by debt kid on March 16, 2010
Photo by Respres
Sometimes getting out of debt is just downright, utterly….boring. It’s a slog. A knock-down drag out fight that certainly know one would watch, let alone pay for on pay-per-view.
I’m feeling the slog of debt right now. Sure, the future is looking bright, and gosh darn it, I’ve come a long, long way. But I’m still not even to a point where I feel comfortable sharing my story with friends or extended family yet. I know I will get there (probably early next year), but in the meantime, I’m struggling to stay motivated.
I just want to blow $300!
All I want to do is go out and blow like $300 on something I don’t need (like an xbox 360!).
I’ll get home, play it for an hour, then feel terrible. So, darn it, I won’t blow the $300.
The truth is I’m sick of scrimping. I’m sick of feeling bad for every purchase I make. I’m tired of having dreams at night where I’m watching stock charts and I’m up like a million bucks only to see it all vanish.
But, I got myself into this slog, and I’ll get myself out of it. Heck, I can’t believe how fast the 15 months have gone. It seems like just yesterday I was spending friday nights at home, working….and now, boom! I’m getting married this summer. And moving to Portland. And getting out of debt.
Now that I’m out of emergency debt mode (ie, an overdraft charge could put me on the streets), and starting to build a nice savings account, I’ve found my goals changing. My old goals were all based around my debt, and dealing with that. And while I still have a ways to go, I can see the light.
And lately my software business has been slow, and so I’ve had lots of time to think about what I’m doing with my time.
I always wanted to be a “hero”
When I was in high school, I wanted to be a hero. No joke. I wanted to join the military, and go save the world. A long story short, that didn’t end up going as I had planned.
Then I wanted to save my Mom. So I thought, “Oh, I’ll just day-trade her account into financial freedom!” Well, we all know how well that went.
Can idealism be practical?
But now I’ve learned my lessons. I’ve taken some crazy hard lumps, and as I’m seeing some success across nearly every area of my life, I’m thinking, “How do I get back some of my idealism, mixed with my newfound practicality?”
I don’t know the answer yet. It really doesn’t matter anyway. Even if I wanted to run off and join the peace corp or something I can’t. I still owe my mother too much money, and I need to focus on earning more, savings more, and paying that back quicker.
So, the debt slog is a bit like this post. Long. Rambling. Boring.
As that fish in Finding Nemo says, “Just keep swimming!”
by Jessica W on March 14, 2010
One of the things that I use to keep myself focused in my journey to debt freedom is books! I use Audiobooks usually because I can “read” these while commuting, working, washing the dishes and folding the laundry. Audible is my favorite source for audio books.
Here are my favorites:
The Total Money Makeover, Audiobook, by Dave Ramsey (2003) I love it because it’s read by Dave Ramsey himself. He has a passion for what he does and a lot of energy in his voice. I’ve listened to it several times and it’s what I turn on if I don’t know what to listen to. I no longer learn something new every time I listen to it—instead, I use it as an energy boost to stay focused. For me, having a “voice” rather than reading the book by myself is like having someone else cheering me on. (Try it, it might work for you too!)
Outliers, Audiobook by Malcolm Gladwell (2008). Also, read by the author, I like all of Gladwell’s books. His unique perspective inspires me to look at all of my circumstances through another lens. The text itself isn’t precisely related to getting out of debt, but success measurement. To me, being out of debt is a measure of success in my own life, so it applies in a less direct way.
Guerrilla Marketing by Jay Conrad Levinson (2009). This one is about marketing in unorthodox or affordable ways. If you have a “side hustle” program going on (as many of us do) this might inspire you to find another way of finding clients or reaching out to sell your product or service.
No More Mondays by Dan Miller (2008). This is a great book about finding/pursuing your passion. I do hope that is one of your post-debt goals. It helps me focus on the “after.”
The Go-Giver by John Burke and John David Mann (2008). This is another great book about change in perspective and attitude. It’s a parable, so easy to listen to, not a bunch of numbers and a good refresher on attitude. (Or maybe I should say it is “attitude refreshing.”)
The Four-Hour Workweek by Timothy Ferriss (2007). I’m personally a big fan of old-fashioned, holistic and neighborhood-based business (I’m a hippie at heart), but what I love about four-hour-workweek is what the case study individuals did once they met their business/income goals. They took their kids sailing around the planet, they pursued athletic goals and other personal goals. I love the “life is more than work” perspective, and use the case-studies as inspiration for what I might want to do when I’m debt free.
Blogs, blogs blogs! I get many personal finance and debt-reduction blogs in my Google Reader, but seldom check it. My very favorite blogs are delivered to Facebook and my email where I’m more likely to read them. Whenever I have a moment of “hmm… I could use some inspiration” I can usually find some within moments on my mobile phone. Surf around for some of the best of the best. I especially enjoy those with a humorous perspective and a youthful voice (Debtkid, PunchDebt, Man vs. Debt, and Budgets are Sexy).
by debt kid on March 12, 2010
So, I’m moving soon. And I’m moving into a neighborhood that has a significantly higher “lifestyle” than my current neighborhood. And gosh darn it if I haven’t read ever smart money book that explains how you spend like those around you! And gosh darn it, I’m gonna try to avoid it. My fiancee and I are quite frugal, and intend to stay that way.
So, here’s my strategy for preventing lifestyle inflation (ie, spending more as you have more money, live in a nicer part of town, etc)
1. Acknowledge The Pressure
I have no doubts that there will be external pressure, both seen and unseen to spend more. The good news is that I pretty much gave up caring what people thought of what I wear, or drive, years ago. I lived in an office on the floor for two months for goodness-sakes. But the pressure will be there. So, Step 1 is acknowledging that the pressure will be there. There is no use denying it.
2. Talk about Spending Changes
If you have a spouse, or significant other, talk about how you can prevent lifestyle inflation. I found just discussing the issue with my fiancee uncovered a number of good insights. Agree to not fall into the “keeping up with the Joneses” trap. Stuff doesn’t equal happiness. Never does. Never will.
3. Allow Yourself to Inflate A Little (if you’re debt free!)
Allowing yourself a little inflation isn’t necessarily evil. If you’re making more, and out of debt completely, then living it up a little bit is totally OK. Lifestyle inflation is a negative when you’re broke, or just buying for appearances, but spending more doesn’t always have to be a bad thing. It’s all about moderation, and circumstance.
4. Learn to Cook
One of the easiest ways to blow money with friends is to eat out all the time. Learning to cook, even if that means spending more on groceries, is a fantastic way to avoid lifestyle inflation. Instead of going out with friends, offer to cook them dinner! It will end up being cheaper for you, and you’ll probably have a chance at a deeper connection with a home-cooked meal anyway.
How do you prevent lifestyle inflation?
by Jessica W on March 11, 2010
For many of us, the battle to get out of debt is a long one, taking many months or years. I’m 15 months into my journey now, and I have about four more months to go.
Right now I’m having a harder time than I have before staying on task. The remaining debt is the biggest “snowball” and is a hefty $10k. It’s also been hanging around like a member of the family for so long it’s become nearly invisible (the balance has been roughly this size for about four or five years years). Waking up every morning and staring that thing down and saying “you’re next sucker” isn’t working because I can practically hear it shouting back to me “yeah right kiddo… just try…”
We’ve covered maintaining the motivation several times (links below) but today I want to focus on immediate and right now ways to get your eye back on the goal.
In our house, we’ve found ourselves beginning to stray now and then—eating out more frequently saying “well, we’ll be debt-free in four months, so let’s celebrate now” or slipping up and beginning to add lifestyle extras. Now that we’ve noticed this—here’s how we’re tackling it.
This isn’t the home stretch—it’s crunch time! We’ve enrolled our oldest daughter as the “traffic cop” to help us all stay accountable on this. Kids notice everything, may as well reward them for pointing out things like this. Besides, when your kid calls you on “bad behavior” you have no choice to but to shape up. There’s no rationalizing to children.
That last snowball is intimidating, so break it down. We used to budget $1,300 to $2,500 for our snowball payments. It got broken up into several places but now we’re down to writing one gigantic check to the last debt every month. I’ll admit it, I’m a wimp. It’s psychologically difficult for me to write one gigantic check—part of me wants to hang on to the money “just in case” something comes up. Instead, I’ve started writing weekly payments to break the big payment into smaller ones that don’t hurt so much to write and maintains some cash flow security. If you are doing this with a credit card account make sure they accept multiple payments in a month as some charge an extra fee for doing this.
Amp it up! Amp up the energy. Talk about your progress to goal every week, or every day. Make a chart or keep a list—whatever energizes you.
Surround yourself by those who’ve done it. One of my favorite things to do is to download the Friday Dave Ramsey podcasts. Every Friday, he invites listeners to call up and scream “I’m Debt Free!” Then he interviews them about the hardest parts, the best parts, and how much they paid off in how much time. I always find myself energized after listening to these, and sometimes listen to them more than once!
Re-focus on the why. I recently realized that I had completely lost track of this. I cannot remember why we were getting out of debt. It took me some thinking to remember what prompted our conversion to the debt-free lifestyle and I realized that one of the motivators wasn’t a factor any longer. (We were attempting to adopt two kids who I met on my travels to Ethiopia, but they’ve since found another family, which is truly OK by us, but I had to step back and re-evaluate my reasons for continuing on this debt-free journey. Additional freedom, reduced need for income, and security for the kids we already have at home proved to be sufficient motivators for me). A few minutes of fantasizing what would happen to us if my husband lost his job (and excellent health insurance) was enough to get me back on the wagon. Take a minute and remind yourself WHY you’re getting out of debt. Make a list of what being debt-free will allow you to do and put it on your checkbook, or your bathroom mirror, or your forehead.
Next up: Motivational reading and soundtrack ideas for maintaining the focus.
In case you’d like to look back at some of our other motivation posts, the links are below.
Motivating yourself when you want to spend
Feeling derailed
Some techniques to keep yourself on task
by Jessica W on March 9, 2010
I just closed two paid-off Visa accounts. One has an annual fee of $75, so I can practically feel the money back in my pocket. We had kept this card around a long time because it was linked to a favorite airline and we got a $50 companion fare annually as a benefit of being a cardholder. This year they eliminated that benefit and incidentally, it came up in our snowball, so we just nixed the thing.
One card left—a MasterCard at 8.9%.
We thought the balance on our last card would be $7950 this month, but it’s actually, still at $10,000. While our high February income was expected, we had some major expenses that were not—a veterinary bill, major office equipment repairs for our small business, some home repairs, and an unplanned auto repair all totaling $3,000.
I must say, I’m pretty jazzed that we could cover all of that out of cash without touching our emergency fund and we still made large (albeit not gigantic) payments on our snowball.
Our March income looks like it’s going to be much better than our usual income, so we believe we can make up the difference this month and still be on track for a July payoff.
by Jessica W on March 6, 2010
Remember how I said we’re implementing a full-blown, whole-hog hustling program around my house? Well, it’s working.
I had projected almost no income for February for my small business, and only a few hundred dollars of writing income. It ended up being a record month. Additionally, we got the balance of our tax return (adoption tax credit). Overall our February income exceeded $11,000 for the month (both of us). We normally budget off of a minimum income of $4,400. March looks to exceed $7,500 (no tax refund this month either!).
We will still be carrying over a huge tax credit into 2010, so we changed my husband’s withholding to be far less than he was even withholding before, because that will get us the balance of the credit week-by-week rather than next year in one lump sum. This will keep our snowball rolling.
So—what caused the massive income boost? A few things at once.
1.Tax refund.
2.Some new clients who’ve doubled my small business’ volume.
3.Old written-off client invoices suddenly paid.
4.Extra overtime for my husband.
At the same time, some planned expenses decreased.
1. Health insurance co-pays were recently reduced. One Rx went from $108 a month to $40.
2. Adding gleaning cut our monthly food expenses by $250.
3. Bartering with friends. Trading piano lessons for babysitting allows me to take on more small-business work while my husband is at work. Normally, I only schedule my work appointments while my husband is home—this new arrangement is for “drop-in” babysitting, so I can take a job while my husband is working, and my friend will watch the kids. This costs me 90 minutes a week in piano lessons for her three kids, and allows me to increase my income by $300-$500 per week.
I’m encouraged. We had more expenses than we expected (Murphy-type stuff) in February, so we didn’t make all of the progress that we had hoped to make, but we did not expect the higher-monthly-income to last beyond February.
Just today I learned that one of my husband’s employees will be out for another month, so my husband will be working six days a week (or more) for another month. I added new clients in February and already in March. Another client informed me that they’d be giving me a raise, and they account for about 50% of my volume.
We still think we’ll be debt free in July, and if my small business volume remains this high, we’ll be debt free by June.
by Jessica W on March 4, 2010
A few weeks ago I posted about my first experiences with the gleaning co-op that I have joined which resulted in many interesting questions. I thought I’d drop in and update you about how it’s going, how it’s affecting our “bottom line” and if it’s worth it.
First off: It’s a huge time commitment. I spend five to seven hours a week processing food. Picking it up in a nearby town, and then cleaning, composting, chopping, canning, freezing, etc.
Second: It’s totally unpredictable. Most weeks I pick up two banana-boxes of food. Last week I picked up six. (Roughly 250 lbs of food to deal with).
Third: It’s not flexible. If six boxes of food get picked up, six boxes of food must be dealt with. If it’s not done ASAP, fruit flies, mold and spoilage will ruin your next several days. You cannot ever be too busy to “deal” with whatever presents itself in the boxes. Even if it includes 35 lbs of cactus leaves, 150 bags of hamburger buns and two boxes of aged radishes.
That said, out of each pickup, we feed our family for a week and freeze extra. We also provide fruits, bread, vegetables and dairy products for as many as eight additional families.
My husband jokes about “food bank day at the Wards” but truly, it’s been benefiting many people.
Overall it’s reducing our monthly food budget by about $250 a month. It would be a greater reduction if I wasn’t doing the Atkins diet which is kind of expensive, so yes it’s worth it, especially when we add in the number of people we’ve been able to help with it. The other day I was able to make a fantastic eggplant Parmesan for six for a grand total of $0.33. (All I had to buy was the eggs—everything else came in the box). 
Honestly, I’m enjoying the adventure and the opportunity to involve my oldest in this lesson in planning, thriftiness and resourcefulness and caring for those in need. She always looks forward to the boxes and wonders eagerly what treasures might be in there and she’s learned a great deal about the needs of others. We’ll be keeping this project up for a while I think.
Many have asked why this food is going to volunteers and not food banks. Generally, the non-perishables all go directly to food banks. Most food banks aren’t set up to process gleaned produce and breads and the ones that are, tend to have far more than they can handle. Most food banks prefer to buy fresher produce and dairy in bulk because the quantity and quality is reliable. We work with families in need from our own neighborhood and from our church to distribute as many items as we can on an individual basis. Otherwise, we’re just diverting items that would otherwise be sent to the landfill because the next inventory shipment has arrived or the item has a cosmetic flaw that results in it being unsalable.
If you’re interested in starting a co-op of your own, you can take a look at the by-laws and organization structure of the one that I’ve joined.
by debt kid on March 2, 2010
Back in 2006, getting a mortgage to buy a home was about as easy as buying a tub of butter. Except, well, you actually had to PAY for the tub of butter upfront, whereas you could get a loan for the house. Even for the self-employed, there were NINA (no-income no asset) no-doc loans, or SISA (stated income, stated asset) loans that with the right credit score, you could qualify for. Heck, even with a bad credit score, you could still get a loan (granted your interest rate was higher).
Now that times have changed, what can a self-employed person do to even have a chance at getting a home loan?
1. Lots of Cash to Put Down
20% is the new 0%
2. Perfect Credit
The days of getting a loan without good credit with a conventional mortgage are over. Your only, and best bet if your credit blows is an FHA mortgage.
3. Documents, Documents, Documents
Lenders are going to want to see not only your last two years tax returns, but they may even ask for bank statements for the last 12-24 months of your business. You need to be able to show without a shadow of a doubt that your income stream is going to continue to be profitable into the future. If your business is less than 2 year old, you’re probably out of luck.
I actually talked with a bank loan officer last summer, just to look at the possibility of ever buying a home again. I just gave up after the meeting. In another year or so, I may go back and look at the possibility again, but for now at least, even getting a mortgage would be impossible for me.
by debt kid on February 26, 2010
Here from CNN Money? Make sure to subscribe!. Also, if you have a few hours and want to start from the beginning of my story in January of 2007, here’s my very first post. Grab some coffee.
Very few people like talking about debt. Those who do are either 1. personal finance bloggers or 2. weirdos who don’t care what anyone thinks.
I fall into both camps, and lately I’ve been feeling more and more ok talking about the mistakes I made in the past. Probably because I’ve come so far since I made them.
Why don’t we talk about money
My fiancee and I talk about money quite a bit. Probably more than we even need too. But, given my unique debt situation, it’s often warranted.
But I can count on one hand the number of money conversations I’ve had with friends in the past 3-4 years. For such an important part of our lives, the topic just doesn’t come up that much. And I don’t mean conversations like, “How much do you make?” those don’t need to come up. But conversations like, “How do you guys save? Where do you save? Do you save money? Do you invest? How? Why?” etc. Those types of conversations could be fantastically interesting to have…
So, how do you start those conversations or are they better left to just your spouse and you?
by debt kid on February 23, 2010
I stepped on the scale this weekend, and the results were not pretty. 199.8 lbs.
Yikes. Now, I don’t consider myself “fat” but I’ve gained 15 lbs since last summer, and I’m not happy about it.
I was thinking about my food spending habits lately, and I know there is some correlation between my weight gain and my income gain. When I was dirt poor, I thought about every single grocery purchase. I never splurged on anything extra.
Now with a little more cushion in my budget, I’ve noticed that I throw in extra food into my cart that I wouldn’t have even considered when I was broke.
So, I need to go back to shopping like I’ve got $70 in the bank instead of $700.
The good news is that since my “fat awakening” I’ve already started eating better. I’ve even been counting calories, which is shockingly familiar to counting dollars. I’ve found it kind of a fun game to play watching how many calories I eat. I even splurged on a food scanning app for my iPhone to scan food items and track the calories, it makes it super easy and fun.
My goal is to be 180 lbs by my wedding in July. I weighed in at 196.4 this morning, so I’ve got a ways to go, but definitely some time to get it done. Maybe I’ll post some before and after shots here for motivation.
The last two months have been bad health and spending wise. With my fiancee’s mother passing, and then we both got sick for 2 weeks, we just ate terrible. And all that happened right after the holidays. Not exactly the best way to start 2010. Here’s looking at a better March!
