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10 Dumb Money Moves

Free Money Finance has a post up on Stacy Johnson’s 10 dumbest money moves. I thought I’d share my take.

Here are the mistakes:

1. Not having a goal
2. Not having a spending plan
3. Attempting to derive self-esteem from possessions
4. Doing what everyone else is doing
5. Starting to save large and late rather than small and soon
6. Paying interest to buy things that drop in value
7. Turning down free money
8. Buying a new car
9. Buying more house than you need or can afford.
10. Not protecting your good credit

Here is my response(and a test: Orthogonal Monkey Silicon Beam)

1. For most of the last 15 years, I didn’t have much for financial goals. “Get more money” isn’t specific enough to be a goal, and our spending precluded the possibility, anyway. Right now, my financial goal is simple: Get out of debt. I’m down to about $61,000.

2. We have a budget, even if it’s been partially ignored for the last couple of months. If it weren’t for my side-hustles, we would have come out negative last month.

3. We struggle with this one a lot. “Keeping up with the Joneses” is an issue in our house. My wife’s closest family is 10 years older than we are, and has more stuff, which makes it hard to visit without making comparisons. We both know it’s irrational, but it’s the way it is.

4. We are fighting this one as well. The fight is going better than #3. We’ve stopped using new debt, which shocked our friends, and I’m working on launching a new business, to break more bonds.

5. Is 30 late? We’re saving small while he fight debt, but I think we started early enough to make the rest of our lives easier.

6. We pay far too much in interest each month, but there has been absolutely no new debt since April 2009.

7. I got into my company’s retirement plan to get the match, but that ends next month. My wife’s employer killed the match 5 years ago. There’s no free money to turn down anymore.

8. We bought a new truck, as part of our debt-accumulation, in 2001. In 2005, we instead bought a car as it came off a lease. It had 11,000 miles on it and that saved us $10,000.

9. We bought our house in 1998. It sits on 1/8 of an acre. sometimes space is tight, but we’ve watched so many people trade up and find themselves in severe trouble. I’m happy we’ve stayed here.

10. This is one we’ve always guarded. No matter how much debt we’ve had, we’ve made every payment. We’re hugging the underside of an 800 FICO score. Thankfully, we’re closing in on the point where FICO no longer matters, because we’re paying in cash.

What are your biggest money mistakes?

Where the hell have I been?

Finance

For the last year or so, I haven’t been writing much, which feels weird. I used to write three timer per week. I’d write about saving money, investing, frugality, sometimes, relationships and parenting.

But that stopped. Why?

When I started this site, I was about $110,000 in debt, and just starting my journey out of it. A few months before, I was looking into bankruptcy, because I didn’t know how to get out of debt.

For years, the ways I saved money, cut corners, and earned extra money was fodder for this site. Everything I did was about saving money, earning money, and paying off debt.

Now? I’m about 2 months away from being completely debt-free. I paid my mortgage off last month, and have about $10,000 in credit card debt at the moment. I know, I paid that off backwards, but there are reasons. Reasons I’ll share another time.

4 years ago, I was essentially working 4 jobs. My day job, my gun training business, my internet marketing business, and my websites(including this one). I was working all of the time. It was necessary, but it’s a path to burnout. Then, I changed jobs a couple of times, nearly doubling my day job’s pay. My business partner got promoted out of a position that generated leads for one of our businesses, then had an accident that the other shared business on hold for a while.

Suddenly, I had free time and enough money coming in that I didn’t need to work all of the time. It was a crazy place to be after spending more than a decade pretending to be a workaholic just to keep my head above water. (Here’s a secret: I’m incredibly lazy. I’m just the busiest lazy man I know.) So I started pursuing hobbies.

Linda and I have been taking ballroom dancing lessons and are nearly to the point that competing is a real possibility.

I cleaned out my garage and assembled a decent wood shop, which is something I’ve wanted to do roughly forever.

I’ve been taking blacksmithing lessons with my teenage son.

I’ve been playing games with my kids, dating my wife, and simply enjoying my life.

This site?

Through all of that, I haven’t known what to write about.

“Dear audience, this month, I paid my bills, didn’t go on vacation, and bought a drill press.”

“Dear audience, my debt went down another $500 this month.”

“Dear audience, I didn’t buy a car I can’t afford this month. Again.”

Those aren’t good articles. Financially–while paying off debt is disturbingly exciting–my life is very repetitive. That’s the hardest part about paying off a lot of debt. It’s good, it’s necessary, it’s boring. My wins have been spaced out by several years lately, and I haven’t been creatively frugal. Screw frugal. If you can afford some conveniences and luxuries, frugal sucks.

Anything new happening in my world that would apply to this site would make it read like an accountant’s ledger book. $100,000 minus $1500 plus $10,000 minus $300, ad nauseum.

Instead of inflicting boring accountancy on you, I’ve been absent.

What next? Who knows. I enjoy writing. I enjoy writing here. I’ve started writing a novel.

What would you like to see here?

Living in Debt: How I Sacrificed My Future

Finance, Life

For those of you who haven’t been following along, I’m in debt. Starting 13 years ago, when I was 19, I managed to bury myself in debt, until I decided I’d had enough of that…almost 2 years ago.

Why?

It wasn’t because of college expenses, though they contributed to my debt level. I was in debt before I went to college. Heck, I was a daddy before I went to college.

It wasn’t because of major medical procedures. The only major medical procedures we’ve ever had were the births of our children, and we had two of them well after we built our shackles.

It wasn’t because we bought more house than we could afford. We own a modest house that we bought before the bubble started.

Then what was it? Why did we do the things we did that have financially crippled us for so long?

It was a combination of things, crowned by a glorious lack of financial sophistication. As I wrote in No Brakes, neither of us had the early training to really understand our financial decisions. We knew bills need to be paid, but what was the difference if the money came from a credit card versus our checking account? Why did it matter if we carried a balance on the cards, as long as we could make the payments? What’s wrong with just making the minimum payment?

Naïve. Unsophisticated.

That day-to-day lack of sophistication was only part of the problem, and it wasn’t the biggest part. We made a lot mistakes, but they were all small. Before 2001, I think our total was about $5000. Too much, but not painful.

Between the fall of 2001 and the winter of 2002, we took our naïve decision-making process and ran with it. It was a full-scale mistake marathon.

That year, we built an addition on our house, because a full dining room and a bigger kitchen would make our house so much more livable and it was cheaper than buying a home, new. Oh, and since the difference between the mandatory crawlspace and a full basement room was just a few rows of concrete blocks, let’s expand it. Wait, don’t bedrooms require walls, sheetrock, windows, closets, paint, furniture, and electricity?

That was also the year that the car companies all jumped on the 0% loan fad. In case you don’t remember, that was the program that meant you could get a 0% loan on a new car if you picked up a 3 year term on your loan. At 22, making maybe $45,000 combined, we decided that buying a $35,000 truck was a good idea. To save money. Rationalization is wonderful. Or at least, effective.

That summer, we got married. We did a phenomenal job getting married on the cheap. We had about 100 guests, a park to get married in, flowers, food, and a hall to eat and dance in, for about $3000. The problem was, we didn’t have $3000. We didn’t have the $1500 + activities for our 10 day honeymoon on a Caribbean cruise, either, though I still plan on returning to St. Thomas.

None of those individual payments were terrible. The biggest problem was that we piled them all so close together that we never had time to absorb their impact before taking on the next obligation. When we did realize how much we had to pay, we made up for it by only buying big things that came with a “0% for a year” deal, like our living room set, our carpet, and our dining room table.

Then, when we finally did pay something off, or came into more money, we’d immediately expand our lifestyle to fill the void. The month we paid off our truck, I got a significant raise. Did we use it to pay off some other debt? Of course not, we bought a new car on a six year term.

We had so many opportunities to make bad decisions with our money, and I think we took them all and have suffered for it, since.

If you’re in debt, what made you decide to get that way?

4 Ways to Change Your Finances for the Better

Finance

Finance is made out to be difficult, but it’s really not. All financial advice really boils down to 2 sentences: “Spend less than you earn. Save or invest the rest.” Everything else is an unnecessary complication, unless you need to be told that commemorative plates aren’t actually an investment. Unfortunately, we’re all people. (Except for you in the back. I see you, and you are not people.) People make mistakes. People sometimes need things spelled out, or at least explained in a way that makes it seem less intimidating to get started.

With that in mind, here are four steps that will get you out of debt and, over a long enough timeline, make you rich:

1. Lower your interest rates. If you’ve got debt, particularly credit card debt, you’re paying too much interest. It doesn’t matter what the interest rate is, it could be better. It’s time to pick up the phone and politely ask your credit card company to lower your interest rate. If they refuse, mention that their competitor is offering you 3% interest on a balance transfer with no transfer fee. Mention a competitor by name, but don’t worry about a specific offer. There are always offers being tossed about.

If they won’t lower your rate, find a company who will. 5% on a 10,000 balance is $500 per year. That’s 3 months of payments for free.

2. Lower your monthly payments. Do you have a cable bill? A phone bill? Any other bills? Put them in a stack and call them. Every. Single. One. Ask if there is any way you can lower your bill. Can you get put on a new customer promotion? My electric company offers a saver switch for my air conditioner that will lower my bill by 15% just for giving them the ability to toggle my AC on and off. When we had that installed, I never noticed it in use.

3. Save $1000. When you’ve got no money, every unexpected expense is an emergency. When you’ve got a little bit socked away, you can ride out the problems without much worry. $1000 may not be enough to ride out an extended bout of unemployment, but it does a pretty good job of taking the sting out of car repairs. Do whatever you have to do, but get some money in an emergency fund. Then, don’t touch it!

4. Categorize wants and needs. I want a vacation. My kid needs braces. I want a big screen TV. My gas bill needs to get paid. I want a new car. My family needs food. Are you sensing a theme? Pay attention to what you spend. Ask yourself if it’s something you need, or just something you really, really want. Just the act of categorizing it can make it easier to avoid buying whatever it is.

5. Use the savings from 1-4 to pay off whatever you owe. Don’t blow your new-found savings on spinner rims or soap made from rich-people tallow. Use it to finally get ahead of the game.

Getting Out of Debt: The Prime Rule

Finance

The American Dream has been perverted. Life, liberty, and the pursuit of happiness has been cruelly warped to mean

Wipe our Debt (Photo credit: Images_of_Money)

“Toys, free stuff provided at the expense of others, and the ability to buy and do anything I want without regard for the consequences.” To fund this horrible new dream, the people who can’t convince a government program to finance it for them often turn to credit. Credit is the art of putting your future into hock for something that you probably don’t need or want and that won’t work by the time you are finished making payments.

Ick. I’ve chosen not to live my life that way. Every day, more people are waking from the consumerism fog and deciding to reel their lifestyles back in and take control of their lives. They take a look at the world around them, compare it to their check register, and realize that it’s just not sustainable. You can’t survive on credit forever. Eventually, you will realize that there isn’t enough money to continue to buy things today on tomorrow’s paycheck.

What’s the first thing you should do when you decide that a “normal” life—a life in debt—isn’t the way you are going to live your life?

Well, when you find yourself standing in a grave, stop digging. You can’t dig yourself out of a hole and you can’t borrow your way out of debt. If you want to get out of debt, you need to stop using more debt. Period.

It may seem impossible, and the people around you may try to convince you that you are crazy. It is not impossible, just time-consuming. Short of finding an insane amount of money hiding under your front step or a winning lottery ticket blowing across the sidewalk, there are no shortcuts to getting out of debt. It’s just a matter of making the payments and not using more credit.

As far as the haters, screw ‘em. They are brainwashed into thinking their unsustainable and insane lifestyle is not only normal, but necessary. You don’t get life advice in a padded room, and you don’t plan your finances with a debt-addict.

Getting out of debt is a simple process, but that doesn’t make it easy. It only has two real steps: stop using debt, and keep making the payments.

10 Tips to Help Parents Stay Out of Debt

Finance, Parenting

People say that when you have a baby, your world gets flipped upside down. That’s not true. Your world gets dropped in a martini shaker and left to the whims of a sadistic bartender with a shaking fetish. Everything changes. That sounds like an exaggeration and nobody believes it until it happens, but it’s true.

When you find out you are about to reproduce, you will experience a phenomenon called “nesting”. Nesting is the idea that, if you take your credit cards and beat them against the curb until they bleed and VISA calls you asking for mercy, you will be transformed into the best parent ever, regardless of what you may actually screw up. It’s the way parents calm their fears by spending money, often on things that aren’t needed.

Q. How do you avoid becoming a debt-ridden, worried mess of an over-protective, over-extended new parent?

A. What do you get when you cross an elephant and a rhinoceros?

I can’t help with the rest, but here’s 10 ways you can avoid the debt problems.

Have a budget. I may have said this before. It’s possible this counts as a recurring theme here. If you don’t have a budget, you aren’t in control of your money. If you aren’t in control, then how do you know where it has gone or where it is supposed to go?
Budget for baby crap. This will be a recurring expense for years, so get used to it. A friend of mine is on the cusp of having everyone out of diapers for the first time since 1993. Do you think they plan that expense? Diapers.com has $10 off and free shipping on orders over $49. Use code “ LiveReal” during checkout.
Double the number you have in #2. Seriously. It will cost you more than you think, but it doesn’t have to cost you as much as you fear. It’s far better to have too much budgeted and find yourself with extra money than it is to budget too little and be forced to make up the difference at the feet of Master Card.
Only take the advice of people you know and trust. Every random jerkface on the street has (usually) well-intentioned advice for new and expecting parents. Ignore them all. If they aren’t your doctor, your mother(assuming she did her job right), or friends with children, they are clueless and their advice should be immediately round-filed. Ditto for parenting magazines. The writers don’t know better than you do. Read the magazines for six months and watch for conflicting advice, not only in the same magazine, but often from the same writer! Don’t add the stress of bad advice from strangers to what is already a stressful time.
Don’t get every gadget designed to cushion the baby. A wipe warmer is a waste of money. Do you want your baby to be scared of a little chill forever? Cold wipes build character. If that isn’t good enough, hold the wipe in your hand for a few seconds before using it. There are a million other gadgets to keep your little one from ever feeling a moment of discomfort. Don’t waste your cash. It may only be 10 pounds, but it’s tougher than you think.
Don’t get every gadget designed to cushion the parent. They make ergonomic bottles, braces to hold your arms in the right position to feed, fancy cloths to catch baby vomit. Tough it up. Support your baby yourself. Build some muscle and some character. Use cloth diapers to catch various treasures your little brat will spit up on you. Spending more doesn’t always make it better. The ergonomic bottles that make it easier to feed a baby, make it harder for the baby to hold the bottle. This is actually making your life more difficult.
Focus on the necessities. Yes, the fancy formula with the pre-digested proteins has a nicer label. It doesn’t make a difference. The generic brand at the warehouse store usually has the exact same ingredients in the exact same ratios as the brand name at the baby store–for half the price. There is nothing special about the blankets in the baby section–except the price. The fancy bottle warmer doesn’t do anything that a cup of warm water on the counter won’t handle. You need: A crib, unless you are doing a family bed; a easy-to-clean mat to change diapers(on the floor works!); and a diaper bag(back-to-school backpacks are more ergonomic and easy to organize than anything in the baby store!). Everything else is a luxury.
Time counts more than stuff. No matter what else you hear, no matter how old your child gets, time with you counts more than anything else you could do or buy. Be there for your kids and the rest is gravy.
Brand-name and designer labels are not status symbols. The opinions of the other soccer mommies do not matter. The opinions of the random jerkfaces on the street do not matter. Designer labels do not make you a better parent and are not an indicator of a happy baby.
Always remember: Babies bounce and have short memories. While I don’t recommend bouncing your baby on the floor, they are surprisingly resilient. They don’t hold grudges, either. There is room to make mistakes without screwing up your kid.

For a hundred thousand years, people raised babies with nothing more than a scrap of hide to alternately chew on or wipe with. You can probably get buy with just a bit more. Relax and enjoy the process of raising your kids. Money doesn’t matter nearly as much as your presence.

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