Posted by: Brian | May 23, 2010

To have a life, or pay off debt?

I am going through a little dilemma at the moment. I currently put $1000 towards my debt each and every month, and that is on top of the minimum payments. Every month I figure out how I am going to pay down my debt and what I am going to cut back on to do it. I like the fact that I am paying down my debt rapidly but I don’t like the fact that I am missing out on my younger years in life. I barely go out because either my entertainment budget is used by the second weekend or my food budget is toast after the third Sunday (I grocery shop on Sundays). I want to travel and visit family back East but I also want to pay off my debt. I feel bad that I spend money when it could go to my debt, but then I feel I gave up so much just to pay off debt. It’s crazy how much debt controls your life.

So should I pare down my debt payments and enjoy life, or stick it out?

Posted by: Brian | May 20, 2010

Gathering Strength

It has been a while since I posted last and that is mainly due to work taking a bunch of my time and the fact that nothing huge has occurred in the way of my personal finances. I am at the plateau point. A plateau point is a term from weight lifting. It is the point at which you keep lifting and you see no real gains. In the beginning of a weight lifting regimen, especially for beginners, you see huge results really quickly. This is mainly due to your body has to burn more calories and build more muscle mass to compensate for the change in lifestyle. But once the body has adjusted, the gains are not as easily noticed as before. Its like climbing up a cliff and you exert all this energy to get to the top but once there, there is no more to climb, like a plateau.

You can overcome your plateau point financially by gathering strength for the next phase through subtle changes. In the beginning of this year, I managed to pay off a butt load of debt and carve almost $1000 out of my budget for paying off debt every month. Now that I plateaued, and the only progress is the same $1000 every month, I need to build my strength. I do this by trying new routines in my spending, like adjusting my food budget to see if it’s a real struggle to live off of 10% less than before. If this small change didn’t do anything, I go back to the original amount and try something else. This really helps because I am finding out what works for me and discarding what doesn’t; building strength. I only do one method at a time so I will know if that method works. After a few months, I will have a list of “exercises” that I can add to my personal finance “workout” which causes my body, aka debt, to go through another drastic gain. (or is it a decrease?…whatever, you get the idea)

Posted by: Brian | May 6, 2010

Book Review: The Other 8 Hours

I recently read The Other 8 Hours by Robert Pagliarini. The book was a good read, though boring at some parts because the subject didn’t pertain to me. I thoroughly enjoyed the ideas presented in the book. In the beginning, Pagliarini sets up the stage by explaining, and showing with a worksheet, how much time we waste everyday doing nothing. The middle of the book talks about the specific actions a person needs to take to change their current situation. This was my favorite part of the book. The chapters were written in such a manner that I could just imagine myself finding a few more hours a day to work on my goals and dreams. Some nights when I was reading, I would put the book down to go work on my projects because I got so fired up from the book. The back third of the book is split into two parts.

The first part is all about possible side activities you could do to generate some income. They are not very in-depth or all-encompassing. The nice thing is that they just brush the subject matter and give you some tips and places to go for more information. Pagliarini writes about four or five activities that range from blogging to investing. The second part talks about getting started and keeping the fire going. This is very important due to the fact that most people start out with a white hot desire that quickly turns to a dull orange, and then to a faint glowing ember.

I would recommend this book as part of your personal finance library, but not a must have. The book provides good ideas and a new look on an old concept.

Posted by: Brian | May 2, 2010

April 2010 Review

I had a good month though not as good as March’s but still good none the less. I reduced my debt by a good bit and only have a little more to go on my next credit card. I am hopeful that by July 1st, I can pay off the Chase Visa credit card. Everything else is pretty much the same. I read The Other 8 Hours this month and the book was actually pretty useful. Look for a post later this week with a more in depth review. I did not get to my camping trip but I am okay with that because I have it planned out and now I just need to find a weekend to go. Here’s where I stand:

American Express                  $0
iTunes Visa                              $0
Chase Visa                               $3,000.43
Bank of America Visa           $7,782.00
Capital One Visa                   $10, 274.65
ACS Student Loan                   $11,121.36
Ford Motor Credit                   $30,089.58
Great Lakes Student Loan   $34,664.40
TOTAL                                    $96,932.42

This month my goal is to get back into shape by going to the gym at least twice a week and bringing my lunch to work 13 days out of the 20 working days. I look forward to working on several other long term goals, such as learning French and cataloging my library collections. I am tracking my spending this month by keeping every receipt I can and writing down all my purchases. I am not good at budgeting so I am keeping a running tally of my main spending categories: food, entertainment, and household.

Posted by: Brian | April 28, 2010

Bottom On Up: One Small Step for Man

This is part of a series of posts entitled Bottom On Up, which focuses on the how-to of your journey out of debt and into financial freedom.

When you have a clear goal in mind, it can be a bit overwhelming trying to figure out how to get there. I like to break the goal up into small tasks, sort of like mini-goals. Lets continue with the main goal of becoming debt free. In order for me to be successful at accomplishing any goal, there must be an end point. If there is no time frame and the goal is left open-ended then there is too much of a chance that I will not complete it. My goal is to become consumer debt free by the time I am 30, and completely debt free by my 32nd birthday. That’s a pretty tall order to knock out $106,000 of debt in under three years and change! It’s totally doable but will definitely take some planning, discipline, and some mind tricks.

I know that I can lose sight of things rather quickly if I am not focused (blame it on the ADD). Like I said, this is a huge goal to accomplish so I need to break it apart. I like to take small, concrete steps towards accomplishing my goal. These small steps are all part of the planning needed in accomplishing any goal. David Ramsey, well-known author and personal finance guru, calls them baby steps and describes them in his book The Total Money Makeover. It’s a very good book and I suggest you read it.

I looked at my $106,000 debt and was like “Holy Crap! This is gonna take a lot to get rid of.” I recently read Change Your Questions, Change Your Life by Marilee Adams. In this book, there is a concept called Q-Storming. This simple idea will help you create the small steps you need to accomplish your goal. Basically, you take your problem and start asking questions. Every question you ask, you write it down. Don’t worry about the answer yet. Just write down the question. Here are some of the questions I asked myself:

How can I pay off my debt? How can I make more money?
What can I do today to help me accomplish my goal? This week? This month? This year? If I could make more money, how would I go about doing it?
What skills do I have that can make me more money? Can I get a side hustle?
Which of my debts do I pay off first?
Where can I learn more about paying off my debt?
Who can I talk to about paying off my debt?
What are some of the side effects of having debt?

These are only a short list of the questions I asked, but don’t stop short. I asked many more questions until I couldn’t come up with another question relatively quickly. As I went along, I noticed that a lot of my questions were forming into mini-goals all on their own. The first mini-goal I focused on was based on the question “What can I do today?” I knew that I could review my bank records and see were I was spending my money. So that became my first mini-goal, my first small step. With my Q-Storming complete, I began to see other small steps I could take to pay off my debt. No longer was my $96,000 a huge problem; my goal was broken down into mini-goals which all were obtainable. I finally had a way to connect A to B.

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