Category Archives: Finance

MONEY SENSE FOR YOU

You know FOMO and YOLO and adulting. You’re probably familiar with regifting. But what about degifting and frugle and debth? It turns out, that as we sort through our money, millennials are creating new language right along side of it.

Why the need for the new vocabulary? Our generation is looking at money differently. Sometimes we’re confronting new issues. Other times, we’re confronting age-old issues in new ways. And when an entire generation is faced with unprecedented money obstacles, it’s going to take some new words to sort through the numbers and the emotions behind them. Because when it comes to millennial money, some of it is good, some of it’s bad, and some even gets a little ugly.

The Research

First things first. Let’s talk research. How do I know all this? Besides being really smartspending all my time on Twitter, Filene Research Institute sent me their Millennial Money Chatter findings, a summary of an online ethnography that looked at semiotics, syntax, and other things that I haven’t thought about since I was an English undergrad. See? Smart. But seriously. The report analyzes the way millennials talk about money online* with words, hashtags, and emojis. And it turns out, we’re talking about everything from being good grown-ups to drowning in debt.

*They’re reading our tweets, guys! We’re basically famous! Now when do we get to be rich?

The Good

Adulting – We’re adulting! We made it. And we’re totally owning it. We have jobs, we pay bills, we rent, we buy. We are officially grown-ups. Merriam-Webster says the use of adult as a verb showed a six-time increase in 2016 compared to 2015. Why shouldn’t we make a little noise? We’re figuring life out and doing awesome things.

Degifting – An example of our awesomeness? We’re not just big on DIY. We’re not just stretching our dollars with staycations. We do both of those things, and we also degift. Instead of just regifting, many millennials are pausing or stopping the gift exchange. Some of us are trying to stretch our dollars further. Some of us are looking to minimalism and meaningful experiences. And most millennials are taking a long, hard look at the consumerism that literally crushed my closet.

The Bad

Frugle – I love me some frugality. I crushed our grocery budget goal. I spend $7 on breakfast all month. Aldi is my BFF. That’s frugality by choice and for a purpose. Being purposeful with my money takes the latte factor out of my closet and helps me tackle goals like slaying the mortgage monster. So what’s with the weird spelling? It turns out that frugle is similar to frugality, but it is due to financial hardship. Forced frugality, if you will. When I stumbled across this word, it was another great reminder to check my privilege.

The Ugly

#debth – What do you get when your debt feels like a death sentence? Debth. Before anyone accuses our generation of being hyperbolic, let’s look at the numbers. This study quoted other research (like Inception but with data, not Leonardo DiCaprios) that shows 43% of millennials have delayed starting a family over debt, 55% worry that they won’t actually pay off their debt, and 75% have delayed saving for retirement because of debt.

Pause. No, full stop.

Almost half of the people surveyed aren’t having families on their own time because of money. Over half don’t feel like debt will ever end. And three-quarters of the people surveyed are going to be sad old people because of their currently-overwhelmed-selves.

While the numbers aren’t all pretty when it comes to millennial money, the fact that an entire generation is talking so loudly about a topic that was once considered incredibly taboo speaks volumes about what we can do. We can have smart conversations. We can share real stories. We can climb out of debt and make sense of our money in ways that should leave other generations inspired.

Financial Wake Up Call Moment

unduhan-20As I look around the world today, still convinced that America is in for a huge financial wake-up call, I see many, many people still wandering around in status-quo spending, telling themselves that they’re just fine. And I get it. Hubby and I did this for many, many years. We leveraged whatever credit we could gain to get the stuff we wanted to have. We thought that the amount of credit banks gave us was an indicator of our success in the world, and we wore those badges proudly with new cars, nice clothes, fancy homes, etc.

We told ourselves the old lie: “We can make the payments just fine, so it’s all good.”

That is, until the job layoff. But funny enough, that wasn’t our financial wake-up call moment. We still continued to tell ourselves we’d be just fine, and made the smart SO not smart move of using our plethora of available credit to make up for the difference in income between hubby’s salary and the unemployment check.

It was nice. We could continue to live as we’d always lived: financially cozy without much consciousness of our spending.

You would’ve thought that living on substantially less income and not knowing when hubby would work again would’ve been our rock-bottom wake-up call. But it wasn’t. Not yet.

Our Wake-Up Call Moment

Then we moved out of suburbia into the country, and something happened.

I think it could best be described as “taking the blinders off.”

In the country, we didn’t have nearby neighbors known as the Joneses to keep up with. And being further away from the neighbors we did have, we couldn’t see what they were spending their money on.

Suddenly, we didn’t have so many people around us to compare ourselves with. We’d spent years comforting ourselves with the “everyone’s doing it, mom” theology. Now “everyone” was far away, and we were left alone with our pile of debt and no one to compliment our cars, our home, our clothes or our status.

It was just us, staring face to face with tens of thousands in credit card debt. 

And that, my friends, was our rock bottom wake-up call. We started to wonder how we’d make these payments if hubby got laid off again. Yep, that would suck. We’d be in big, big trouble was the answer.

And since there was no one nearby to comfort us with the “it’ll be just fine” message, we had to face the fact that if a job layoff happened it really wouldn’t be just fine. Not in the least.

It was that stark realization – the one that foreclosure, bankruptcy and all those other not-so-fun things could become a reality – that induced our financial wake-up call.

Don’t Wait for a “Forced” Wake-Up Call Moment

My prayer for the millions dealing with oads of consumer debt and bloated mortgages today is that they don’t wait for that “forced” wake-up call of a job layoff or other disaster before they start making a plan to dump the debt and build a more secure financial situation for themselves.

Take a few moments today to honestly analyze your finances and see if your financial situation really lines up with your dreams and goals. Then make a plan to reduce debt and increase savings if needed.

No one is immune to a job layoff or decrease in business income. Or major league medical or other expense. Begin the work of preparing yourselves today so that your potential rock-bottom, wake-up call moment will end with a real-life “we’ll be just fine.”

How to Build a Financial Fortress

Here’s how you can begin those preparations.

1. Assess Your Situation

Sit down today and make a spreadsheet listing each of your debts (liabilities) in order from smallest to biggest. Then list your assets (savings, retirement, homes, cars, etc.) and their values in order. Subtract the liabilities from your assets in order to get your net worth.

2. Make or Assess Your Budget

If you have a budget, look it over to figure out if you can or should trim costs somewhere in order to improve your money situation.  If you don’t have a budget, make one. Make the first budget based on what you spend, and another one based on what you could be spending in order to make your money situation more secure.

3. Cut Costs That Aren’t Value-Based

Go through your budget line-by-line and analyze each non-necessity cost. If the expense is in line with your financial goals and dreams, keep it, but if it’s not, consider reducing or eliminating it. Example: If meeting your financial freedom goals is more important to you than watching cable TV, get rid of the cable, even if just for a time.

Ask yourself before making any expenditure: Is this expense worth me delaying my financial freedom date?

4. Put All Extra Cash Toward Consumer Debt Reduction

If you’re carrying consumer debt, commit to putting all extra monies toward paying it off. Use the Debt Snowball or Debt Avalanche to help accelerate the process.

Student Loan Analysis Tool

I’ve been working behind the scenes for months now to produce a simple, free spreadsheet to help with one of the greatest financial problems of our generation, that of student loans. I finally have a student loan analysis tool to share with you after many hours of work, and I’m very excited about it. Click below to download it while you read the rest of the article.

The Millennial Moola Free Student Loan Analysis Tool

Student Loans: My Accidental Side Hustle

I started learning about the maze of loan repayment programs while helping my girlfriend make a plan to repay her medical school debt. There’s IBR, PAYE, the Standard Plan, and now REPAYE. Each of them have unique rules and eligibility requirements. On top of that, if you work in a not for profit job you can even qualify for Public Service Loan Forgiveness.

I realized that choosing the right student loan repayment strategy could be boiled down to a financial analysis of your individual loan situation. In my prior corporate life, I traded bonds for a living, so using Excel to build cash flow models is something I’m familiar with. I started doing flat fee $100 consultations for people with six figure student debt burdens about six months ago. I’m still taking on new clients by the way if this spreadsheet doesn’t give you enough detail. If you wanted to email me at travis@millennialmoola.com I could give you more information.

In the short time I’ve been involved in the student loan space, I’ve discovered that it’s basically the Wild West of middle class personal finance. I read an excellent piece over at Millennial Money Man reporting that “debt relief” companies are charging hundreds or even thousands of dollars to tell you about information you can find out for free by searching the free Federal student loan website.

Student Loan Servicers and Financial Aid Officers Do Not Model Anything For You

People are turning to these scams because the companies that collect their payments are awful. Additionally, they cannot even report accurate information as to how long you have paid your loans and how many qualifying payments you make towards loan forgiveness, much less give you an estimate as to how much different repayment plans cost.

The majority of financial aid officers are similarly useless. One veterinarian I spoke with as part of my student loan consulting practice had almost $400,000 in debt a few years out of school. Her loan counselor told her not to worry, that it was “good debt” that she would figure out how to pay off at some point down the road. This individual had no clue what they were talking about. She had the opportunity to limit her interest accrual by switching to REPAYE, which slowed the accelerating growth of her massive student loans.

I was lucky enough to graduate school without any debt. Even so, that somehow doesn’t stop some extremely annoying robo caller hassling me weekly about an exclusive student loan relief offer I can get by dialing zero after the tone to speak to a representative. If this ever happens to you, try to get off their list. You will be speaking to someone who is better at sales than adding or subtracting with minimal knowledge as to what the heck they are talking about.

How My Student Loan Analysis Tool Works

I have a simulation tab that runs all the data you enter in the ‘Student Loan Inputs’ tab. The ‘Summary Statistics’ tab boils all this down for you in an easy to understand page. The red tab is the highest cost repayment plan you could use. The green tab is the lowest. If you work in the private sector, your Public Service Loan Forgiveness row should read N/A. Here’s a sample of what’s going on in the background.

Do The Math For Debt

I’ve never gotten more push-back on a post than I have for my 30 Financial Milestones You Need to Reach by Age 30. It’s still Money After Graduation’s most popular post of all time, and since making the checklist the download that you receive when you sign up for my email newsletter, more protests are coming in.

In the time I’ve been doling out personal finance advice online, I’ve been called everything from privileged and out of touch, to colorful names I will not repeat. I know I don’t have the soft touch many other personal finance gurus have. But I have to be harsh with you because you need to know the truth:

If you do not get your financial shit together, you will not be okay.

If you do not aggressively save for retirement, you will not have enough money saved to leave the workforce on your own terms and live comfortably. If you do not pay off all your debt as fast as possible, you will not have the flexibility and security of keeping every dollar you earn. If you do not set aside money for emergencies, you will not be ready to deal with what life throws at you (and it will throw many things at you, and a handful of them will be horrendous).

But the painful truth is I cannot make any of the above easy for you. I can tell you how to do it and I can give you motivation and inspiration, but I cannot lighten the load. I cannot reduce your debts, earn you more money, or increase your investments. You have to do that part.

I also cannot (or at least, will not) lie about it. Which is why my advice sometimes comes across as “harsh” or “mean”.

It’s not easy.

Getting your finances under control is not easy at all. That’s actually why most people don’t do it. It is far, far easier to buy a house you cannot really afford, finance a car with a 7-year loan, make the minimum payments on your student loans, and use credit cards to fill in the gaps.

That’s what most people do. Don’t be most people.

You can save $25,000 for retirement in less than 5 years.

When you look at that number, you might think $25,000 over 5 years means you have to save $5,000 per year or about $417 per month.

Wrong.

If you invest that money in the stock market and earn an average rate of return of 5%, you only need to save $368 per month. This saves you just shy of $50 per month, or nearly $3,000 over the 5 years. Yes, you read that right. $3,000 of your $25,000 retirement savings is going to save itself. So you don’t have to save $25,000 — you have to save $22,000.

Don’t think you can earn a consistent 5% return? Fine. Find 3% and you only have to save $387 per month. It’s still $30 less per month than you thought.

You can save up a 3-month emergency fund in less than 1 year.

Some people think you need to save 3-6 months of your gross income as an emergency fund. This is a wonderful idea, but largely impractical in your 20’s and 30’s. You should, however, have at least 3 months of essential expenses on hand. Make a list of all the things you spend money on over the course of a month. Now, cross out anything that isn’t a necessity.

If you were without income, you would still need to pay for housing, utilities, food, and your cellphone, as well as make the minimum payments on your debts. But that’s it. You do not need to put money into savings when you don’t have a job. You can apply for forbearance on your student loan payments. You will not go out with friends.  You literally will live on the bare minimum.

Is it your entire income? Probably not.

These are your essential expenses. I would guess they’re somewhere around $2,000 or $3,000 per month. Multiply it by 3, then divide by 12. That’s the amount you have to set aside each month to accumulate a 3-month emergency fund in less than a year. If you cannot save up a 3-month emergency fund in one year then your home is too expensive and/or you cannot afford your car and/or you can’t differentiate between “needs” and “wants”. Explore each category ruthlessly, then cut out whatever is holding you back.

Right on the Money

Many of our grandparents were born between 1910 and 1925. This is what Tom Brokaw dubbed “The Greatest Generation” when America was developed and defended on the backbones of its hard-working citizens. Anyone with silver hair, no matter their birth date, has spent an entire lifetime making choices and reaping consequences. It is our choice whether or not we will learn from our grandparents’ experiences and advice. That is why I’ve comprised a list of frugal habits I’ve learned from watching my own grandparents as a child.

It only just dawned on me that I’ve been learning from their example all of my life even though they’ve all passed on.

Even my grandpa “Big John,” who passed away from a heart attack when I was four, left a legacy in his community as a reliable and trustworthy man others looked to for business advice. Things like that, 25 years later, stay with me.

Grandma’s Top 10 Frugal Habits That Were Right on the Money

I titled this piece “Grandma’s Top 10 Frugal Habits” because many of us had “that grandma” who wore the same three outfits and that one pair of shoes.

But this list will also include other grandparents who had a powerful influence in my life.

1. Driving a used car.

My grandma Dorris drove the same used car through my entire childhood. It wasn’t new or flashy, but it was nice, reliable, and paid for.

2. Gardening.

My grandpa Lloyd plowed Michigan soil every season of his adult life. In retirement, his favorite pastime was taking care of his beautiful garden.

Grandma Dorris and I spent time picking and snapping green beans straight from her garden into the dinner pot.

When I graduated from high school, grandma sent me a letter with two packets of seeds to start my own garden. That was my grandparents’ legacy.

3. Scratch and dent.

Grandma helped me shift my mindset and think about things like manager’s specials and clearance racks. She went a bit too far some days, coming home with food that looked like it was ready to crawl out and burrow itself into the ground, but the lesson was still valuable.

I probably won’t hunt for nearly spoiled food and cereal boxes that look like they’ve been flattened by a forklift. Still, finding food on sale because of a simple blemish or dent is a win in my book.

4. Saturday garage sales.

If I visited grandma Dorris over a weekend, we’d either end up at the “scratch and dent” store or we’d go to garage sales. If I didn’t bring my own spending money, grandma didn’t buy me anything.

I remember only one time when she got something for me. It was a knock-off Barbie doll with chopped hair and a missing foot. It couldn’t have cost more than a quarter. Still, I cherished her gift and played with it for many years.

5. No TV.

I have so many childhood memories of showing up at grandma’s house, diving under her couch for a pack of Uno cards and sitting across from her as we played for hours. Not once did my grandma own a TV.

We’d occasionally listen to Peter Rabbit on her record player or catch the latest Detroit Tigers game while we cooked dinner together.

These types of memories stay with me as I raise my own children. I love the idea of our TV being a side product to our house, not the central focus. We don’t have cable and we try to spend as much time in the play room, kitchen or outdoors as we can.

I want my kids to have as much fresh air and the color green in their memory banks as I had

6. Homemade gifts, toys, and quilts.

Grandma worked constantly with her hands, whether that meant carving bars of soap into little rabbits or sewing brightly colored quilts and toys for her church and family. She didn’t have Pinterest, but I’m so glad that side of grandma’s life lives on in so many homemade projects happening in the world today.

7. The gift of time.

One frugal habit we all have is the gift of time. Grandma Dorris became a widow in her early 60’s, but she devoted a great deal of time befriending and supporting other widows. She’d make them tea, sit with them and lend a listening ear.

Grandma also performed a tremendous service for the single mothers in her community. Each week, she opened her home to their children, running a sort of after-school hangout.

Many of these children had troubled environments at home or struggled with mental disabilities, unchecked emotions, anger, lying, and stealing. I was there to witness the patience of my grandmother with everyone she met.
I’m not saying grandma was perfect. She never followed a recipe and burned many a meal. Even still, she had the same 24 hours that you and I have. She willingly gave many of them away, saving money on purchasing gifts, but also giving some troubled and lonely people in her community a safe haven.

Hit Your Money Goals

unduhan-21So you save some of your paycheck, contribute enough to get your company’s 401(k) match and wouldn’t dare miss a payment on your student loans.

Nice. You’re on your way. But your journey might be longer—or harder—than it has to be. Because while smart steps like these will help you eventually reach your goals, there’s a good chance it’ll take longer than if you applied a little more strategy.

Want to travel a less painful path toward wealth? Make sure you’re not committing these common (and well-intentioned) mistakes.

You’re nickel-and-diming yourself.

You calculate how much you’re spending on happy hours and Shake Shack, then ban them for the sake of your budget. Your head’s in the right place, but your strategy is misguided if you’re striving to save $15 a week by cutting something you enjoy, but still paying $100 more than you need to for cable or $200 a month on a gym membership you haven’t used since January.

Related: Start saving $100/month on Live TV

“Not only will little budget tweaks not get you very far in terms of your overall savings, but they may bum you out, which will cause you to burn out,” says Dominique Broadway, a financial planner in Washington, D.C., making it tough to stick to your budget.

Instead of looking for small-ticket items to skip, start with the big stuff. Can you renegotiate your gym membership? It can’t hurt to ask. Are you paying too much for your phone plan? You may save hundreds over the long run by downgrading your data plan, asking about specials or switching to a competitor.

You’re putting money in a savings account, but not investing.

It seems like a smart move to transfer money from checking into your savings account each month—and it is. But it’s not enough to ensure a comfortable future.

Banks are paying an average of 0.5 percent interest annually on a savings account now, but the inflation rate is above 1 percent (and, over the long term, it’s averaged more than 3 percent annually). “So by simply putting money in a standard savings account, it’s almost like you’re losingmoney,” says Broadway.

An easier way to grow your money and take advantage of compound interest? Once you have at least three months’ worth of expenses in an emergency savings account, start investing leftover cash, says Mary Beth Storjohann, a San Diego-based Certified Financial Planner and founder of Workable Wealth.

Aside from retirement accounts, you can open a traditional brokerage account or keep it simple with an app like Acorns or another automated investment service.

You’re only contributing enough to get your company’s 401(k) match.

It’s easy to think you’ve got your long-term savings covered if you’re contributing a few percent of your salary each year and taking advantage of your company’s free match.

“But the amount that your employer will match should be the minimum you contribute. It’s important to remember that it’s not tied to how much you’ll actually need to save in order to be comfortable in retirement,” says Certified Financial Planner Cheryl Sherrard, director of financial planning at Clearview Wealth Management in Charlotte, N.C.

How to Get PERFECT on Credit Score

images-34I will teach you the secret to achieving the perfect credit score. This will open many doors for you that are closed to most. I’ll first start with a story to set the stage:

I’m in the military. Some people around the office seek me out for financial advice. They know I’m a “money guy” and word gets around that I like talking investing and real estate.

I always warn people they won’t like my advice. They usually don’t.

This guy didn’t.

Recently a co-worker told me he’s got $20,000 burning a hole in his pocket, and what I think about investing in the British Pound. With the Brexit, it seems like a sure thing!

I told him this kind of speculation in currency isn’t for everyone. Even those who devote their lives to studying this are wrong more often then right. I warned him this would be a fun way to lose money quickly on something he doesn’t understand. It seemed like he took that to heart.

Guy: “Ok, I got a better idea! What about gold!?!?!?”

Me: Shit. (silently in my head)

I told him I have a different approach to investing. With an extra $20k and with no debt (awesome), consider fully funding retirement accounts first.

Guy: “O no, I still have debt!”

Getting Your Money

Being a young adult in 2016 is no picnic. You (mostly) don’t know what you want to do, your love life’s a slow-motion disaster film, and your parents keep asking when you’re going to settle down/get married/go to med school.
Oh, and you’ve got crazy student loan debt, wages have been stagnant for decades, housing prices are through the roof, and climate change just killed a bunch of reindeer in Siberia.
It’s enough to make you feel like this:

It doesn’t have to be this hard. While we can’t tell you how to figure out what you want to do with your life, or get you to stop drunk-texting your ex, or bring those poor reindeer back to life, we can help you get your finances in order.
Here’s how to be an adult—on paper, at least.
1. Pay yourself first

It’s a personal finance cliche, but it’s still the first step on the road to financial stability. Saving money often feels like deprivation—you can’t buy stuff you want. But if you change your mindset, and see saving as an investment in (pretty near) future you’s health and happiness, it makes it a lot easier.
How to pay yourself first? Here are a few ideas:
Do (at least) the bare minimum when it comes to retirement savings

Ideally, you’d be putting away a significant amount of money toward your golden years, but we know you’ve got bills: Those fat monthly payments to Sallie Mae, as well as rent, food, and the (more than) occasional night out.
But one of the few advantages (financially speaking) of being young is that you’ve got decades until you’re going to need your retirement money. Thus, every dollar you put away now will be worth more at retirement than dollars you put down in 10 or 20 years, when you’ll be a little farther along the slow crawl to the grave—and thus more flush.
Why? Compound interest. With time, your money earns interest, and then that interest earns interest, and then the interest on your interest earns more….you see where this going. Time is on your side on this one.
So what’s the bare minimum?
If your employer offers a match, contribute as much as you need to get the maximum match. For most of you, this will be 6 percent, with an additional 3 percent coming from your employer. Free money!

And with that, you’ll be close to halfway to the 20-percent savings rate that most financial advisors (and Money Under 30) recommend.
If you start right out of school, it might even be enough for you to have a year’s salary saved up in your 401(k) by age 30.
And because that 6 percent comes out pre-tax, you won’t feel as much of a pinch in your (slightly) reduced paycheck.
If you employer doesn’t offer a match?
Then you should open up a Roth IRA and aim to max out your yearly contribution. Since you’re young, and probably not making a ton yet, you’ll be paying less in taxes than you will later on. Contributions to a Roth IRA are done with post-tax money; withdrawals you take in retirement are tax-free.
Regardless, you’ll want to put your money in low-cost index funds, as fees can really eat up your returns.

Getting Out of Debt

I’m a math nerd, I like depriving myself of stuff, and I really like to live simply…and getting out of debt still sucked.

BUT – it was one of the best things I’ve ever done.

In case you don’t really know my story, here’s the sequence of events:

  • Graduated from college, had $18,000 of student loan debt
  • Got married (yay!)
  • Together, we paid off the $18,000 and built up an actual net worth
  • Got divorced (booo…), kept the house, and therefore was thrown back into debt because I owed my ex $22,000 of our equity
  • Paid off the $22,000 in 6 months (whew!)
  • Paid off the remaining $54,500 on the home mortgage in just 12 months!

In other words, I’ve been in debt, got out of debt, was thrown back into it, and then came out of it faster and stronger than ever. I quickly became a get-out-of-debt machine.

How did this happen? It certainly wasn’t by accident. Through the unfortunate life events listed above, I discovered the absolute best tool for getting out of debt.

Getting Out of Debt – Discovering the Tool

No, I’m not trying to sell you something. The purpose of this post is not to jack up your spirits and then tell you that it’ll cost you $49.99 to experience euphoric bliss. First of all, I’m not that cruel. Second of all, this tool for getting out of debt shouldn’t really cost you anything. Just a few moments of your own time and thoughts.

So what the heck am I talking about? What is this tool for getting out of debt?

Discovering My Tool: The 1st Time

When my ex and I were first married, I distinctly remember the day that my general nervousness turned to panic.

Our student loans came due, and that fateful bill came into the mail. The bill that we couldn’t afford.

It was in that moment that I put my foot down and shouted, “NO MORE!!”

No longer was I going to lie back and relax while my bank account was obviously plummeting toward the negative! It was either we fight this evil giant called “Debt” or we were going to let it rule us for the rest of our lives.

From that date when we said, “No more!”, we paid off $18,000 and cash flowed a $6,000 car in just 14 months.

Discovering My Tool: The 2nd Time

“I don’t love you anymore,” She said matter of factly. “I want a divorce.”

I crumpled to the floor and looked up in disbelief. I didn’t understood non-physical pain until that moment. But once I felt it, all I wanted in life was for it to go away. The only chance I had was to cut all the strings – to pay off my debt to my ex.

From that moment, it only took me just 6 months to pay her the $22,000 she “deserved”.

All ties were cut and I could breathe again. Finally, I could get on with my life.

Discovering My Tool: The 3rd Time

My ex was paid off, but something still didn’t feel quite right. I still felt owned. Something was still holding me back in life. This time, it was the bank.

I owned a house, sure. But was it really mine? If I lost my job tomorrow and could no longer afford the mortgage payments, what would happen? The bank would send me a letter, let me know that they were taking possession of “my” house, and then strong arm me out. As long as there was a mortgage on that house, it most certainly was not mine.

I was single, I had a decent income and had no other debt – it was time for me to truly own my house…completely.

After that decision day, it took me less than one year to pay off my entire mortgage.

Getting Out of Debt: With Motivation

In all of my situations above, there was one common theme that propelled me out of debt. No, I didn’t find the secret to have my student loans forgiven, I didn’t invest in some magical stock that took care of all my debts, and I also didn’t get rich by blindly allowing a piece of software to save money for me (Achhhmmmm, Digit…I’m still not a fan).

My debt vanished because of one simple tool: motivation.

On every occasion, when I was pissed off about my debt, I simply figured out a way to get rid of it.

When people today say that they just can’t seem to get out of debt, it just frustrates the heck out of me.

  • Don’t you have a wife that works her butt off at corporate, but really wants to be at home raising your children?
  • Don’t you love your kids and want to provide them with the best education possible? Isn’t that more important than that shiny Land Rover you’re driving?
  • Have you ever thought about your retirement years? If you have nothing saved, don’t you realize that you’ll be trying to live on cheap pasta and tuna every day? Does that sound like fun to you?

Money Ideas For Great Finance Manage

My “awesome ideas” folder is piling up over here,  so I thought I’d release some of them on you today to help turbocharge your goals 😉 All these come from emails and comments that YOU ALL have sent over the months, so big thanks for dumping out your smarts on us! It all helps!

See if any of these ideas stick with you:

#1. The financial notebook

This one comes from Sarah who shared it on Millionaire Day this year:

“I started keeping a financial “notebook.” I write in it every time I do something that moves me closer to the FI mark. (Ok,  so I am rather liberal with what counts… reviewing the kids’ 529s counts, as much as paying an extra $100 to the debt monster.) Flipping through it helps keeps me motivated in the dry spells and reminds me when it’s time to review some bill or policy!”

So pretty much, a financial diary. Which is much more juicier than a normal one, if you ask me!

#2. An awesome way to charge your kids rent 😉

From Paul:

“I am going to provide my kids a (mostly) judgement free place to live when they are done schooling. My only Caveat is I will charge them rent, and that rent will be in the form of proof that they are maxing their 401(k) and IRA, and investing 50% of their net pay. As long as they do that they can live here ’till they get married.”

Another great benefit: they’ll be able to move out faster with all that money saved! 😉

#3. Chart your net worth progress against your goals!

LOVE LOVE LOVE this from Bill Furst:

“I wanted to pass along a neat little tracker I put together that I use monthly (now, and previously just yearly) with my own net worth updates.  It basically tells me that I am on track for my retirement goal ($$ and time) with a visual chart.  The larger the green section, the more ahead I am.  You just input in the grey boxes and the yellow parts calculate for you.

I filled this in with your stats dating all the way back from 2008… I did yearly from 2008-2015, and then monthly from 2016 on. Line 8 is your historical net worth amounts. I don’t know what your time line is for your cool $1M, but if it’s 2020, you’re ahead of the game.”So smart, right? Looks like the first year and a half I was falling short of my goal of “a million,” but from there we took off and are set to hit it earlier than expected. I really like this because it gives you a super fast idea of how well you’re doing or not in relation to your OWN goals and not anyone else’s. And it’ll now be yet another addition to my sturdy spreadsheet I’ve been tweaking over the years – woo!

I’ll have to make a template of it one day for y’all, but for now here’s the spreadsheet Bill created above for any of you who’d like to copy/test it out yourself: Net Worth Comparison Chart

Thanks Bill! (And your wife is right – you totally need to share your thoughts online somewhere! Start a blog already so we can check out all your other ideas you’ve got brewing :))

#4. “How much freedom will this cost me?”

Great way to think about all your purchases, by Free-Range-Nation.com:

“I ask my clients to think carefully about every purchase, and ask themselves how much freedom do they have to give up to work for someone else for this item? 15 mins … ? One hour… ? One day… ? One week… ? One month… ? One year… ? And then, is it worth it? If it brings tremendous value or return on investment, go for it. If not, sit on it awhile. Then, when they decide not to make the purchase, I suggest putting that amount into their Freedom Fund, or FU fund, as many like to call it. How about the Middle Finger Fund to keep the fun there and the profanity out. 🙂

#5. Pay enough extra towards your mortgages to see a $1.00 decrease every month

Another interesting idea by Richard, in response to staying motivated paying off your debt:

“One of the things that made it simpler for me is focusing on a small detail. I call it my magic number: $310. That is the number (rounded up to next $1) at which the extra principle payment reduces my monthly interest by one dollar. It is great to know that by paying that extra amount, all my future payments will include $1 more principle, and $1 less interest. It’s a benefit I can see on paper. I can also see the compounded effects of making those extra payments over the years. It soothes the number crunching addiction I have.”

I used to love seeing the interest portion of the payments going down by a dollar too. I never calculated “my number” to make sure that happened every month, but I did round up to the nearest hundredth every month – for both our mortgages – which sped up the debt killing immensely.