The Push/Pull of Saving Money vs Paying Off Debt

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“It’s a teeter-totter. One side can’t go down without the other coming up, and unless you’ve done something horribly wrong and are a really awful playground equipment jockey, you can’t get both sides to come down at the same time.

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I’m not the brightest bulb in the knife drawer, so when I talk mathematics, I like to keep it simple enough for even me to understand. So here goes…

Simple math dictates that if you have 10 dollars to spend, you can spend less than 10 dollars, but you certainly can’t spend more.

Am I with me so far? I am? Great! Let’s move on.

If we carry that same analogy forward to how my wife and I used to operate my life, if we got 10 dollars, we would immediately spend that 10 dollars on dumb stuff. Then we would hit a point in the month where we needed additional money for legitimate reasons, but again… we only had that 10 dollars. So we would instead charge things on a credit card. Simple!

Simply stupid.

Listen folks, we didn’t get into our current situation by making smart choices. We made the financial equivalent choice of stepping right into the ring with an MMA champion because we watched a Jackie Chan movie from our couch and thought “it all looked kind of easy.”

Now that we’re over that way of thinking and have firmly placed our life back on track, we don’t have the credit cards anymore. I almost said, “as a fallback,” but that’s like saying, “We don’t have the pit of spikes to catch us if we fall off of this tightrope anymore.”

The 10 dollars we have is now the 10 dollars we have.

In our situation, we had some money in a 401k, but literally no money in a savings account of any kind. So now we have two things that we need to accomplish:

  1. We need to pay off our debt.
  2. We need to put some money into savings.

Dave Ramsey’s approach to this is wildly aggressive. He basically says you should get $1,000 into an emergency savings fund, and then divert every remaining penny to paying off your debt as quickly as possible.

David Bach on the other hand goes for an approach of splitting any funds you have almost 50/50, with half going towards savings until you’ve got 3-6 months worth of salary built up, and the other half going towards debt.

Almost 7 months into this process and I’m still not sure which one I side with.

Read More »

Waiting with David Lee Roth for the Debt Payoff Snowball to Start Rolling

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It’s somewhat maddening, because I have to wait until September to make everything happen, but it will feel awesome once those floodgates open. Until then, my tangible results are quite limited and my payoff numbers hardly move at all.

Starting Credit Card Debt (01.01.19): $126,310.77
Current Credit Card Debt: $109,570.87
Total Paid Off: $16,739.90
Income Going to Savings: 2%

I used to read a lot of Stephen King books. When I wasn’t reading horror books, I loved a good Rockstar memoir or something by Patrick F. McManus.

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Tangent: The most difficult book I’ve ever read was Van Halen lead singer, David Lee Roth’s autobiography, “Crazy from the Heat.” That book was like reading the sideways babbling of an insane person.

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Tangent to the Tangent: How messed up is it that I’m not even a full paragraph into this blog post and I have already hit you with my first tangent? AND THEN… I’m not even done with the first tangent and I tangent my own tangent. Lame.

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Tangent (Continued): Seriously though… by the time I finished DLR’s book I wasn’t sure if he was a coked out lunatic who spent far too many nights free-basing this and drinking that and in the process had pickled his brain beyond repair, OR if he was a certifiable genius speaking on another wavelength that I simply couldn’t comprehend.

I’m still not sure.

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These days if I have any free time for reading, I concentrate on financial and self-help books. After all, if I’m looking for a way to scare myself, I don’t need a book about a clown with a red balloon. I just needed to look at my bank statements!

If you haven’t heard of Dave Ramsey and you’re in any kind of situation similar to mine, I highly suggest you check him out. He takes a no-nonsense approach to recovering from debt, and he seems to be a genuinely good human being to boot. One thing Mr. Ramsey often refers to is his “Snowball Plan” for digging out of debt.Read More »

How We’re Digging Out of Debt: The Good, The Bad, and The Ugly

As with many things in life, we didn’t make 1 giant mistake with our finances all at once to get ourselves into this mess. We made 100s of small mistakes here and there, and slowly enough that we didn’t really notice what a bad spot we were getting into.

Starting Debt (01.01.19): $126,310.77
Current Debt: $109,299.87
Total Paid Off: $17,010.90
Income Going to Savings: 2%

So I’ve written a lot about how we got to where we are financially, and now I’d like to talk to you a bit about what we’re doing to correct our situation. This is 100% our story, so please be mindful that the approach we took may not be the best approach for you and your situation. I’m hoping to share just so that you can pick up a few tips along the way.

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I had these co-workers once who thought it would be really funny to take my adjustable desk and rotate it down a quarter of a turn every single day. Each morning before I got in, they would ratchet it down by a small fraction of a turn so that it effectively got just slightly lower every day. The problem was that they did it so slowly, I never noticed. I just slowly adapted with my desk.

The co-workers finally got so frustrated by my lack of response that they came clean and yelled, “WE HAVE BEEN DOING IT EVERY DAY, HOW DID YOU NOT NOTICE?!?!?!”Read More »

The Night I Found Out I Was Broke

Note: If you got notified of this post yesterday, I apologize. It got messed up by the holiday weekend, and I didn’t catch it until it posted early. What follows is the edited and much funnier version!

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Now I was wishing I was the person holding the phone in that scary movie, because I was only moments away from the sweet release of that orange traffic cone.

Starting Debt (01.01.19): $126,310.77
Current Debt: $110,102.44
Total Paid Off: $16,208.33
Income Going to Savings: 1%

Okay, so I’m not broke. It’s a sensational post title to get views because I guess that’s what my life has become. I’m really close to broke, but I’m not broke. I’m still paying my bills, but I just don’t have anything going to savings and a mountain of debt. So maybe I am broke.

In any case…

My wife and I have had an agreement pretty much since we got married 23 years ago, and that agreement goes like this:

I keep my mouth shut and she lets me continue to live inside.

Wait… wrong agreement. Here is the right one:

My wife handles the bills, and I don’t ask questions.

If there was something I wanted to buy I’d say, “I’m going to buy this,” and then she would either say it was fine or it wasn’t fine.

My wife is one of the most caring and loyal people walking the face of the earth, and slowly over time my kids and I began to wear her down. She hated the feeling of being “the bad guy” and telling one of us that we couldn’t have something, so she continued to find ways of saying yes.Read More »

Short-Term Gain, Long-Term Pain

Starting Debt (01.01.19): $124,310.77
Current Debt: $108,427.15
Total Paid Off: $15,883.62

I was fortunate enough to have parents who were willing to pay for my college. In fact, I was fortunate enough to have parents so invested in my college education that when I showed resistance to the idea of attending college, they offered to pay for my college and buy me a brand new pick-up if I agreed to attend and graduate. And you know what?

I still messed it up.

To be fair to me, I was young and stupid and young stupid people make young stupid mistakes. I saw an amazing opportunity for short-term gain to go work for my father making $40,000 a year, which was great money for a guy in his late teens / early 20s.

Tangent #1: Remember that small town I mentioned that I was raised in? Well it was also very common in that town to marry young and start having kids soon after. I wasn’t engaged yet at the age of 18, but I knew I wanted to propose and I at least had the wherewithal to understand that I’d need a job to support a family.

Tangent #2: I did wind up getting married at a very young age. I was 20. I’m also happy to report that my wife and I just celebrated our 23rd year of marriage together late last year! More on us and our children another time.

So after 1 year of limping along in college with lukewarm aspirations of becoming a radio Disc Jockey, I dropped out and went to work for my Dad on his bustling new cattle farm.

Without fully comprehending the ramifications of my decisions at the time, I traded short-term gain for long-term pain:

Short-Term Gain: $40,000 a year at the age of 20! I might even buy one of those new flat screen TVs!
Long-Term Pain:
What do I do for income if my Dad loses the family business.

Later in life I would make this very same mistake again with things like credit cards:

Short-Term Gain: A new flat screen TV in 4 rooms. HD! 4K! IT’S LIKE I’M ON THE FIELD!!!
Long-Term Pain:
23.99% interest rate if not paid off in 12 months.
Spoiler Alert: I didn’t pay it off in 12 months.

Where these types of choices landed me was under a mountain of debt with a bunch of junk that now clutters up my life and very little to really show for the amount of stress that came with the bills. From this point forward, I will be looking long and hard at every decision I make and deciding if it’s going to benefit me and my family in the long run, but it took me almost 25 years to get to this point.

When you’re a kid, you eat candy for a quick buzz and because it tastes good. You do this despite all of the adults around you saying, “You’re going to rot your teeth out, and all of that sugar is not good for your health.” My spending habits were my candy, and even though I had lots of people telling me that I was just going to rot my teeth (literally throw money away in interest) and jeopardize my health (savings and retirement), I didn’t listen. I shoved that stuff in my face as fast as I could as often as I could, and now I’ve got no teeth in the bank and financial diabetes!

That was a terrible analogy that went far longer than it should of without any kind of real payoff, but you get my point.

Also, make sure you floss. Not financially. I’m saying make sure you floss your actual teeth often. You’ll thank me later.