The “Friday Five” are five items to help you in your journey to financial freedom. They might be 5 tips, they might be 5 tricks, or they might just be 5 items of thoughts. In any case, it’s Friday, and I’ve got 5 “things” for you, so here we go!
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As you can see, I’m trying something new with the Friday posts here. I like having some themes that I can dock to, such as the “Thursday Think Tank,” and the “Tuesday Tip Jar.” On top of this, I feel like you kind of don’t want a long post getting in your way on a Friday, and would prefer just to get out there and enjoy your weekend.
So these “Friday Five” posts will be a bit shorter, and get right to the heart of the matter, of hopefully providing you with 5 items you can use to help with your financial health and success.
So here goes! We’re going to kick the first one off with the first 5 things you should do if you find yourself in debt.
Back in January, my wife and I found ourselves in a buttload of debt. If you aren’t familiar with some of these fancy financial terms such as “buttload,” just know that it was a LOT. If you check that fancy little diagram/chart in the right column of this site, you can see we were just north of $126,000 in Credit Card and Student Loan debt.
Even though it took us years to get into this position, it was a smack in the face once we took a hard look, put it all together, and realized just how bad off we were. We didn’t really know what to do first, and just felt an initial sense of helplessness.
Debt can be super-scary, and you may not know where to begin. So let me give you 5 good initial areas to focus on if you find yourself in a similar situation:Read More »
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One of the problems is that the money is so damn accessible now. I’m old enough to remember pre-internet life where if you wanted to put money into savings you had to physically drive your car to a bank and deposit it with a paper deposit slip. Usually while someone stood next to you smoking a cigarette and talking about the latest episode of Magnum PI. If you wanted to withdraw from your savings, you got back into your Trans-Am, popped in an REO Speedwagon cassette, and drove back to the same bank where you filled out a withdrawal slip and took your money out.
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%
[06.27.19 Update] – Just got an email from Marcus saying my new APY is 2.15% and not the 2.25% called out when I wrote the post below. Make sure you check their site for the latest rates before signing up.
I suck at saving money. Growing up I lived in a household where if we made $15 bucks that month, we spent $15 bucks that month. If we made $1500 bucks that month, rather than just spending the $15 that we managed to get by on the month before, we instead spent all $1500. My family didn’t really save money, and for the past 25 years, I haven’t really saved money either.
One thing I want to be clear about is that I do have some money in a 401k account. On this blog I often talk about having zero money in savings, but when I say that I’m referring to my standard savings account.
Part of the problem for me was always ease of access to my savings. I’d put $500 in savings and tell myself I was NEVER going to touch that money unless it was due to some unforeseen emergency. Two weeks later AC/DC would announce a world tour and I’d think, “Well I need to see them. They are getting pretty old, and this will probably be their last tour. This really is basically an emergency.”
Once at the show, I’d buy a t-shirt, food, pay for parking, and of course buy a pair of those light up plastic devil horns to wear. Can’t be the only one in the crowd without plastic devil horns on after all.
So I’d pull that $500 bucks right back out, and have it all spent in a matter of two weeks. The next month I’d start all over again, each time finding some kind of “emergency” to spend things on.
One of the problems is that the money is so damn accessible now. I’m old enough to remember pre-internet life where if you wanted to put money into savings you had to physically drive your car to a bank and deposit it with a paper deposit slip. Usually while someone stood next to you smoking a cigarette and talking about the latest episode of Magnum PI. If you wanted to withdraw from your savings, you got back into your Trans-Am, popped in an REO Speedwagon cassette, and drove back to the same bank where you filled out a withdrawal slip and took your money out.
In other words, it took a fair amount of work to get your money in and out of savings, and thus once it was in, it tended to stay there.Read More »
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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 »
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All of those sleepless nights and feelings of utter terror could have been avoided had I just been a bit more of an adult and realized that I didn’t really need any of that garbage.
Starting Debt (01.01.19): $124,310.77 Current Debt: $107,793.15 Total Paid Off: $16,517.62 Income Going to Savings: 1%
Last week I made a joke about buying Eddie Van Halen’s guitar. I have to come clean and say I didn’t *really* buy that model of guitar (nor did I buy a chunk of a President’s brain in a jar), but I did buy a different guitar. This is the true story of that purchase.
I vividly remember purchasing my Les Paul guitar from Guitar Center. I can almost still smell the new strings as I pulled it down off the wall, plugged into a store amp, rotated the volume knob all the way to 11, and ripped into a power chord. The feel of that instrument in my hands (having seen countless guitar heroes of mine play that exact same model) was one that truly made me feel like a GOD.
With just one chord strummed, I knew then and there I had to own that guitar. It wasn’t cheap and I didn’t have the kind of money it took to purchase it outright, so I (of course) registered for a store credit card on the spot. I was not going to be denied such a beautiful piece of hand-crafted ROCK-N-ROLL!
The dopamine drip was flowing that day and I felt like a million bucks. In fact I felt so good I was even considering taking guitar lessons to actually learn how to play my new purchase!
I was feeling that good.
Years later as the overwhelming stress of six-figure debt was crushing my soul like an industrial jackhammer, I felt like breaking that Les Paul in half. And not in the cool Rockstar way where you slam it on the stage for your final encore as confetti showers from the rafters, but more in the way where you take it into the driveway and run it over with your car while no one is watching.
You see, that guitar represented (I guess the correct term would be “represents” as I still own it) everything I did wrong. It represented me not being able to control my desires and purchasing something that I really couldn’t afford. Sure this one purchase was only $2,000 worth of something I couldn’t afford, but that coupled with the countless other times I had done it had led me to six figures worth of an entire home of somethings that I couldn’t afford.
I look around my house today, and I see lots of little reminders of this type of behavior. Lots of little trinkets and worthless garbage that I thought I just “had to have” at the time, without having the actual money to pay for them.
I’ve had serious health problems as a result of this stress. My blood pressure is through the roof, my sleep cycle is all jacked up, and I know I’ve probably shaved at least a year or two off of my ride on this rock because of the mental torture I’ve gone through wondering if I’m going to have enough money to buy my kid a slice of pizza.
All of those sleepless nights and feelings of utter terror could have been avoided had I just been a bit more of an adult and realized that I didn’t really need any of that garbage.
In a later post I’ll share some tips on dealing with stress, but honestly the best way to deal with stress is to avoid it when possible by making good choices in life.
Oh… and that Guitar Center credit card? It had an interest rate of 29.99%. TWENTY-NINE POINT NINE NINE. I paid nearly a thousand dollars more for the guitar than the asking price by time I paid that thing off.
I did not get the call to join Guns N’ Roses. I didn’t get to go on tour and make millions. What I got was yet another lesson in my journey towards financial responsibility. It took me a long time to get to a point where I can reflect and comprehend just how silly some of those mistakes were, and I hope others can read this and avoid them far sooner than I did. Trust me when I say that the stress of debt is no fun at all.
Side Note: I did eventually learn how to play the damn thing at least, so if you know Axl Rose, go ahead and give him my number please.
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It’s sort of like the folks who decided they were going to fly to the moon. It must have felt like an impossible task. It’s so overwhelming that you almost don’t know where to begin.
Starting Debt (01.01.19): $124,310.77 Current Debt: $107,793.15 Total Paid Off: $16,517.62 Income Going to Savings: 1%
I had a chance to think more about my late Friday post over the weekend, and I came to the realization that I really didn’t celebrate my accomplishment as much as a I should have.
In case you missed it, I flipped the switch and began contributing a whopping 1% to my 401K.
Doesn’t sound like much does it? You’re right.
BUT…
Then I started to look at it this way:
Less than 6 months ago, I had bills that were $3700 dollars more per month than what I was bringing in in income. You read that correctly… I was $3700 bucks upside down every single month.
As you can see by the stat cluster at that top, this means that in less than 6 months not only have I managed to pay off 13% of my outstanding debt, but I’ve also managed to overcome that $3700 a month gap and contribute that whopping 1% to my 401K.
It’s sort of like the folks who decided they were going to fly to the moon. It must have felt like an impossible task. It’s so overwhelming that you almost don’t know where to begin. But then you build your first o-ring and assemble your first flux capacitor, and you start to feel like you’re really making progress.
You know what? I shouldn’t have started that analogy. I don’t know jack about rockets, but I had started typing and it kind of got away from me.
Let me try it again.
It’s sort of like deciding to build a cruise ship. You get your first… uh… rudder?
I know even less about cruise ships. This is not going well.
The point is that we often feel overwhelmed with a massive burden like digging out from under six figures of debt. Yet if I really think about it, not only am I on the right path, I’ve actually put a really good dent in my debt in less than a half a year.
Thursday of last week I felt pretty awful about where I was at, but if I had just taken a moment and really looked at my situation, I would have realized that…
WAIT
It’s sort of like the folks who had to build the Great Wall of China. There they were with a stack of bricks and some glue…
Nope. Thought that one might work, but it didn’t.
In any case take my advice and make sure you take time to properly celebrate victories big or small. You deserve it!
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Digging Out with Dave Johnson 