Where Have I Been?

Wow, it’s been a hot minute since my last post! Four months to be exact. I actually had to go back and re-read it to figure out where I left off back in APRIL (I suck.) So far, not so good with the whole Blogger thing. Guess I probably shouldn’t quit my day job just yet.

In my last post I had JUST become debt-free and was languishing over how in the 6 month process of paying off my $12k in credit card debt, I had managed to accumulate something else… a little bit of excess fluff around the midsection. Well, midsection… hips… thighs… arms… you get the idea. Fluff everywhere.

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Well, I am happy to report that I believe I’ve stymied the flow of Fluff Buildup, and am swinging the pendulum in the opposite direction toward Fluff Reduction. I’m ALSO happy to report that I followed through with the financial goal I laid out last time – save $6,000 by August. Actually, if I may be so bold as to toot my own horn real quick, I *crushed* that goal and saved $7,300 instead! Some thoughts from that process:

  1. It’s actually fairly easy to save a shit ton of money when you’re not throwing a shit ton of money at credit card payments every month
  2. It’s actually fairly easy to save a shit ton of money when you’re not spending $500 a month on crap you don’t need
  3. It’s actually fairly FUN to try to figure out ways to save even MORE money by pursuing alternate means of income when you get to keep that money for fun stuff

As for #3, I find that I’m more motivated to make extra cash through side-gigs now that I am actually getting to *keep* that cash. I sold stuff from around my house and put the proceeds toward my CC balances during my Debt Paydown phase, but over the past 2 months I’ve gotten into what I’m considering a full-blown side hustle. I’ve actually started buying cheap furniture from the used/secondary market (Craigslist, Facebook Marketplace, etc.), cleaning it up/painting it/giving it a facelift, and selling it for about 100x the price I paid for it. I’ve netted over $400 in just over 5 weeks doing this! I’m lucky because my parents live a mile away from me and are both retired. They’ve been helping with this little side-gig (riding along for pickups, helping with some of the painting and stuff, etc.) and it’s been awesome to spend more time with them while making some extra cash. It’s been great, even if my dad does call the “business” Painted Trash, Inc. He’s not totally wrong.

The Craigslist side-hustle has me extra motivated because all this money is going into my “fun” savings account, meaning it’s separate from my growing emergency fund and can be used for guilt-free spending on big ticket items like vacations, furniture, etc. I’ve decided this is a nice compromise to keep myself from feeling deprived while trying to maintain relatively frugal spending habits on a day to day basis – if I’m going to spend on something big and unnecessary, that’s fine. I just need to work a little harder in my downtime to pay for it. That also makes it a lot easier to prioritize what I do or do not actually want to spend money on and avoid impulse buys. For instance – is this new couch worth the 17 dressers I’ll need to flip to pay for it, especially since that work will all be done in my “free time”? (answer: yes, and I’ll be buying it on Black Friday BITCHHH!)

Along with my new Craigslist racket, I’m keeping my cash savings rate high from my *real* job, too. I’ve been averaging $1,200 per month in cash savings from my full time job, and all of that money has been going straight to my Emergency Fund. I want to get that to $10,000 and then I’ll divert that money toward my car loan. Projections right now have me crossing the $10,000 threshold in early November. $10,000 will be 4 months of bare-bones living expenses, which I feel pretty good about.

So, where does all that leave me for my August check-in?

  • Credit Cards: $0.00 (yay)
  • Cash Savings: $7,300 (yay!)
  • Car Loan: $11,945 (blegh)
  • Monthly Spending: $602 (shit)

God, that monthly spending is GROSS. Granted, that includes any non-essential spending (everything outside bills, groceries and gas), so it covers anything from dining out to clothing to home décor items to vacations, but still. Gross. During my aggressive debt paydown phase I was running at about $300 per month, and even THAT was more than I *really* needed to be spending. I’m up to double that now! *kicks own ass*

The car loan is also gross, but I’m not as upset about it as I used to be. I will have it paid off by mid-2019 (at the latest) and will keep this car until the engine falls out on me… should be 10-15 years easily. I know cars are not an investment, but I’m choosing to look at mine as one, and will take meticulous care of it in the hopes that I will get many years of comfortable, reliable transportation out of it. The $10K EF goal should be reached in early November, and then every dollar that was previously going to the EF will get siphoned toward the car loan. Between almost $1,500/month in payments ($219 monthly payment plus $1,200 re-routed savings to accelerated payments) and some additional money from my annual bonus in January, I’m hopeful that the loan will actually be dead by March.

As for my next goal (hit $10,000 in the Emergency Fund): it would be sooner, but I’ve got a big “surprise” expense in September that I’m actually super excited about–I’m having the exterior of my house painted. It’s been a long time coming (and necessary… the joys of home ownership!) so I’m trying to look at the bright side instead of dwelling on the $2,000 I’m about to spend.

  1. This is necessary maintenance to keep my siding from deteriorating. Avoiding this would be penny-wise and pound foolish since replacing the siding on my house would be way more than $2,000 (like, at least 10x more)
  2. This has kicked off some other long-neglected items like replacing some rotten wood, etc. My dad has been helping with this so it’s been super cheap so far, I’m learning new skills, and I’m getting to spend quality time with my dad doing something we both love—home improvement projects. Win, win, win.
  3. I LOATHE the color of my house now and can’t wait for it to look adorable like a postcard (yes I’m obsessively scanning Pinterest every night for inspo)
  4. I actually have the money to pay for this, have budgeted for this expense, and am prepared for it

Phew. That’s a pretty good place to be. I found myself thinking I should open a new credit card and pay for these expenses to get some cash back, but I think that might be a little too fancy for where I’m at in my journey. Probably best to just stick with the cash for now.

Alright, that’s probably all I have for now. Maybe my next post can be about my house painting! I always enjoy reading about people’s home improvement projects and seeing before and after pics. Want to see a pic of my ugly exterior paint color now?

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What even is that color? Is it yellow? Is it beige? It’s like earwax.

So yeah, maybe I’ll post an after pic here. Or maybe I won’t post again for another four months.

Just kidding. (Maybe.)

 

Pay Off Your Debt and… Get Fat??

I’ve mentioned before (and am not nearly the first to have drawn this parallel) that the experience of paying off my credit card debt was a lot like the experiences I’ve had dieting. Trying to drop a bunch of dead weight (sometimes literally) in search of that feeling of freedom and health, whether physically or fiscally.

The process of accumulating debt is a lot like accumulating excess body fat, too. Many of us eat in excess or binge-eat or gorge ourselves on sweets in search of something: filling a void, soothing ourselves, making us feel better. The same can be said for overspending. Whether you’re stuffing your face full of Olive Garden breadsticks or stuffing your cart full of clothes and shoes, the end result is the same… you’re accumulating excess.

Calories or cardigans, take your pick.

I will admit, I had noticed my pants starting to fit more snugly over the past few months, but I could barely spare a thought for it as I trudged along in my pursuit of debt freedom. “I’ll deal with that later,” I told myself as I stuffed my shirt inside my jeans to keep the button from digging into my stomach. (Don’t act like you don’t know what I’m talking about.)

Imagine my [complete lack of] surprise when I stepped on the scale last Friday to discover that over the past six months, I have gained a whopping SEVENTEEN POUNDS!

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How could this have happened?? This whole time I thought I was getting my shit TOGETHER, while I was actually letting some of my shit fall apart. This doesn’t make any sense!

Or… does it?

Overeating and overspending are both obsessive or addictive behaviors. Is it really any surprise that when I buckled down on my spending and finally turned off the Feel Good Faucet that was my wallet, my subconscious looked for other ways to experience that same sense of indulgence?

You stuck to your budget, you deserve a treat,” I’d tell myself at the grocery store, fully focused on keeping my bill under $75 while reaching for a Reese’s cup in the checkout line.

I can eat this all week and it averages out to less than $2 per meal,” I’d tell myself as I scooped full-fat ricotta cheese into a heaping pan of baked ziti.

I’m so mentally exhausted from being focused on my finances, I just don’t have the energy to focus on food,” I’d tell myself as I realized it had been three days without a vegetable anywhere near my [ever-growing] gravitational pull.

That sneaky little addictive brain of mine. She knew what she was doing.

The good news is that while gaining seventeen pounds isn’t exactly something to throw a party over, it’s also not the end of the world. I’m trucking along toward my next financial goal (save $6,000 by August), so now I just have another goal to add to my list. I’d like to lose these seventeen pounds.

My Debt Weight.

Besides, I already lost the literal debt weight… almost $12,000 of it. What’s a measly seventeen pounds compared to that?

Outstanding Balance: $0.00

 

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This day has been a long time coming, but has only been a real possibility since last November when I discovered the FI blogosphere. Like I’ve discussed in previous posts, I had been feeling more stressed and more anxious about my financial situation as 2017 progressed. I had started making some small changes in my own mindset and my budget as far back as the spring, but it wasn’t until the fall that my stress and anxiety reached a boiling point and I started digging in and getting serious.

It was discovering this post by MMM that kicked my ass into high gear, and over the past five months, I have reread that post many times to keep myself in check. As my debt started shrinking, I found my brain trying to fall back into old patterns.

My brain: My balance is down to $3,000! I could pay that off easily if I wanted to… A $100 purchase doesn’t really matter…

Me: time to re-read this post

My brain: Okay but now my balance is down to $2,000! That’s pretty much one paycheck! And I haven’t had my hair done in seven months–

Me: read this fucking post again

My brain: $500! FIVE HUNDRED DOLLARS IS NOTHING AND I’VE BEEN THINKING ABOUT PLANTING A WEEPING CHERRY IN MY BACKYARD FOR YEARS SO IT FEELS LIKE I COULD REWARD MYSELF BY FINALLY–

Me: READ. THIS. FUCKING. POST. AGAIN.

It’s a struggle, y’all. What can I say. Even though I find myself lusting after things less and less, and I have definitely shifted my perspectives from mindlessly wanting things that I don’t have to loving and valuing the things that I do, I still find myself trying to fall back into old ways. I suppose it will take longer than five months to deprogram twenty-eight years worth of learned behavior.

Guess I’ll just leave that post bookmarked for now.

Today is a big day, though. I am officially credit card debt free. Damn, it feels good to say that!

I paid off $11,700 in credit card debt between November/December (start date is a little iffy) and April. Five months. $2,340 a month, averaged out. That surprises me. Where did all that money come from?

  • Annual bonus (January): $5,386
  • Side-hustle income: $1,900
  • Regular income: $4,000
  • Miscellaneous: $450

I was basically putting $1,000 a month from my take-home pay toward this debt, plus I used a huge chunk of my annual bonus, and I used *all* money from my (sporadic) side-hustle (I plan to talk about that eventually), and I used some tax refund cash, and… I sold some shit on Craigslist.

Looking at it broken out like that, I am surprised for other reasons, too. None of that was particularly hard to do, and none of that was stuff that I couldn’t have done in years prior. I’ve had the $1,000 a month hiding in my take-home pay for years, I was just spending it on other stuff (read: FOOD AND BEER.) I made $2,300 from my side-hustle in 2017, but don’t know where it went. I got a slightly smaller bonus last January (by about $1,500), but I spent it all on a trip to Mexico and other stuff. Instead of selling stuff on Craigslist, I bought other things I didn’t need.

It’s ridiculous when you sit down and look at it that way, because the past 4-5 months haven’t looked any different than the first 4-5 months of 2017. The only thing that has changed in 2018 is my attitude and my choices. The choice was there to spend that money or to make that money work for me, and this year I decided I wanted to put it to work. That choice was there last year, too. I just chose a different path. I chose the same path that I had chosen in 2016, and in 2015, and in 2014, and though that path took me to the same place every single year–financial instability, increased debt, increased stress and anxiety–I was still inevitably shocked and angry when I wound up at the familiar end of it. Every year I chose to spend instead of save, and every year I was shocked when another 12 months went by and I was still in debt. What’s that saying about the definition of insanity?

If you sat down and compared your financial situations year over year, how do they stack up? Most of us don’t experience wild fluctuations in income on an annual basis, so chances are, they look similar to today. What goals did you have last year? Did you accomplish them? If the answer is no, take a look and see why that is. Could it be as simple as the equation I posted above? $11,700 spent will leave you still missing that $11,700, whereas $11,700 saved will get you to your goal.

All you gotta do is pick the path that takes you there.

As for what’s next… I think I’m going to chill for a sec and just breathe. I’m tired, y’all. I feel like I’ve been sprinting for five months and your girl is OUT OF SHAPE. My plans were originally to jump headfirst into tackling my auto loan, but I think I’m going to spend a little time breathing instead. This newfound freedom, this feeling of not having the albatross of credit card payments hanging around my neck… this feeling feels good, but this feeling is new. There’s still a little bit of anxiety there, like I might wake up tomorrow and there will magically be thousands of dollars back on those cards, needing to be paid.

I think I need to take a minute and reset. I think my priorities have shifted and I want to ensure that this feeling I’ve caught sticks around. I want to ensure that I never need to rely on credit cards again, and to do that, I need to feel more secure in my emergency fund.

I’m going to spend some time breathing over the next few months, and I’m going to sock away the cash I’ve been putting toward these credit cards into my emergency savings. I also need to take care of some stuff I’ve been neglecting while I’ve been putting all my dollars toward my debt (I should probably get a haircut for the first time in a year… the split end situation right now aint good, fam.) By July, I should have 3 months of living expenses ($6,000) saved. I think that’s going to give me the peace I need to switch gears again and tackle my auto loan head-on.

But as for today, I think I’m going to kick back, obsessively check my $0.00 balances, and drink a big, cold beer.

The Hard Yards

I’m currently putting in the hard yards.

The hard yards are the unglamorous, unglorious yards you have to conquer in order to reach the endzone. The hard yards happen when you’re backed up at your own five yard line, and with the wrong play call, you could end up face down, ass up in your own end zone with 2 points clocked against you.

The hard yards are not really any fun. You can celebrate every now and then if you make a little progress and get yourself a first down, but you might do a metric shit ton of work only to be beaten backward and have that sweet gratification delayed or, worse, erased. The hard yards are exhausting and there’s no cheering and there’s no spiking of the ball, no doing the robot in the endzone as the scoreboard flashes your name.

I’m currently putting in the hard yards with my finances.

I’ve made a ton of progress. A METRIC SHIT TON OF PROGRESS. Thousands of dollars in credit card debt gone. Poof! But there is still more to go. And then tackling my car loan. And though intellectually I know this isn’t true, it still feels like every dollar I pay on those credit cards is a dollar lost, not a dollar saved. That has been a real eye-opener, as I think it speaks to the corrosive nature of credit card debt on your psyche. After all this time and energy and effort and research and enlightenment, a part of me STILL feels like it’s not my money, so why am I paying for it?

A part of me feels like I’m putting my hard-earned dollars into a black hole of nothingness. It doesn’t feel like I’m spending my hard-earned dollars on things that I’ve actually bought and paid for, because these purchases happened so long ago that I barely even remember them. I am literally paying off lunches that I bought in 2012. It’s like there’s a big hole in the ground, and I’m just throwing my hard-earned money into it until it gets filled up and it’s gone. Thousands and thousands of dollars.

My brain knows this to be a lie, but that’s the mental game that debt plays on you. It’s how debt tricks you to keep coming back for more, to prolong the payoff process, to stop “wasting” all of your money by throwing it into this enormous pit. Just throw a little in, instead! The minimum! Who cares if the pit gets a little bigger. It’s just a little bit. You’ve paid off so much, you deserve something nice. You’ve been needing a new sofa for years. Maybe it’s time to pull the trigger! After all, you just paid off almost twelve thousand dollars in less than six months. You could pay off that couch SO EASY if you wanted to! Just buy it!

Despite my trash can of a brain trying to trick me into not staying the course, I’m trucking along. With each paycheck I dump hundreds of dollars into that pit, and I see the level of the dirt rising. I’m closer to the top than I was, but there’s still some hole to fill. The closer I get to the top, the more tempting it is to slow down. I won’t do it. I’m mad at that hole. Fuck that hole. I’m ready to walk on level earth, again!

It is frustrating, though. I’m proud of the work that I’ve done, but there’s much more work to do. I’m ready to celebrate, but I feel like I can’t. No one is cheering me on, no one is congratulating my progress. It’s just me, my spreadsheet, and a whole lot of hard yards in front of me.

Milestones

Today is a big day for me.

Today is the first day since 2013 that the balance in my savings account is greater than the balance owed on my credit cards.

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It has been a really, really long time–five years, actually–since I’ve had enough cash on hand to pay off my cards in full. I won’t be doing that as my cards are at 0% interest until November and I don’t want to clean out my savings at the moment (I wouldn’t want something to happen and need to rely on those recently paid off credit cards to bail me out), but it still feels good to know that if I wanted to or needed to, I could.

My credit card debt is scheduled to be paid in full on April 27, 2018. Here’s a look at the chart I use to track my liquid savings vs. my consumer debt. The vertical green line is today.

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When that blue line hits zero on April 27, I will switch gears and dive headfirst into tackling my auto loan–that’s the red line up top. It’s going to feel good next January when this chart is only capturing positive cash buildup!

This journey I’m on is a hard one, and the emotions that go along with it are… strange. I’m working my ass off on this thing, but I’m not telling anyone about it. No one. Not my family, not my best friends. Okay, I’ve told my dog, but he’s great at keeping secrets. It’s such a private battle and on milestone days like today, I want to shout from the rooftops about my success, but I feel trapped and silenced and alone in this struggle.

My brain keeps trying to equate the process of paying off debt with the process of losing weight (I’ve got a post in mind for that… more to come later), but even that isn’t really a true analogy, since successes achieved in losing weight are obvious to the people around you. If you work your ass off at the gym and lose 50lbs, people are going to take notice because your big burly muscles are right there in front of their faces, and they’re going to praise you for your hard work and dedication. That praise can then be turned into fuel that motivates you to keep going, and keeps you focused on your journey and your goals. It’s visible progress.

No one can see that I’m paying off debt, since no one can see my bank accounts. Well, I suppose the two readers of this blog can see it, but my friends and family and coworkers and people in my real life can’t see it. And if we’re being honest, paying down debt isn’t something most people want to brag about, because there’s shame that accompanies the pride. I mean, look at my graph above! I’ve paid off $8,634 in credit card debt since January. That is something to be proud of. But there is also shame in that statement.

Great news, guys! I’ve paid off $8,634 of my $10,719 credit card debt since January!

That’s great and all but oh my God, you had a $10,719 credit card balance to begin with?

That’s great and all but oh my God, you still have a $2,085 credit card balance?

In order to be proud of paying off huge amounts of debt, you have to admit that you fucked up and got yourself into huge amounts of debt in the first place. Not a super glamorous admission. It’s like accidentally shooting yourself in the face and then bragging about what a great job you did at stitching your eyeballs back into your skull. What kind of idiot shoots themselves in the face to begin with?

I think the shame we feel with our debt is rooted in the feeling that we lack self control (and again, my brain goes back to the emotions that accompany weight loss/weight gain… but alas, for another day.) There is shame in the thought that we can’t control ourselves enough to keep ourselves from spending thousands of dollars that we don’t have and, even worse, that we maybe can’t pay back. But the sad reality is that most of our country is in this same boat and knows this same shame, and until we can be open and honest about what got us all here, and until we can be open and honest about our struggles and successes in pulling ourselves up and out of this pattern, there can’t be any real change. We should be able to talk about this freely in the hopes that we can open up some real discourse about why every person in our country (regardless of socioeconomic standing, religious or political beliefs, racial or ethnic demographics, etc.) is caught in the grips of compulsive consumerism. In a time when it seems we are more divided as ever, this is one sad thing that unites us all. At every level, we are overspending. At every level, we are in trouble.

Today has been a milestone day for me on my journey, and I plan to bask in my success privately. Someday I hope I can work up the courage to open up about my journey to the people closest to me, as I’m sure most of them can relate to my situation on some level, can speak to the toll it takes on you emotionally, and share the desire to finally be freed from the grips of debt. We should all feel empowered to talk about this openly.

Says the girl patting herself on the back on her anonymous blog.

Investing Advice for Dummies Like Me

I’m a product of the South Carolina public school system, which is nearly always (depressingly) ranked among the 5 worst public school systems in the country. We hang out near the bottom of the list with states like Mississippi and Oklahoma. It’s sad down here, y’all.

I bring this up because the abysmal state of public education across much of the country enrages me, especially when I think of the lack of valuable lessons that we teach to our high school students specifically. I firmly believe that every high school should have mandatory financial management classes for juniors and seniors that cover the basics of budgeting and borrowing money and how compound interest works, to the more advanced concepts like purchasing a home and investing for your future.

(Note: this isn’t a slight against public school teachers… I know many and love/respect them all. But you can’t make chicken salad out of chicken shit, and most of what they have to work with is chicken shit.)

I remember playing a “stock market game” in my senior Economics class, but it was more of a joke than a true lesson as all of us tried to one-up each other by choosing the stupidest investments possible. We all lost all of our money and no one cared. More importantly, no one took anything valuable away from the exercise. We all went on to graduate, and most of us went on to college, and most of my fellow grads took out tens of thousands (or more) in student loans to pay for their educations, thinking of those loans as investments and, as a result, hugely impacting their future financial situations.

We deserved more than that shitty 55 minute “stock market game.” We deserved real, true lessons and discussions around what it means to take on $100k in debt, how that debt is not the same thing as a true investment, and how if you play your cards right you can make your money work for you instead of against you. In 2007, we were graduating high school with no debt and the future at our fingertips. Just over ten years later and I look at us, most of us with student loan payments on top of credit card payments on top of car payments, and scarcely any of us with a positive penny to our names.

All with jobs, working hard, and yet so underwater that the thought of investing money in any significant way to build wealth seems absolutely fucking ridiculous.

I’m slightly more well off than most of my friends. I have no student loans (thanks, mom and dad) and a higher paying job than most. I also do have some (meager) money to speak of. I started with my company in 2012 at the ripe old age of 22, and I opened my first (and, until recently, only) investment account that same year. My company offered 401k matching at 100% of the first 3%, and 50% of the next 2% contributed. I had no idea what that meant, and at 22 years old, I didn’t much care about an account that I wouldn’t be able to touch until I was 65. Luckily my father told me (in no uncertain terms) that I would be contributing the 5% needed to take full advantage of my company match, that I should keep it simple and start out at 100% to the S&P 500, and that I could “reevaluate things” in a few years time.

He told me that when it comes to investing, set it and forget it.

I didn’t really want to, and it didn’t really interest me (I would have rather had that 5% in my checking account to spend on things like booze and clothes), but I listened to my dad because he’s a smart dude. I took his advice about setting it and forgetting it literally and until 2017, my 401k rarely crossed my mind. I actually wasn’t even sure how to log in and check my balances. I had forgotten what the S&P 500 was, I didn’t know I should care about fees (or how much those fees should be) and I knew the term “diversify your portfolio” without really understanding what that meant.

At 28 years old, my understanding of investments could be summarized by the following:

  1. You should contribute to your 401k at the maximum amount to take full advantage of your company match, because that’s free money
  2. Your money grows in the stock market unlike in a regular old savings account
  3. You might lose money investing
  4. Investments are for retirement and retirement only

I genuinely thought that outside of having a 401k, people were “saving” by putting money into a savings account at a bank. I couldn’t understand how anyone could amass enough savings for something like a 20% down payment on a home or paying for your kids college by dumping a few hundred bucks into a savings account each month. I didn’t understand the full advantages of investing, all the way from outrageous tax benefits to the beauty of compound interest.

Probably should have paid more attention during that “stock market game.”

As I mentioned in my last post, I’m taking 2018 to pull myself out of consumer debt completely by paying off my credit cards and auto loan. The goal is that in 2019, my only debt will be my mortgage, and I can get far more aggressive about my savings rate and more savvy about my investment strategy. Since there’s not much I can do for the next ten months while I throw every available cent at my debt, I’m trying to use this time to learn as much as I can about how I should be investing my money and in what order. I’m reading Get Rich Slowly and I’m about halfway through the Stock Series by JL Collins, and so far my initial thoughts are:

Why is investing so fucking confusing?

I feel like I need an Investing for Dummies book that explains to me like I’m five years old all of the various terms and phrases that I keep encountering. It feels like every page I’m having to stop and Google “what is a bond” or “is a Traditional IRA the same as a 401k” or “what does MAGI stand for” or “how do I calculate my MAGI?”

Painful . Tedious. Embarrassing.

So if you’re sitting out there reading this, scratching your head and also wondering how you’ll ever be able to make informed decisions about why having money in an REIT is better than stocks or whether an REIT is the same thing as stocks or what the fuck even is an REIT, this post is for you.

After much hair-pulling and eye rolling and fingers cramping from the incessant Googling, here are my Investing Tips for Newbies Like Me:

  1. If you’re a millennial like I am and you’ve got (hopefully) a lot more time to invest (as opposed to someone at the cusp of retirement age trying to pack a lifetime’s worth of saving into 5 years), you can be more aggressive and be more stock-heavy in your portfolio since the returns are better & you have longer to recoup any losses
  2. Index Funds are the best way to go to maximize returns over a long period of time due to low fees and consistent growth with moderate risk thanks to owning portions of a metric shit-ton of companies. Think about putting all your eggs in one basket, and then instead of eggs think about thousands and thousands of dollars, and then instead of a basket think about Napster or Enron, and understand why having lots of baskets for your eggs is the better option
  3. Everyone in the FI blogosphere gets hard for the Vanguard Total Stock Market Index Fund (VTSAX) but if you’re like me and you’re just hanging out in company 401k land for now, that fund might not be available. Look for funds that track the S&P500 and go with those, they’re almost as good and also cheap
  4. Social Media is not your friend… when you log onto Reddit and see a post about people making crazy money by investing in the latest & greatest Whatever It Is, just close the app, put the phone down, and slowly back away. In the words of my dad, set it and forget it
  5. If you’re happy with your 401k and plan on staying with your company for a while, look into Roth IRAs next and that can be where you save some post-tax cash for things like down payments, etc. Your 401k contributions are tax deductible so it’s a good idea to dump money there, but principal contributions to Roth IRAs can be withdrawn without penalty at any time
  6. If you are on a HDHP with your company and have the option for an HSA account, for the love of God, open one. It’s like an IRA on steroids since you get tons of tax benefits (you contribute pre-tax money, growth is tax free, you never pay taxes on withdrawals for medical purposes, and if you withdraw for non-medical you’re taxed the same as any other IRA). The HSA is your friend
  7. The money you’re putting into your 401k doesn’t have to stay untouched until you’re 65. Wild, right? Smart People (not me) figured out ways for you to access those funds sooner than that (like the Roth Conversion Ladder) if you kick ass and are able to retire before then

This is all going to seem very No Shit Sherlock to any investment savvy folks reading this, but it has taken me months to amass just the knowledge in those seven points above. This stuff is complicated, especially for someone completely new to the scene, and while jumping headfirst into books and blogs and forums will definitely teach you a lot, it’s also really overwhelming if you don’t have some of the basics nailed down.

 

 

Setting Goals & Not Fucking Them Up

I just started reading Get Rich Slowly by William Spitz. I bought it used for $5 and am thoroughly enjoying the previous reader’s chicken-scratched notes in the margins of the pages (though a quick flip to the end leads me to believe that they gave up about halfway through. #relatable)

Seeing as I’m still mostly in the paying down debt stage of my journey rather than the accumulating wealth phase of my journey, I figure that this is a good time to bulk up my knowledge to prepare for the next step when I’m ready to take it. Paying down debt is necessary, but I have to admit, it’s boring AF.

Until recently, my knowledge about investments and how to manage my portfolio was… limited. My dad made me set up my 401k when I started working for my company in 2012, and I’ve been contributing 5% (bumped to 6% in January of 2018) since then. It’s 100% allocated to the S&P 500 and has been since I opened it. I’ve never even considered diversifying, and even if I would have considered it, I would have had absolutely zero clue how to do that. I’ve thought about opening a Roth IRA, but didn’t really understand what that was or why I should do it other than “it’s what you’re supposed to do.” I contribute to my HSA account, but I’d always just considered it a true health savings account rather than any type of investment vehicle.

So much wasted time. Womp womp. Better late than never, I suppose. Enter: a bunch of light bedtime reading about healthy diversification, risk:return calculations, and lotsof math.

The very first chapter of Get Rich Slowly talks about how setting goals is the inaugural step to any quality financial plan, as it’s impossible to plan your finances without knowing what you’re planning for. Once you figure out what your individual goals are, you can make calculated decisions about your savings and investment strategy that will best yield the results you seek. I mean, no shit, right? And yet I needed to spend $5 on this book to have that concept hit home. Facepalm.

I love a good list, and I love goals (as you know, thanks to me yammering on for days in my last post about what a goal-driven person I am), so I was chompin’ at the bit to get started. As I was working through this, I realized that I actually have 2 lists: one that is more financial initiatives (what am I trying to accomplish, big picture?) and one that is more financial goals (actionable items that will help me achieve my initiatives.)

Starting with financial initiatives, when I think about what I’d like to accomplish:

  1. Peace of mind and sense of financial security
  2. Ability to “retire” or work at will long before I’m 65
  3. Ability to indulge occasionally (travel, home improvement projects, etc.)
  4. Ability to give back to my family/friends/community in meaningful ways

These four things could obviously be broken down into a billion subcategories, but I’m going to keep it high level for now.

So now that my initiatives are defined, I need to think more closely about how those initiatives are achieved. To achieve these, I need to set some goals.

In 2018, I hope to:

  1. Get out of debt (pay off credit cards and car)
  2. Build a 3 month cash emergency fund ($6,500, meant to cover job loss, etc.)
  3. Build a $4,000 “sinking fund” (meant to cover emergencies with home, car, etc.)
  4. Maximize pre-tax investment opportunities (HSA and 401k)
  5. Open additional investment accounts (Trad or Roth IRA)

If I am able to reach these five goals in 2018, I will be setting myself up to enter the wealth accumulation phase in 2019. 2019 also happens to be the year I turn 30, and as much fun as it sounds to spend my 30s a slave to credit card payments, car payments, and stress about my savings accounts, I’d rather spend my thirties doing whatever the fuck I want while my finances work for me in the background.

It feels good to have some high level goals laid out, but ultimately the thing I’m chasing is the same thing most people are chasing: financial freedom. Financial freedom would allow me to achieve all four initiatives that discussed, and the five goals I listed for 2018 are ultimately just laying the foundation for hopeful financial freedom in the not-too-distant future.

As far as what true financial freedom looks like for me, I’m not yet sure. If I try to envision myself in the future, when I’m hopefully financially independent, I see:

  • Peace of mind that no matter what happens, I am able to take care of myself and won’t need to rely on anyone or anything to bail me out
  • Options to spend my time doing things I’m interested in and passionate about, either for fun or for a paycheck
  • Not being chained to a specific job or industry due to dependency on maintaining a certain level of income
  • Spending more quality time with those I care about
  • Devoting time to hobbies and learning new things

 

In this new life, I get to make decisions that feed my soul and allow me to grow as a person. I get to steer my life in whatever direction I want instead of feeling like I’m being steered by outside forces, just reacting to things as they happen to me. I’m in total control and I’m free.

For now, this feels like a fantasy because I don’t have a real, tangible gameplan to achieve this lifestyle. The reality is that this life is within my reach, and the gameplan is right at my fingertips just waiting to be drawn up.

So I’m left with one major question: how do I get there? What are my magic numbers that I need to be this person, living this dream life?

After reading (ten billion) financial independence blogs, it seems like most people define financial independence as when you reach at least 26x your annual expenses or the 4% rule. For me, that number is right at $700,000. My net worth is currently $40k. Dreamland seems reeeeeeeeeeally far away at the moment. More like Neverland.

Get Rich Slowly is promising me that I’m going to learn all the lessons I need to make smart investments that will ultimately get me to my goal. Hopefully between bulking up my understanding of various investment options, reducing my overall spending, and increasing my savings rate as much as possible, I’ll be able to reach that number long before I start going gray and relying on a pill organizer.

For now, I’m keeping my focus on hitting my 2018 goals. If I can get my business handled this year, then walking into 2019 will be like turning a brand new page. Actually, fuck that, it’ll be like reading a NEW DAMN BOOK. Actually, fuck THAT, I won’t be walking into 2019, I’ll be SASHAYING into 2019 like a QUEEN. That’s the feeling I’m chasing. Becoming a FINANCIAL QUEEN.

Without the ball and chain of my consumer debt weighing me down, I should be able to truly save up to (at least) 58% of my income. And that’s not including raises or bonuses (which has historically been about 20% of my salary between the two.) If I use this year’s raise and bonus info, my savings rate could look more like 67%.

That’s a far cry from the 5-6% I’ve been holding steady at since 2012. Now I just need to Not Fuck It Up.

Report Card: January 2018

I have always been a goal-driven worker.

In school,  I was never a particularly devoted student. I didn’t have to be. I was gifted in the sense that academics came easy for me and I could get by—or, dare I say, excel—by doing the bare minimum. In high school I would attend classes, take some half-assed notes, study very little, and get As and Bs. These bad habits continued into college where I would frequently skip classes to sleep or hang out with friends, spend the night before the exam cramming my brain with three weeks’ worth of material, and still get As and Bs.

I realize that anyone reading this is probably feeling very “Go Fuck Yourself” right now, and rightfully so… but I don’t say this to brag. It’s just that schoolwork didn’t motivate me. I didn’t really enjoy being a student. I wasn’t excited about learning about ancient British literature or how to solve a geometric proof or whatever. I constantly found myself asking what the real-world applications of those lessons were. When in my REAL LIFE would I ever need to know what terminal velocity is, and why wouldn’t I be able to look it up if I did? Of course, I realize now as an adult that the lesson itself isn’t really the lesson… getting an education teaches you how to think critically, problem-solve, and analyze on a larger scale than what my fifteen year-old brain understood. But what can I say, kids are idiots.

Anyway, I digress. Moral of the story: I didn’t love school. I did, however, love report card time.

I wish I could say that I am the type of person who doesn’t need validation from others to feel good about myself, but it’s just not true. I LIVE for it. I loved report card time, because report card time was the tangible evidence of how SMART I was. Look at all those good grades! And even now, in my professional life, I crave validation from my peers and my superiors. In some alternate universe, I am living a happy life where I’m not bitter about the two years with my company (out of six!) that I wasn’t on the very short list of nominees or winners for an end-of-year performance driven award, but alas. We are in THIS universe, and those two years still haunt me, and the thought of being left off that list in the future is motivation for me to work harder and better than ever. The same holds true with the promise of raises, bonuses, and promotions.

My life experiences have shown that if you dangle a carrot, I will give chase.

Like I said, I wish I wasn’t this way. I don’t see this as a desirable characteristic for a person to have. Personally, I’m much more attracted to people who scoff at things like meaningless corporate awards, but it’s just not who I am. I’m a hoe for validation and praise.

The way I see it: when you realize you’re in possession of an Undesirable Trait like this, and when that Undesirable Trait proves to be something that is nearly impossible to correct (as it’s fundamentally a part of who you are as a human being), you can either try to resist and live forever in denial that this is really the piece of shit person you are, or you can embrace it and figure out how to weaponize your Undesirable Trait to your advantage. I prefer option 2.

The reality is that I probably can’t change the fact that I’m a piece of shit who chases pointless awards and pats on the back, so instead I choose to use it to my advantage. Who cares if that’s what it takes for me to do my best work? I just need to be honest with my boss about that fact, and we can set up a very visible, achievable “ladder” of goals for me to endlessly pursue. I am happy as I run after bullshit made-up milestones, and my company gets my best foot forward all the time. It’s a win-win.

So what does this long, rambling stream of consciousness have to do with achieving financial freedom?

Same concept. A mountain of empirical evidence has shown that when I don’t break my financial goals down into small, achievable milestones, I get overwhelmed and lost. I lose motivation. I slip back into old ways. I give up. I have examples:

  • Exhibit A: when I spent a year paying off a credit card and to reward myself, I went out and financed a brand new dishwasher (12 months at 0%!!!)
  • Exhibit B: when I started chipping away at my mountain of credit card debt but got overwhelmed by how much it was so I took a trip to Mexico instead (increasing my balances by $1,000)

Ya girl needs goals to keep her motivated. Ya girl needs goals that she can ACHIEVE CONTINUOUSLY to make her feel good about her progress and keep her on track. Ya girl needs small, realistic goals or she gets distracted by shiny objects and next thing you know she’s swiping her card at Nordstrom Rack because what’s another hundred bucks when you’ve got $11k to go?

The success I’ve had over the last few months (paying my credit card debt down from $11,700 to $4620 $3645!) has been in large part because of small, achievable goals I’ve set, and being able to check those boxes as I’ve reached them.

This probably isn’t shocking to most people. After all, if you look at $11,700 in credit card debt from a distance, it’s really fucking overwhelming. How could I ever pay that off, short of an unexpected windfall? And who wants a windfall, anyway? Usually a windfall means someone close to you kicked the bucket. I hate this debt, but not that much.

Looking at $11,700 from a distance is daunting, but if you break that mountain down into easier-to-climb levels, it becomes easier to see how climbing it might actually be achievable. Those levels might look like cutting out some monthly luxuries, tapping into (more like draining all of) your Christmas bonus, or selling your extra shit that’s just cluttering up your house. And each time you conquer a level, you get yourself a pat on the back.

The other half to this equation is accountability. That’s the other great thing about report cards… it’s right there in black and white, permanent and unavoidable, and it goes on your PERMANENT RECORD *dun dun dunnn.* Getting a report card, good or bad, keeps you accountable. You either need to maintain the level of success you’ve been working at, or you need to get your ass in gear so your next report card isn’t so fucking embarrassing and your mom doesn’t take away the keys to your 1993 Buick Roadmaster station wagon for a month.

So, I’m going to be issuing myself report cards. Monthly, quarterly, whenever I feel like it. I think this will keep me accountable toward reaching my goals while also satisfying my need for validation.

Here’s the grading scale I’ll be using:

  • A+ :  just quit now, no reasonable room for improvement
  • A   :  you killed the game, be proud of yourself
  • B   :  good job, but some room for improvement
  • C   :  not terrible but I’ve had better
  • D   :  sucked pretty hard what happened?
  • F   :  trash, garbage, epic failure. total and complete dumpster fire

I think there should also be some categories each month that get graded. I’m reserving the right to change these in the future but this should be a good start for now.

  • Debt Management (paying off & managing my consumer debt)
  • Food cost & food waste (eat & cook what I buy, keep restaurant expenses low)
  • Discretionary spending (shopping, entertainment, etc.)
  • Savings (investments & bulking up emergency fund)

SO, without further ado (as if I didn’t just spend 1,000 words rambling about nothing), here’s the first installment of the Report Card series.

JANUARY 2018

  • Debt Management: GRADE = A
    • Threw a TON of money at my credit cards… $7,000 in total. This was a mix of increased allocation of my regular monthly take-home pay toward debt, PLUS over $4,000 from my annual bonus
    • Bonus money is an anomaly — will not continue into other months
  • Food Cost & Food Waste: GRADE = C
    • Horrible last week of the month brought this score down to a C… ate out for lunch EVERY DAY for 5 days and ended up throwing away some groceries
  • Discretionary Spending: GRADE = B
    • Bought tickets to a concert that I don’t even want to go to (whyyyy) but other than that, spent very little extra
  • Savings: GRADE = C
    • Pretty much all of my extra cash went to credit cards & will continue to do so. Will continue throwing money at the cc’s until they’re gone
    • Continue contributing 6% to 401k (with a 4.5% company match) and small ($40/month) contributions to my HSA

I’m pretty pleased with how this looks overall. Some room for improvement, but major positive changes happening over in the ol’ bank accounts. I’ve also done some extensive planning for the rest of the year and am feeling good about the goals I’ve set, when I can expect to reach those milestones, and when I can finally kiss those credit cards goodbye. I’ll talk more about those goals soon enough.

I’ll leave you with a snapshot of my finances as of February 5, 2018.

  • Cash savings: $2,746
  • HSA: $2,040 liquid; $1,983 invested ($4023 total)
  • 401k: $33,962
  • Home Equity: $16,548 (this is an uber-conservative estimate)
  • Credit Card Debt: $3,645
  • Auto Loan: $13,333

Net Worth as of 2/5/2018: $40,301

Hot damn, 2018’s lookin’ up!

Shifting Perspectives

It’s a strange feeling, to shift perspectives. To change priorities. To look at life and money and the future one way one day and then, either suddenly or gradually over a period of time, begin to question everything you thought you knew about all of those things. It’s a disorienting, untethering, but also exhilarating feeling.

2017 was a year of shifting perspectives for me.

After much reflection, I do think it started with my anxiety over my financial situation finally coming to a head. Like I’ve discussed in my previous posts, I’d long ignored this anxiety and self-soothed by convincing myself that it was easily remedied, long past the point of when it was actually easily remedied.

The thing about problems is that they build on each other. Have you ever noticed how when you’re feeling overwhelmed and out of control, the easiest problems to fix seem absolutely impossible to tackle? Let’s look at an example.

My house has aluminum wiring. This isn’t inherently an issue, but over time, the aluminum wiring creates “hot spots” at outlet receptacles and light switches and requires some maintenance. I can always tell when this is happening, because anything plugged into an outlet sharing the circuit with the issue will begin experiencing telltale symptoms… lamps will flicker/surge, etc. It’s no big deal to fix, really… just cut the power, pull the outlet out of the wall, tighten the connection (or in a worst case situation, replace the outlet for $5), turn the power back on, and you’re done. No. Big. Deal.

But despite this being no big deal, the last time this happened was a VERY BIG DEAL. I was super stressed. My house was a mess, I had a dead Christmas tree in my living room dropping needles all over my floor, my dog had cancer and was slowly dying, my car needed washing but it was cold outside, the door handle on the French doors leading to my back deck kept falling off because a screw fell out, I had a trip to NYC coming up, work was stressful and it was almost review time, bills were due and those credit card balances were staring me down…

All of these things taking up space in my brain meant that there was very little space left for me to process the very easy-to-solve problem of my outlet. It wasn’t that solving my outlet issue was any more complicated than it had been any other time this had happened, it was just that my brain was TOO FULL to deal with it. I was overloaded. I felt like I didn’t have any extra energy to give even the smallest, most easily remedied problem.

So, how do you solve the problem of an overloaded brain? An overloaded LIFE?

Less.

Less stuff. Less stuff to maintain, less stuff to keep track of, less stuff to keep clean or organized or balanced. Less stuff means a simpler life. An uncomplicated, uncluttered life. Less stuff means less problems, honestly. Less stuff means less stress.

I found myself looking around at all the things cluttering up my life and my brain and realizing just how many of them were superfluous and unnecessary toward my actual happiness and well-being.

Why did I have 4 closets full of clothes (and 2 dressers on top of that) when I only ever wear some variation of the same 10 outfits? This overload of options (most of which I hated) left me feeling stressed each time I went to pick out an outfit. So I got rid of the shit and only kept the stuff I actually wear and like. Badabing, badaboom, every outfit is easy to choose.

Why did I still have furniture that I’d received for free or picked up from a scrapyard back when I was fresh out of college, when I was poor and desperate for anything to furnish my home, when it wasn’t serving a purpose and I didn’t even like how it looked anymore? It collected dust and cluttered my space. Sold it, trashed it, whatever. Problem solved.

Why did I have an outdoor shed full of shit I could sell or donate that I wasn’t using and didn’t care about? I couldn’t even use my beautiful potting bench because it was covered in garbage that the previous owners had left behind. Sold it, trashed it, whatever. Problem solved.

And the real question… WHY did I always feel like I needed MORE of this shit? Why, despite my closets full of clothes, did I shop and buy new ones each month? Why did I lust after a new sofa when I had a perfectly good one sitting in my living room? Looking around and seeing just how much I had, and what an absolute excess of stuff it really was when you looked at what I actually need, I felt sick.

Shifting perspectives.

I wondered to myself whether any of the things I own actually contribute to my happiness in a meaningful way. What matters most to me? Least? What brings me happiness and joy? What adds true value and richness to my life? Am I giving those things enough time and energy? What things make life worth living?

And then I made a list:

  1. Quality relationships with family and friends
  2. Animals (and, specifically, my animals)
  3. Helping others
  4. My home (working on my house)
  5. Creating (specifically writing, but creating art in general)
  6. Good food & drink (see: beer)
  7. Music & reading

Interestingly, money was nowhere on this list. Even more interesting: most of these things were not dependent on an excess of money to make them happen. I don’t need an excess of money to foster close relationships with people I care about. I don’t need an excess of money to give my time and energy to causes I believe in. I don’t need an excess of money to read books or create art or eat good food (I would argue that you spend LESS on eating good food when you make it yourself.) I don’t need an excess of money to improve my home when I have two working hands.

Other noteworthy absentees from this list: TV, shopping, clothes/cars/material things, traveling (I’m probably alone in that), my job, seeking out romantic relationship/thinking of having kids. I currently spend ZERO time on a romantic relationship/thinking about having kids, so it was nice to see those items not on my list. Unfortunately, I do spend a LOT of time watching TV, and I have spent way too much time focusing on material things and stressing about my job when it turns out: these things don’t actually bring me any real happiness.

Looking at my list of things that DO bring me happiness, I realized that I didn’t need $700 per paycheck for “miscellaneous spending,” because there was absolutely nothing that I needed to buy. All items can be done on a totally reasonable budget. And absolutely none of these items require me to be in thousands of dollars of credit card debt to enjoy.

Shifting perspectives.

I needed to purge my life of clutter (both physically and mentally) to make space for the things on my list that matter to me. I focused on getting rid of physical items that I didn’t want, need, or use, which opened up space in my home for me to display the things I do care about. I decided to watch less TV (and cut the cord to save some cash) and spend more time writing (and here I am.) I made an effort to spend my weekends off my couch and on my feet instead, working with my hands, crossing off items that have spent so long on my To-Do list they’ve basically grown roots. I asked my mom to teach me how to do stained glass as a way to spend quality time with her and flex my creative muscles. I’ve made an effort to cook 80% of my meals and make good, restaurant-quality food.

And next up on my list: shed the financial burden and clutter of my consumer debt. The peace of mind and freedom I’ve felt from purging the crap from the rest of my life has left room for me to handle my debt problem in a way that doesn’t overwhelm me. I’m not distracted by all my other [pointless] shit, so I can focus. One problem at a time. One dollar at a time.

Less is more, especially when it comes to debt.

Shifting perspectives.

So, How Bad Is It?

After you admit to yourself you’ve fucked up, the next item on your Get Your Life Together To-Do List is figuring out how to un-fuck yourself. And in order to un-fuck yourself, you need to first determine just how fucked you are.

This is sometimes easier said than done. For instance, in my case, I’d had an unsettling feeling that had been growing (and that I’d been successfully ignoring) for years, and the gist of that feeling was something to the tune of “I think I fucked up, and I think I might still be actively fucking up, but I won’t worry just yet.”

When I finally woke up and decided that I did in fact need to worry, the first step on the road to fixing things was to figure out how bad things really were. Spring of 2017 I stepped back and took some honest stock of the damage.

Was it worse than I’d thought? Yes. Was it life-ruining? Not yet. Not if I stopped the behavior and changed course immediately. If I’d continued on as I had been, ignoring it and letting The Problem grow, it had the potential to become a life ruiner.

Ahhh, The Problem. The thing I’d been avoiding. The thing I’d been averting my eyes to, hoping desperately that it would magically go away if I just ignored it for long enough. Spring of 2017 found me finally staring at it headlong and admitting it to myself, OUT LOUD, that yes, I do have a problem, and that problem’s name is

DEBT!

This was a painful realization for me. I’d always fancied myself good with money and in my mind, I was well off compared to my peers.

For instance, 2017 would be the fifth year running where I organized an annual ski trip for a group of my friends. I was always the one to organize this trip because by and large I was the only one with enough money in my bank account to front the bill for everyone, and to let people take their sweet time reimbursing me. That’s the kind of shit RICH PEOPLE do, so I must be a RICH PERSON, right?

if-youre-the-5a62b2

The problem is, when you’re evaluating yourself against a group of people who are in worse situations than you are, it’s easy to look good by comparison. Change the standard and calibrate yourself against someone who knows what they’re doing, and you quickly realize you ain’t shit.

The realization that I was not, in fact, a rich person was a sad, sad day for me. Living in denial is wonderful. I didn’t want to leave Denial Land. Money grew on trees in Denial Land and sure I could book the ski trip and sure you can wait four months to pay me back and it’s fine if you back out at the last minute and I have to eat the cost of your spot and of course I can go out of pocket to pay for group t-shirts to commemorate the weekend! Why not? I’m a rich person!

Womp womp. Spring of 2017 had me taking a hard look at my finances and crying a steady stream of slow, dramatic tears as Denial Land grew smaller and smaller in my rearview mirror. Things were about to change for ya’ girl.

The first thing I had to do was take inventory of my situation. Full, comprehensive, no-holds-barred inventory, and answer the question that I posed in the title of this post:

So, how bad is it?

I sat down, pulled out my trusty budget (a handmade spreadsheet I’d been using semi-successfully for years), and figured out WTF was going on.

Taking Inventory

Spring of 2017 looked something like this:

  • Gross salary: $60,700*
  • Monthly take-home: $3,082
  • Monthly spending: $3,042

*Gross salary doesn’t include my annual performance-based bonus, another $8k or so

Not awesome, right? The leftover $40 each month got put into my “Emergency Fund”, but I was cutting it so close each month that more often than not I’d have to pull it back out to cover something stupid I bought.

Alright, so my month-to-month spending didn’t look awesome and I could see why I felt like I was living paycheck to paycheck (because I was.) But I had a house! I must just be CASH poor, but BEHIND THE SCENES rich, right? I mean, I contributed to my 401k!

Let’s take a look at what my net worth looked like:

  • Assets
    • Emergency fund (cash): $2,300
    • 401k: $23,446
    • Home equity: $10,000 (151k mortgage with 141k owing)
  • Liabilities
    • Credit Card debt: $11,700
    • Auto loan: $15,000

Net Worth: [2,300 + 23,446 + 10,000] – [11,700 + 15,000] = $9,046

This picture was bleak. I’d long heard that by the time you reach your 30th birthday, you should have 1x your annual income saved. Looking at my net worth, I was nearly $50,000 away from that, and the path I was on showed that the chances of closing that gap were slim to none.

I decided at that point that I needed to make a change and really take control of my monthly budget. I hunkered down and for a few months I tracked spending rigorously to figure out where my money was going. My monthly spending was high but my actual utilities were low… where TF was my money going?

FOOD.

I had “groceries” budgeted in every month, and yet I saw myself spending HUNDREDS (like, more than a handful of hundreds) of dollars at restaurants, bars, brunches, lunches, food trucks, breweries… WHY?!?!

I focused hard over the summer months and into fall on getting the food spending (and subsequent food waste) under control. The thing about excessive food spending: most of the time it comes with food waste, and food waste is terrible. Headed into autumn, I had a much better handle on my monthly expenses and I was no longer dipping into my “emergency fund” (though it had taken a beating over the summer as I’d used it to travel to Mexico AGAIN! That’s an “emergency,” right?)

Mexico trip aside, September came and I was feeling pretty good about myself. I was making bigger payments on my credit cards and I’d paid off almost $700 over the summer. I was almost under the $11,000 mark! And even better, I’d barely made any changes to my overall lifestyle outside of budgeting better for groceries and putting the rest of the leftover cash into a category I dubbed “Miscellaneous Spending.” By doing that, I could have guilt free fun money to play with while also being RESPONSIBLE about my food spending and credit card paydown.

I could have my cake and eat it, too.

This new-found feeling of control over my finances had me feeling better than I had in months. So what if I still had $11,000 to go? I had paid off $700 in six months! At this rate, I’d be debt free in… six short years? Just call me Dave Ramsey!

This small taste of forward financial progress had me craving more, so I went online and Googled “how to pay off debt faster.” The results led me down a rabbit hole of personal finance blogs–mostly a collection of first-hand accounts by people who were making far less money than I, but who’d gotten themselves out of holes much deeper than mine, and they’d done it in a few shorts months in some cases. My measly $700 paydown paled in comparison. How could this be?

I somehow found myself on a blog I’d never heard of, written by a crazy man who called himself Mr. Money Mustache. I saw a post in the sidebar that said News Flash: Your Debt Is An Emergency!!!

I clicked.

The entire post was a huge kick in the ass regarding paying off consumer debt, and it seemed like this post was written DIRECTLY TO ME.

“Oh, congrats on paying off $700 over the span of six months, you are terrible and have no excuse for not making more progress than that, you should have paid off six TIMES that amount based on your income, why are you getting $130 haircuts every 6 weeks you are LESS THAN POOR, GET YOUR SHIT TOGETHER!!!!!”

I found myself angry at first. $700 is a lot of money! I did good! But then I looked back over the budget I’d spent half a year agonizing over. Yes, I’d identified that food spending was an issue in my budget so I’d split groceries out into its own category, but then I’d just taken the leftover cash after that and dumped it into my “Miscellaneous Spending” bucket and considered it “fun money.” The final piece of the puzzle clicked into place:

You don’t get to have fun right now, dumbass. You had fun, and it cost you $11,700, and you’re still paying for that fun. You’re still paying for margaritas you drank in 2011. Stop drinking margaritas for a while.

There will be time for fun later. Now is the time for action.

I looked at my Miscellaneous Spending and saw over $700 PER MONTH in those buckets. And what did I have to show for it? A new lamp. Two new shirts. Five extra pounds I didn’t need.

I did some math. Six months at $700/month would have knocked off an additional $4,200 from my credit card debt. And all I’d managed was a pathetic $700.

I poured through MMM’s blog posts, devouring every word and feeling over and over again like these posts were written specifically with me in mind. I had been feeling a shift in my perspectives and priorities for a while, a desire for less THINGS, less stress, less clutter, less debt. I somehow hadn’t put two and two together that the answer to both problems was right in front of my face all along:

Look around you and realize that you have exactly enough. You have more than enough. You don’t need anything more than you have right now to be happy, fulfilled, and content. Stop buying shit you don’t need. Take back control of your life.

After spending what had to amount to entire days’ worth of time on MMM’s blog (which took me to Mad Fientist’s blog, which led me to other blogs, etc.) I was left with one nagging question that i needed to answer before I could move forward:

So, how bad is it?

The truth was, it wasn’t ideal, but it wasn’t a dire situation just yet. I sat down and took a look at that budget I’d loved for years, and then I took out a red pen and I slashed it. I identified areas of waste and I eliminated what I could. I had to play by a new set of rules in my new Debt Emergency life:

  1. My “Miscellaneous Spending” bucket shrunk from $700 to $100. All items purchased (including restaurant trips and alcohol) that didn’t fit into a fixed category in my budget had to come from that $100. Once the $100 was gone, that was it.
    1. Savings: $600 extra toward credit card debt
  2. I got rid of luxuries I couldn’t afford. I cancelled a stupid life insurance policy my skeezy insurance agent sold me, I cut cable and went to internet and streaming services only, I forfeited my (sparsely used) gym membership, I cancelled a long-dormant Weight Watchers subscription.
    1. Savings: $230 extra toward credit card debt
  3. I had a hard conversation with my roommate (and close friend) about her flaky rent payments. I had to own up to the fact that when she didn’t pay rent, it made things very hard for me because I did truly need that money. This was an AWFUL convo to have as a prideful and non-confrontational person (see: living in Denial Land above), but necessary and ultimately healthy for our relationship.
    1. Savings: $400 extra toward credit card debt
  4. I sold some shit.
    1. Savings: variable

With my new monthly budget and my new outlook on tackling this debt, I had a plan in place that (with the help of my January 2018 annual bonus) would mean I’d have my credit card debt paid off by April. Five short months and I’d be out of the credit card hole. Looking at this plan was wild–it had taken me longer than that to scrounge together $700, and here I was staring down $11,000 and realizing

this mountain is big, but it’s not insurmountable.

So if you’re asking yourself “how bad is it?” The answer is probably “not as bad as you think, if you’d just shut up and do something about it.”