Feeling a Little Like John Kerry

June 10, 2010 2 Comments

I’m the type of person that when I make up my mind, I stick to the plan.  Lately, though, this hasn’t been the case.  I’ve struggled to stick to spending plans, failed to keep a balanced budget and have been indecisive about whether to save money or pay down debt.  Cue the Swift Boat Veterans!

Even more than you’re probably sick of hearing about my struggle with my spending and the battle to balance savings and debt repayment, I’m sick of struggling to reach a solution to the problems.  It is frustrating to continually fail at reaching my spending goals and even more troubling to realize that what had been a surplus at the beginning of the year has become a deficit.

Exposing these challenges fills me with fear and discomfort.  It is a lot more fun to share the accomplishments, the highlights of life and inspirational stories.  It isn’t as enjoyable to broadcast my weaknesses and uncertainties and I don’t like sharing my insecurities and self-doubt.  I don’t like it but I want you to know that I struggle with the same challenges as anyone and I want you to realize that doing the right thing isn’t always the easiest.

It is a battle always in perpetuity.

I will continue to struggle and fight these battles so that when I come out at the end of all of this, I will have the comfort of knowing that I have fought to do the right thing the entire time.  In the process surely I will make mistakes and maybe even fail.  I will be wrong and do stupid things at times.  I will satisfy my impulses one day and regret the decision the next.

Despite all of this, there is an end to the war and it isn’t over until I have won.  It isn’t over until I have defeated my enemy; debt.  It isn’t over until I am consistently reaching my savings and retirement goals.  This battle cannot be lost until I choose to give up and accept defeat and as much as I may vacillate from time to time, I will persist and I will win.

We must fight the battles in our lives that are worthy of fighting and realize that defeat only happens if we make that choice.

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Check out Pop Economics’ Carnival of Personal Finance #261 which featured this Hundred Goals’ article!!!

Filed under Budgeting, Debt, Goals, Life, Money, Preparation, Prioritizing, Random Thoughts, Savings, Spending, Success

Eating Ourselves into Debt

June 6, 2010 1 Comment

With all the ventures we have been pursuing in our lives, no doubt a lot has changed in the past few months.  Some of us have had children, moved into a new home, started a new job or lost an old one.  Maybe we are on the cusp of a new beginning, starting our own company or thinking of marriage.  No matter where we are in our lives, even if it seems as though life has been pretty dull lately, now is a great time to take another look at our budget.

“I don’t have a budget.”  Then today is your lucky day!  It is time to take control of your finances and create one.  You get to tell your money where it will be spent.  There will be no more uncertainty of where your money is going.  It is the dawn of a new era in your finances!

I created a budget at the beginning of the year based on actual and expected expenses.  When I made my budget I was running a surplus.  I budgeted for debt repayment and savings and still had money left over to use for pocket cash.  I used the extra money to help pay for some of the expenses of my travels around the world and a candy bar here or there when I wanted one.

Since setting up my budget, my life has remained relatively unchanged.  I didn’t move, no babies were born, marriage is still somewhere beyond the horizon.  Everything seemed to be headed in the right direction, yet, despite the appearance of a stable financial situation, when I re-evaluated my budget recently, something was amiss.  I found myself with a monthly deficit.  In a year’s time, the balance in my bank account would drop hundreds of dollars even though I was doing everything I should have been doing according to my budget.

What had changed?

When I revised my budget, I replaced the expected expenses of the original budget with actual expenditures over the last few months.  In addition to some recently added expenses, our actual grocery expenses were much higher than I had budgeted for at the beginning of the year.  This comes as no surprise considering how challenging it has been to bring this expense down in recent months.

Earlier this year we were eating meals that were cheap and unhealthy.  Processed food was all too common and fresh vegetables were pretty much absent from our diet.  When we prepared meals at home most of the ingredients came from a box, can, carton or bag.  Cheaper?  Yes.  Healthy?  Not at all.

We wanted to dramatically change our diet so we donated all of our processed food from our cupboards to the local church and restocked our shelves with foods that were healthy.  Fresh fruits, vegetables, fresh meat.  The recipes we used called for ingredients we had never heard of.  Strange and exotic spices began filling our cupboards and our grocery bill climbed.

Even as our spending grew, our budget didn’t change to reflect the increased costs.  We were making smarter decisions about what we ate but ignored the cost.  The money we were spending in restaurants was declining now that we were cooking meals at home and we weren’t eating out as often, however, the drop in restaurant spending didn’t make up for the inflated expense of the groceries.

How do I plan to turn the deficit back into a surplus?

Grocery spending (and restaurant spending) is what got me into this mess in the first place and will be the first category that will be cut.  I will not be buying macaroni and cheese to make these cuts.  The reduction in spending will boil down to meal planning.  Now that we have many of the basic ingredients for our new diet, I expect the costs associated with our diet to begin to decline.

I will create a zero-based budget, which means every penny will be accounted for somewhere on my budget.  No more surplus money floating around.  I will create individual accounts for specific goals such as my Emergency Fund and  Travel expenses.  My debt repayment goal will remain unchanged for the time being, though once my budget is balanced and flowing correctly, I hope to increase the monthly payment by an additional $100.  Each month I will transfer the budgeted amount into those accounts.

I have also added another category to my budget; Entertainment.  When there was extra money every month, it was easy to spend $30 to $40 on a date with Erin.  Now that I am spending more money than I bring in, it is time to tighten the belt and adjust accordingly.

That’s the plan!  Cut spending, begin a zero-based budget, no more slush fund and new budget categories for Travel and Entertainment expenses.

How often do you check your budget?  Once a month is probably better than twice a year!

Filed under Balanced Diet, Budgeting, Food, Money, Spending

Iceland Wrap Up

June 5, 2010 1 Comment

Recently I scratched Goal #8) Travel to Iceland off the list.

As our plane descended into Keflavík, I watched Eyjafjallajökull on the horizon spewing ash into the sky.  The land below was barren and scabrous, covered in black volcanic rocks from ancient eruptions.  For a moment it felt as though our plane was about to touch down on another planet.

For the next week, this was home.

The 45 minute bus ride into Reykjavík confirmed what I had seen from the sky.  As far as I could see, the landscape was devoid of life.  Like the flower that pushes its way through a crack in the sidewalk, tiny communities sprouted out of the black, the bright colored homes contrasted against the earthly surroundings.

The small communities started to condense as we approached Reykjavík and the boundaries between towns blurred until it was impossible to distinguish one from the next.  Hallgrímskirkja appeared in the distance, meaning Reykjavík was only moments away.  We entered a city as modern as any I have seen.  Unlike other European cities I have been to, Reykjavík lacks a feeling of history, no surprise as much of the growth within Reykjavík took place after World War II.

After a bus transfer at the main station, we arrived at our hostel in downtown Reykjavík.  On the counter there was a pile of propaganda promoting tours to visit Eyjafjallajökull.  I could accomplish Goal #83) Witness a Volcanic Eruption by taking one of these tours and I found myself caught up in the excitement of the moment.  Only the best tour would be good enough for me!  Total cost: 70,000 Icelandic Krónur.  We spent the rest of the afternoon wandering about the streets of Reykjavík while we waited until it was time to begin our tour.

The rest of the week we found ourselves taking tours and going on excursions around the southwestern peninsula of Iceland.  Thankfully, the remainder of these were significantly more affordable than the trip to Eyjafjallajökull.  We went whale watching in Faxaflói Bay where we watched Minke Whales surface and dive down into the cold North Atlantic waters off the coast of Reykjavík.  Bottlenose dolphins played off in the distance.  We took the Golden Circle tour where we saw Þingvellir, Gullfoss, Geysir and Strokkur.  We visited the famed Blue Lagoon, relaxing in the chalky blue water before eating dinner at the Lava Restaurant.

Our week was filled with unique moments and spectacular places.  We ate at a variety of restaurants, from hot dog stands to locally owned restaurants where the owner greeted each customer as they came in and left.  Aside from spending far too much money on the tour to Eyjafjallajökull, our trip was fantastic and I wouldn’t change a single moment.  With exception of the trip to Eyjafjallajökull (which was amazing), each trip was worth every penny, especially the Golden Circle Tour with Reykjavík Excursions.  If you ever have the chance to visit Iceland, this is a tour I recommend you spend a day taking.  The guide provided a wealth of information on the history of Iceland, the geology of the region and his thoughts on the countries financial crisis and upcoming city council elections.

By Saturday I was ready to go home and sad to be leaving.  It is clear that I need far more time in Iceland than a week at a time.  On my next visit I will spend at least 2 weeks so that I can take a road trip around the Ring Road and see the rest of the country.  It is an amazing place and I can’t wait to go back.

Click here to check out photos from my trip to Iceland!!!

Filed under 192 Countries, Iceland, Travel

The Game of Risk…err, Life

June 4, 2010 Leave a comment

 

To laugh is to risk appearing the fool.
To weep is to risk appearing sentimental.
To reach for another is to risk involvement.
To expose your ideas, your dreams before a crowd is to risk their loss.
To love is to risk not being loved in return.
To live is to risk dying.
To believe is to risk despair.
To try is to risk failure.
But risks must be taken, because the greatest hazard in life is to risk nothing.
The people who risk nothing, do nothing, have nothing, are nothing.
They may avoid suffering and sorrow, but they cannot learn, feel, change, grow, love, live.
Chained by their attitudes they are slaves; they have forfeited their freedom.
Only a person who risks is free.

-Author Unknown

Filed under Attitude, Inspiration, Motivation

The Borrower is Servant to the Lender…Maybe Not?

June 3, 2010 3 Comments

I have $31,829.47 in Student Loans.

Even though my loans are in deferment, I am paying these loans back while still in school.  As I mentioned last week, I am paying $350 each month towards this debt.  I’ve been crunching the numbers and came up with some scenarios.  At the current rate of repayment, it will take 9.3 years to repay the loan in its entirety.  By increasing the monthly payment to $450, I can have the entire balance of the loan paid off in 6.8 years, a full two and a half years earlier.

In order to reach my original goal of paying off $14,417.68 by next year I would have to pay $1,246.19 each month.  In as few words as possible, “It ain’t happenin’.”  If I were to eliminate all travel expenses (estimated at $3,000 to $5,000 a year), as some readers have suggested, it would take 4.8 to 3.6 years to pay the loan off in full.  By giving up travel, I could cut the loan time practically in half.

Maybe of more concern than the length of the loan is how much money can be saved.  The interest accrued on the loan when payments are $350 a month comes to $9,363.24.  Adding $100 a month would reduce the interest charges to $6,634.26, a difference of $2,728.98.  The accrued interests at $600 and $775 are $4,637.04 and $3,444.60, respectively.  The savings on interest charges could be as much as $5,918.64.

I could be out of debt in 3.6 years and save myself $5,918.64 if I eliminated all travel and applied the money towards debt repayment.  That really sounds great but the question becomes, “At what cost?”

Should money be the only consideration when getting out of debt?

The benefits of paying down the debt as quickly as possible are obvious and living with debt limits our potential.  Debt forces us to make decisions based on servicing our financial obligations rather than making choices that will bring happiness and satisfaction to our lives.  We are slaves to our lenders.

Or so we’ve been told.

The phrase “the borrower is servant to the lender” has been around since Proverbs 22:7 and in so many ways, this idea has weathered the test of time.  As I mentioned above, debt limits our potential and becomes the driving force behind so many of our decisions.  If we are in debt, taking the risk of quitting a job to pursue a dream becomes almost impossible.  Our ambitions are stifled by our obligations to our lenders.

Still, I wonder…is it possible to live a rewarding life while in debt?  Can a balance be found?  If we are methodically paying down our debts and meeting our financial obligations by building our savings and preparing for retirement, are we slaves to our lenders?  If we are able to balance these financial responsibilities while enjoying the moment we are occupying, does that make us slaves to our lenders?  There must be something more to this idea of being a slave to our lenders.

We become slaves to our lenders when all of our life energy is focused on servicing our debts.  We become slaves to our lenders when each penny we earn is not able to be enjoyed because it must be used to pay off debt.  We becomes slaves when we go to work for the sole reason of paying the bills when they come due.  Slavery to our lenders means the money we earn doesn’t belong to us anymore.  We become the middle man, working for one to give to another.  That is slavery.

Can we escape the financial slavery while still having debt?

I believe we can.  Being a slave to debt is a very real situation for many people but for a lot of us, it is a self-imposed sentence.  It was an imbalance in our finances that got us into trouble in the first place and it is an imbalance that is forcing us into a feeling of slavery.  If all of our energy is being spent to earn money to pay down our debts, of course we will feel like slaves.  If we work to create a balance between paying down our debt, building our savings and pursuing our passions and hobbies, the feeling of slavery disappears.  Paying our debts no longer feels like drudgery.

It will take longer and cost more money to reach an endpoint but the end will come.  Does it make sense to put yourself through 3 years of pure Hell to get out of debt faster and save some money or does it make more sense to create a plan that falls somewhere in the middle while you are still able to enjoy the precious few moments we are given on this earth?

That is a decision each of us must make on our own.  As for me, I am going to try to fall somewhere in the middle to get out of debt a little sooner while still chasing after my dreams and ambitions.  I am going to review my budget, find areas that can be cut and use that money to pay off my debt.

And as for cutting travel?

…

Filed under Attitude, Behavior, Debt, Freedom, Money, Passion, Preparation, Prioritizing, Spending, Student Loans

May Wrap Up

June 1, 2010 6 Comments

Today marks the halfway point in 2010.  The weather is finally beautiful and on the verge of becoming oppressively hot.  I actually thought that I was going to have to turn on the air conditioner last week!  I’d like to make it through the summer without having to do so but if last week was any indication of what the future holds, I’ll be camped out in front of the AC unit in my underwear!

At the beginning of the year I laid out a number of specific goals which I hoped to accomplish over the course of the year.  How are things going?

Diet:  “I will no longer treat my mouth like a garbage can and junk food will find its way to the trash where it belongs.  I will learn about healthy eating, teach myself how to prepare healthy meals and reduce the number of times I visit restaurants significantly.”

Our goal for the month of May was to cut our restaurant spending to $190.  Here are how the numbers shook out for the month:

Grocery Spending: $241.98

Restaurant Spending: $254.92

Iceland Food Spending: $185.19 (does not include food paid for with cash)

Again this month, we didn’t reach our goal to reduce our restaurant spending despite having a plan.  That plan was to withdraw cash to use for our restaurant budget.  When the money was gone, it was gone.  Or, that was how it was supposed to be.  By the end of the month we had exceeded our budget by about $65.  How did this happen?

When we came home from Iceland we were hungry STARVING!!! (Note to Icelandair: Please provide your passengers with free food.  Having to pay for food on an international flight is absurd and many passengers will refuse to eat simply on the principle of the matter.)  By the time our plane landed in Minneapolis, not only were we starving, we were craving familiar food.  Our first stop after we got back home was Chipotle for a steak burrito.  Honestly? It was worth every penny!  Our next budget violation happened a couple of days later while we were out and about shopping for new running shoes when we stopped at Olive Garden for lunch.  It had been a couple of months or more since our last visit and their Chicken & Gnocchi soup was too much to resist.  Budget busted!

I am beginning to wonder if I am being unreasonable in my budget.  If I am consistently spending over our budget, it might mean that I should adjust accordingly.  What is your opinion?  Is $190 a month an unreasonable amount of money for a couple to spend on restaurant dining?  It seems perfectly reasonable (even generous) to me.  I am shocked that I am not able to spend $23.75 a week or less on eating out and it is kind of frustrating.

Any suggestions?

Our total spending for May was lower than the previous month, even though we traveled to Iceland and ate out everyday.  We did purchase groceries for breakfast and we cooked spaghetti at our hostel a couple of the nights, otherwise we went to a few pricier restaurants and some cheap, local places for pizza and burgers.  We even ate at a hotdog stand.  We had to, it got rave reviews in our guide book!  It was pretty good, it reminded me of the Frankfurter I had while in Germany a couple months ago.

Another aspect of my food goal is to learn about healthy eating.  I’ve mentioned before about reading The Eat Clean Diet Recharged by Tosca Reno, a book which changed my opinion about the importance of food in addition to an active and healthy lifestyle.  This month I read another great book, which is less about the health effects of your diet than it is about the food industry, The Omnivore’s Dilemma by Michael Pollan.

This book really caught my attention, possibly because I am majoring in Environmental Science and much of what he writes about are topics I learned in many of my classes.  The earlier portion of the book discusses the politics of our food system in the United States, especially in regards to our corn production.  It is a fascinating read and another book I feel comfortable recommending.

Personal Resolutions

Travel: My goal is to travel 50,000 miles in 2010.  This month we traveled to Iceland, adding ~6,000 miles, leaving my total miles traveled this year at 21,300.  In about 3 weeks we leave for Kauai, Hawaii, adding another ~8,000 miles.  My traveling plans are beginning to slow down for the year and I am doubting the possibility of reaching 50,000 miles.  I am expecting to fall considerably short, which, honestly, doesn’t hurt my feelings.  Not because I am tired of traveling but because I am grateful for having the opportunity to visit so many amazing and unique places throughout the year.  You can’t beat traveling!!!

Education: Spring semester wrapped up a couple of weeks ago and final grades have been posted.  Statistics kicked my ass.  I ended up with a C, which really impacted my GPA for the semester (3.29), making my cumulative GPA 3.58.  I finished the year with a GPA above my goal of 3.5, barely.  This summer I am taking two classes, a personal finance class (which should be an easy grade) and yet another Chemistry class, which will be a challenge.  From this point forward I expect the curriculum to be considerably more challenging and I hope to be able to maintain my GPA. 

Find Internal Peace: Expect an update about my journey to find internal peace in the upcoming days!

There you have it!  A lot of progress was made and a lot more still needs to be made.  I’m feeling good about the upcoming month, it is going to be exciting!

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Check Out A Gai Shan Life’s Carnival of Personal Finance #259 which featured the Hundred Goals’ article Ask the Readers: Debt or Savings?

Filed under Updates

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