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The no-pants guide to spending, saving, and thriving in the real world.

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Keep Your Friends Out of Debt

Finance

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If you’re like me, you get a bit evangelical about getting out of debt.  I try to convert spendthrifts and irritate my fellow debtors.   I’m probably pretty annoying at times.   What I’ve learned–or at least pretend to have learned–is the direct approach rarely works.   Hitting someone over the head with a brick won’t convince them of anything, even if it’s a very frugal brick.  Try it sometime.  You may convince them to buy a bigger brick to return the favor, but you won’t convince them to save money.

What can you do?  Your friends want to spend money they don’t have and worse, they want you to come with to spend money you either don’t have or don’t want to spend on bad music and overpriced beer.  Suggest less expensive activities.

If your friends want to catch a movie, suggest a matinee or hitting redbox for a night in.   It may even be worth investing in a projector and screen if movie night becomes a habit.   My couch is certainly more comfortable than the theater seats and my soda is cheaper.

When you are invited to dinner, suggest a potluck or have a barbecue. It’s almost always cheaper to eat in, and cooking together can be a wonderful social activity.   If that’s not practical, use coupons.  Restaurant.com has some amazing deals, but don’t use them without an coupon.  Their default price is a $25 gift certificate for $10.  With a coupon (currently DAD), you can get that same certificate for $3.   That usually means a minimum tab of $35 and mandatory tip of 18%, but it’s still a good savings.  Your $35 meal will cost $19.30 when all is said and done.

[ad name=”inlineleft”]Don’t compete for the coolest gadgets. “I just got an iPod for $300″ should be countered with a receipt for a $20 mp3 player, not an ad for an iPad.   Race to zero, not zeros.

Don’t be ashamed of your frugality.   “I they are laughing you don’t need ’em, cuz they’re not good friends.”   My habits aren’t secret. If I say something isn’t in the budget, my friends know I won’t be doing it.  It’s not up for debate.

Above all, I try to be proactive. I try to suggest cheaper alternatives before the expensive options are on the table.   Having a beer on my deck and watching a movie in my living room is so much cheaper than drinks at a club before a concert.

Update:  This post has been included in the Carnival of Personal Finance.

5 Life Altering Lessons I Learned From My Debt

Finance, Life

Starting position of a chess game. House of St...
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Several years ago, my wife and I dug ourselves into debt pretty deep.   It wasn’t as bad as some, but it was much worse than anybody could actually want.    Recognizing the problem as a problem was a life-changing event.  From there, I’ve been examining every thing else about my life.   As part of that examination, I’ve spent a lot of time really thinking about the ultimate causes of the debt and what it has taken to motivate ourselves to get rid of it.

I’ve realized a few things:

      1. The things I want right now do not matter. I own around 2000 movies.   Up until last spring, every time I went into a store that sold movies, I’d peruse the cheap rack and buy 2-3 moves.  I’d watch them all, but the vast majority were only ever watched once or twice.  The rest may as well have been rented.   I wanted them and I wanted them “right now”, but after watching them once, the value vanished.   Most things I’ve bought on a whim lost their value to me shortly after bringing them home.  Planned purchases are enjoyable longer.
      2. The things I care about do not cost money. I cannot buy a kiss from my kids, or a hug from my wife.   The school project my son did on his hero(Me!) is absolutely priceless.  The TV, the smartphone, a new car, these things are fleeting.   Teaching my kids to read or ride a bike, getting beat by a 6 year old at chess, these things will last us all forever.  It took $30,000 of unsecured consumer debt to drill that lesson home.
      3. Instant gratification is easier than security, but not nearly as gratifying. It is incredibly easy to buy what you want when you want it.    It is much harder to postpone buying something until you can afford it.   Once you build that habit, and see the savings of delayed gratification, it’s worth it.   There is a comfort in having a few months worth of expenses in an emergency fund that no amount of knickknacks can match.
      4. I like getting stuff more than I like having stuff. It’s easy to succumb to the temporary high of a quick purchase.  It’s easy to train yourself to crave that high to the point that it’s impossibly to walk out of a store without buying something.  I did that.    When I cleaned out my entire house this spring, I came to the realization that I don’t need–or even want–most of the things I own.   I wanted it once, but once I had it, the infatuation was gone.  I didn’t have many problems unloading most of my crap.  It felt good to get rid of it.
      5. Owing money sucks. The borrower is slave to the lender.   When our debt exceeded our annual income, we were working 3/4 of the time just to stay afloat.  Instead of being able to spend my time and money on the things that matter, I was forced to spend thousands of hours just covering interest and pretending to make progress on my shackles.  That’s not how I recommend spending your life.   Time is the one thing you have that you can never get back.  Don’t waste it on crap like debt.

 

Have you learned anything from your debt?

3 Habits Every Soon-to-be-Successful Debtor Needs to Cultivate

Finance

Getting out of debt is primarily a matter of changing your habits.   We’ve all heard people swear by skipping your morning cup of coffee to get rich, but that’s just a small habit.   Much more important are the big habits, the lifestyle habits.  Here are 5 habits to cultivate for financial success.

Frugality

“Beware of little expenses; a small leak will sink a great ship”– Benjamin Franklin

As Chris Farrel wrote in “The New Frugality“, being frugal is not about being cheap, but finding the best value for your money.  When my wife and I had our second baby, we couldn’t justify spending $170 on a breast pump, so we bought the $30 model.   It was quite a bit slower than the expensive model, and was only a “single action”, but for $140 of savings, it seemed worth the trade.   Six weeks later, it burned out so we bought a new one, still afraid to justify $170 on quality.   This thing took at least 45 minutes to do its job.  When it burned out 6 weeks later, we decided to go with the high-end model.   This beauty had dual pumps, “baby-mouth simulation” and it was fast.  The time was cut from a minimum of 45 minutes to a maximum of 15.   That’s 3 hours of life reclaimed each day fro $140. Six months of breastfeeding for each of two kids means my wife regained 45 days of her life in exchange for that small amount of money.   At the rate of 6 weeks per burnout, we would have gone through 8 cheap pumps, costing $240.   The high-end unit was still going strong when we weaned baby #3.  Buying quality saved us both time and money. I wish we would have gone with the good one from the start.  Sometimes, the expensive option is also the cheap option.

Maturity

A very sad, sad panda :(
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“Maturity is achieved when a person postpones immediate pleasures for long-term values.” -Joshua Loth Liebman

Being a mature, rational adult is hard.   It means accepting delayed gratification over the more enjoyable instant variety. We save for retirement instead of charging a vacation.  It takes a lot of restraint to put off buying the latest toys, clothes, gadgets,  cars or whatever else is currently turning your crank until you actually have the money to actually afford it.   It means planning your future instead of looking like a surprised bunny caught in a spotlight every time your property taxes come due.   (Who knew that the year changed every year?  Do they really expect annual payments annually?  Geez!  There’s so much to learn!)   It means thinking about your purchases and buying what you actually need, actually want, and will actually use instead of resorting to retail therapy whenever you feel like a sad panda.    The only benefit to mature, rational management of your finances is that, given time, you will have the security of knowing that, no matter what happens, you will be okay.   That’s a huge benefit.

Pleasure

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“Do not bite at the bait of pleasure, till you know there is no hook beneath it.” – Thomas Jefferson

If it hurts, you won’t do it.   You have to learn to take pleasure from from things that won’t make you broke and you have to learn not to hate putting off the things you can’t afford.    Take pleasure in the little things.  Enjoy the time with your family.  Presence means so much more than presents. So many people never learn how to enjoy themselves.  Take the time to experience life and enjoy doing it.

Update:  This post has been included in the Carnival of Debt Reduction.

One Year Later….

Misc

In April of 2009, I told my wife we were either going to straighten out our finances or file bankruptcy. At that time, we had $90,394 in total debt, including $30,000 in credit card debt.  It hasn’t been easy, but we are working out way out of that hole.   Since then, we have paid down more than $30,000.  That’s not $30,000 in payments, but $30,000 less debt.  We are now less than $60,000 in debt.   We have entirely stopped accumulating more and I don’t remember the last time we carried a new balance on a card or had to use our overdraft protection.   Next month, my car will be paid off, 10 months early.

Given my new-found fanaticism, I spent the next 6 months or so evangelizing about our debt repayment.   Eventually, I decided to share my thoughts and progress with the world and launched this site on December 1, 2009.   Today is my anniversary.

Here we are, 234 posts, 695 comments, and 17, 661 spam later.   You all rock.  Except the spammers.

To say thank you, I’m giving away a $100 Amazon gift card to some lucky reader.  Yes, I rock, too.

There are several ways you can enter the drawing:

1. Subscribe to Live Real, Now, either by RSS or email. If you are already subscribed by email, you are automatically entered.   To show me you have subscribed by RSS, there is a contest code in the feed.  Just post that in the comments. (1 entry)

2. Follow me on twitter and tweet the following: “@LiveRealNow is giving away $100. Come get some! Follow and RT to enter! http://bit.ly/f1roKM #Giveaway #Yakezie” (1 entry possible per day.  Every day you retweet this is another entry!)

3.  “Like” LRN on Facebook. This is easy, just click the little ‘like’ button on the left.  If you’ve already done that, you have already entered once.(1 entry)

4. Send me an email at Jason <AT> LiveRealNow <DOT> net telling me what you would like to see me write about more (or less!).  You can also use the contact form. (1 entry)

I’m closing this down on the 15th.  That’s 18 possible entries for $100 you may win early enough to help with some last-minute Christmas shopping.

UPDATE:

And the winner is…Claudia!  Congratulations.   Email sent.

Say Please

Finance

This is a guest post/reader story from a good friend of mine.

English: A giant satellite dish of the mdr (Mi...
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Greetings,

As a long time reader of Live Real Now, I’ve enjoyed the advice and the step by step, “I’ve been there” advice from Jason. Sadly, until now I haven’t really taken much of it.  It was too much work.  It was too hard.  But the recent “Future Me” post really struck home so I looked for something that should be easy.

What I found was the concept of “Call and Ask”.  I took a look at all of my accounts and utilities to decide which ones I was willing to change, drop, or reduce.  The two I came up with were Dish Network and CenturyLink DSL.

My plan was simple:

  1. Look for their introductory offers
  2. Compare to my current price
  3. Call
  4. Ask if existing customers are as important as NEW customers
  5. Finally, be nice!

I started with CenturyLink since I needed to call them for a new modem in anyway.  We’ve been with CenturyLink  for years and I’ve been paying $34.99 for slow DSL  and using it a couple times a week to work from home.  Their new customer promotion is $19.99 for the faster service.  I’d love to give you my script but I don’t entirely remember what I said. I believe I asked if they would extend the new customer rate to me and for how long. I know I pointed out that I would be out 3-5 days of internet service so now was the time to start trying to lower my bills.    The customer service rep was actually pretty cool about it.

“Let me look at your account.  We can offer you that rate for 12 months. After that the rate will be $54.99.”

That seems like a short term win for a long term loss, right?

His followup comment was golden: “Call us back in 12 months and see what specials we can offer you then.” So I went into Google Calendars and set myself a reminder 10.5 months from now.

Net effect: $15/month saved.

Next step: Dish Network.

We’re getting the Family Package which is already pretty inexpensive for Dish.  Looking around, the new subscriber price was $5 less.

Same plan.

“Hello, I’m a long term subscriber.  I see that you’re offering new subscribers the same package for less. Could you extend that offer to me?”

Same response… “Sure, you can have a $5 discount for 6 months.” Again, I set a Google Calendar reminder, this time for 4.5 months out.

Net effect: $20/month saved.

Can this go farther?

I recently purchased 3 pairs of F.O.M work jeans from Duluth Trading Company. Yes, they’re expensive, but they fit and last a long time.  I’m not a small guy. (Ed.  Welcome to the club!)  Anyway, at the time their sale looked good: $10 off each pair when you order 3 or more. Coincidentally, I was down to a single pair after a deer hunting accident. (Don’t tie your jeans into your boots while field dressing a deer. You’ll stretch and then things get a bit breezy.) With $5 shipping, I saved $35 on that order for jeans I needed anyway.

I thought I’d done pretty well.

Fast forward to today where I see 20% off on everything and free shipping.  And they’re still offering the $10 off deal I already used.  I called Duluth Trading Company, and explained I was VERY happy with their pants and enjoyed the sale but was wondering if they’d please extend the 20% off sale to my prior order since it was so recent.

$23.70 back in my account.

Easy as pie and a polite: “Thank you for offering us the chance to make you happy with the transaction, sir.”

So, 3 nice phone calls, net effect:

Immediate: $23.70 in my pocket
Short term: $30 savings over the next 6 months
Long Term: $180 Savings over the next year
Total Savings: $233.75 for 15 minutes work

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