Update: Goal #97) Eliminate my Student Loans

I hate debt.

And if there’s one goal on my list that I feel is the most important to accomplish, it’s eliminatng my student loan debt. Over the last few years, I’ve climbed out of credit card debt, paid off my car, and wiped out a small pile of personal loans. But I’ve yet to unbury myself from the mountain of student loan debt I’ve built for myself.

If you’re considering short term loans for your personal financial needs, try custom loans from Launchloans.

When I began my college career, I was in a dire financial situation. Then I discovered an easy way to pull myself out of that situation: student loans. Having that money available without any real effort to acquire it meant taking out as much as possible every semester. I went a little crazy.

When I took out the loans, I was convinced that life after graduation would be different…BETTER! I thought paying back thousands of dollars would be just as easy as it was to get the loans in the first place. I’d have an amazing career and earn lots of money!

With graduation on the horizon, I’ve been trying to pay off as much as possible before joining the “Real World.” And today, I finally paid off all the accrued interest. It’s a small step in the right direction…and I have many more steps before I reach zero.

But I will reach zero.

Loaning Money is Stupid

I won’t loan money to anyone.

I wouldn’t loan someone a penny to buy a candy bar.  I don’t care how much they might think they need their chocolate and even with the crazed looks of desperation, wild handwaving and dramatic music playing in the background, I just don’t care.  “No” will always be my answer.  Forever and always, anyone asking to borrow money from me will get the same response.  No.  No!  NO!!!  A million times, no.

Why?

The answer is simple.  Loaning money changes the dynamics of the relationship.  Now, instead of a friend, brother, sister, son or daughter, that person is a debtor.  In encounters and engagements which would’ve otherwise been carefree, now you begin questioning the intentions of that person, especially if they’ve had a hard time paying you back.  That doubt lingers in your mind like a fart in a crowded room.  You wonder if they’re thinking what you’re thinking but you’re afraid to ask because it would be awkward.  So you sit silently, brooding to yourself, counting the lost money and contemplating all the things that money could have been better used for.

I wish to avoid ever having to feel that way about anyone I care for, so that’s why when people ask me if they can borrow money I always tell them “No, but you can have it.”

If someone you know asks for money, especially an amount more than just chump change for a Hershey bar, chances are, they really need the help.  It takes a lot of courage to tell someone you’re having trouble making ends meet and that you could really use their help.

If you just loan the person money, what good does that do?  It only places yet another burden on them and it alters the relationship, sometimes in an irreparable way.  By giving them what financial support you can offer, you’re helping them instead of shuffling their problems from one hand to another.

A few dollars to someone in a bad situation will make a world of difference.  It can put food on the table for the next few days, keep a roof over someone’s head for the next month or keep the lights on a little while longer.  Knowing that you’re able to give that to someone is one of the best feelings in the world.  And for them, knowing that you expect nothing in return lifts some of the weight from their shoulders.

Here are a few suggestions for giving money:

Expect nothing in return.  This is unorthodox in our society, so expect wails of protest.  Insist and don’t end the conversation until you win.  If there is no winning, tell them that when they’re back on their feet they can buy you lunch.

You are not a charity.  People in need often flounder for a while before finding their footing.  Decide for yourself how much you’re willing to support them and make it clear.  If this is a one time deal, say so.  It’s hard to refuse money to someone who is in need but you must also take care of your own financial responsibilities.

Offer advice.  Sometimes all a person needs is someone to talk to.  Other times they need someone who can help them find resources or give them a ride somewhere.  Be that person if you are able.  There’s nothing worse than feeling like you are in it all alone.  Be a friend, give your shoulder to lean on and show them you care.

 …and “NO!” I won’t give you money to buy a candy bar either!!!  Sheesh!

The Life You’ve Always Wanted?

We all have our ideas of what the “perfect life” would be like but often the images in our mind are a far cry from the reality we are living.  If you were able to travel back in time and ask a younger version of yourself if this is the future they’d choose for themselves, what would their answer be?  Twenty years ago, could you have envisioned the life you have today?  Is it everything you’d imagined or have your dreams evaporated into thin air?

Chances are, the life you are living today is nothing like the life you expected to have.  You sold your ideals for a dollar bill.  Why?  “Because that’s just what adults do.” We have to make a living to pay the bills.  There’s food to buy and television to watch.  How are we supposed to save the world when we’re up to our eyeballs in debt?  The mortgage isn’t going to pay for itself, is it?

“It is what it is.” There’s no time for dreams.  Dreams don’t pay the bills or put food on the table.  Our younger selves didn’t understand what it meant to be adults.  We have obligations now and we’ve built our lives around some idea of what it means to be a “responsible adult” in today’s world.  What we ended up with is a career that steals our time and energy, a mortgage that drains our income and debt from all the Stuff we bought to furnish and decorate our home.  We have many thousands of dollars in Student Loans and a couple of cars to pay for.  Oh yeah, and the credit cards…

It looks like being an adult isn’t all that we’ve been led to believe.  All of our lives we’ve been told that adults are “responsible”, implying that it’s somehow more virtuous to fall in line and follow the leader than it is to follow our youthful ambitions.  The “responsible” thing to do is find a job, get married and have children, buy a house and a couple of cars, then keep your nose to the grindstone until it’s finally time to retire.  When that day does come, we hope that our health will last long enough to enjoy the life of our dreams; the life we’ve been waiting our whole life to live.

And what has it all amounted to?  A garage full of Stuff we never really needed in the first place, kids that seem to resent our very existence unless we’re buying them something, a spouse that we barely seem to know anymore and a huge house we aren’t able to enjoy because we are at the office earning a paycheck to pay the mortgage.

Sure, we have all the Stuff we could ever imagine.  We drive nice cars and wear nice clothes.  Our home is decorated like a magazine cover and on the weekends we are able to relax with a cold beer in the backyard.  On the surface things seem wonderful.  A little deeper though and things don’t look as good anymore.

What are we sacrificing to create this image of the “perfect” life?  Our time, our energy, our sanity?  If the average person starts working fresh out of college at the age of 22 and retires at 67, that’s 45 years of life sold for a dollar bill.  We’re trading our life to fill our garage with junk, for a heap of metal to take us to a job so that we can pay for that same heap of metal.

What if there were a different way?  What if you didn’t have to spend your entire life working?  Would you do it?  If you knew that in 10 years you could be financially able to walk away from your job with enough money to pay for all your expenses, would you have the ambition to make it happen?

There is a way, it is possible!  The only problem – of course there’s a problem – is that to get there, you have to minimize your spending and save.  “But that’s Un-American!” Our entire lives we’ve been told to “get out there and boost the economy.”  After the attacks on September 11 we were told to go shopping as a way to stand up against terrorism.  Does that mean we’re supporting terrorism by saving money?  Of course not!

What I’m talking about isn’t a new concept.  It isn’t impossible.  It’s been done before and it’ll be done again.  And not just by a few outliers but by many thousands of people.  Will you be one of them???

What’s the secret?

Live Frugally: Cut your expenses to the bone.  Anything that doesn’t offer real value to your life is out.  That might mean going without a contracted cell phone, cable television, TiVo or Netflix.  Find alternatives or other ways to occupy your time.  It may seem impossible now but you can live without these things.

Get Out of Debt: You can’t be financially independent when you’re in debt.  Get out, get out, get out! By adopting a frugal lifestyle, the extra money you’re able to save can be applied towards eliminating your debt.  After you’ve saved up enough money to cover six months of living expenses, every penny should be thrown at your debt.

Save: Once you’ve paid off the last of your debt it’s time to save like never before.  It may take you a few years, maybe even ten or 15, to save enough money to become financially independent but that’s better than 45 years!

Invest: This is where the magic is!  With the money you’ve saved, you can invest it into conservative investment vehicles which will pay you interest in fixed intervals over a specific length of time.  If you’ve saved and invested enough, this interest will cover all of your monthly expenses.  Now your money is working for you, not the other way around!

If you’d like to learn more about the process outlined above, I recommend checking out the book Your Money or Your Life by Vicki Robin and Joe Dominguez.

Guest Post: Credit Cards, Fancy Cars and Caviar

The following is an article written by Brandon Bailey.  Brandon’s blog, Adventure Deficit Disorder, is about enjoying life in the present, simplicity, and seeking adventure.  If you enjoy this article, check out his blog and be sure to sign up for free email updates!

As humans, we are horrible at knowing what will make us happy.  From a psychology standpoint, we generally avoid actions that will inflict some kind of pain or suffering and actively pursue what we think will make us happy.  In our modern capitalist culture we have been socialized to think the consumption of goods will make us happy.

But does it?

On a recent trip through Aspen, Colorado I found myself falling into a sort of trap.  Seeing the smiles on the faces of all the beautiful people drinking expensive wines on restaurant patios, the flashy cars rolling through the streets and the gorgeous ski-in ski-out mansions made me envious of the wonderful lives these people seemed to live.  Then I started asking myself questions like,  “Why am I envious of such a lifestyle?”, “Are these people really as happy as they seem?”, “How do so many afford a lifestyle of such luxury and extravagance?”

Envy is a powerful emotion.  According to British philosopher Bertrand Russell, “envy is one of the most potent causes of unhappiness” because it reveals our self-perceptions and desires in relation to others.  At a time when the MTV-lifestyle is seen as the epitome of success and credit cards are readily available, we (or at least people under 35) have been taught to think we need - and deserve – a celebrity lifestyle.  This kind of entitled attitude is dangerous and despite having previously explored a high-life image of expensive dinners, exclusive parties, “celebrity” friends, penthouse apartments and European cars, only to discover that I was more unhappy than ever, I still find myself occasionally drawn in by the Siren’s song of the high-life.

A few years ago it dawned on me how absurd and unsustainable such a lifestyle is while in the VIP section of a nightclub with several well-known NFL players.   I found myself surrounded by so-called beautiful people, wearing oversized watches embedded with diamonds - one more extravagant than the next, drinking bottles of champagne costing several hundred dollars each.  I could feel envious eyes peering in from beyond the red velvet ropes – wasn’t this what I was supposed to aspire to?  MTV and other social indicators told me so, but I couldn’t have felt any more like a fraud.  After I left the club that night, early and alone, I never heard from any of my “friends” again, confirming that I had made the right choice to walk away from that lifestyle.   Through this experience, I now realize that the so-called happiness derived from living this type of lifestyle is fleeting and only surface deep.  

In the subsequent years I’ve discovered that by cutting my expenses, not increasing my earnings, I have more time and freedom to pursue the same things I enjoyed and dreamed about as a kid.

So what did I cut?

Big nights out.  Dinners at trendy restaurants.  Drinks into the early morning hours.  These things can add up to big bucks.  A nice dinner here or there with people that you really enjoy is perfectly fine, if not important, but should not be a lifestyle.

The wardrobe.  I can’t figure out why anyone really needs multiple pairs of jeans or shirts that are exactly the same (especially t-shirts that cost upwards of $100).  If you are worried that people will notice whether or not you wear the same thing every day, they won’t.  Think you will never have enough clean clothes?  You will.  Clothes are rarely legitimately dirty after one wearing.  Donate anything you have not worn in a year, even if it is a “nice” article of clothing that you “forgot about”.  You probably won’t wear it again anyway.  When getting new clothes, buy things that will serve multiple purposes and can be worn year-round.

The fancy car. This doesn’t mean we should all drive a beater - a car should be safe - but it does mean that having a car that is losing value faster than Lehman Brothers is going to hurt you.  For some reason people seem to forget that cars depreciate and are therefore not an asset.  You’ll also save on insurance and registration if the car is even just a few years old.  Better yet, ride a bike.  Gas is expensive.

The cable. According to the A.C. Nielsen Co., the average American watches more than 4 hours of TV each day.  That is 28 hours each week and 2 months of nonstop TV-watching per year!  In a 65-year life, that person will have spent 9 years glued to the tube.  Figuring in a fixed average cable bill of $71 per month for those 9 years ($71 x 12 months x 9 years) you would save $7,668 just by cutting out cable.  If you think you need television for news or entertainment, try going without it for a little while.  Suddenly that extra 28 hours per week will be obvious.

So how do so many people afford a lifestyle of such luxury and extravagance?  Well, many don’t.  If you follow the news even just a little, you’ve probably heard that the average American carries more the $8,000 in credit card debt.  According to Liz Pulliam Weston at MSN, this isn’t entirely true, claiming that 50% of credit card users owe $8,000 or less.  Still, 1% of the 84 million American households who have at least one credit card owe $21,400 or more – that’s 840,000 households that have racked up some serious credit card debt.  Additionally, as of May 2010 there were 2,082,113 foreclosed homes in the US.  In some states, the foreclosure rates are as high as 1 in 78.

As for the smiles, fancy cars, and castles in Aspen - it’s mostly surface deep and difficult to maintain.  Credit cards are maxed, the fancy cars are just for show, and the ski castles are for sale.  There are a lot of $30,000-millionaires out there living lives well beyond their means who will never achieve the freedom to pursue their childhood dreams.  Don’t be one of them.  Cut your expenses to get the time and finances for doing the things you really want.

Feeling a Little Like John Kerry

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 debtCue 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.

*     *     *

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

The Borrower is Servant to the Lender…Maybe Not?

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?

Waiting For Someday

Around the time I began writing Hundred Goals, I wanted to change my life.  I was working at a job that I hated to pay for a car that took me to that very job.  All three of my credit cards were maxed out and over their limits.  I had been dragging along a personal loan for almost 6 years, the result of multiple failed attempts at debt consolidation.  This, on top of my Student Loan debt that continued to grow with each semester.

I wanted to change my life and the first step had to be getting my financial situation under control.  Without making money my priority, accomplishing anything else, any personal goal, would either be impossible or lead me further into debt.  My only option was to dig myself out of debt, dollar by dollar.   For the next year I spent every moment of my life working.  I went in early and stayed late.  If I was able to work on the weekends, I did.  I worked every single day of the week, Sunday to Saturday, at times working more than three weeks without a single day off.

I was earning a lot of money and using every penny to pay off my debt.  I watched my account balances disappear and I began the long climb out of debt.  My credit cards were the first to be paid off, then the personal loan.  While I was working to get out of debt, my life consisted of nothing more than work.  Keeping the money flowing in was my sole mission and purpose in life.  I knew that my hard work and determination would eventually pay off.

After paying off my credit cards and personal loan, I felt like my financial situation was almost under control and I began working less hours.  Now that some of my debts were paid, I was no longer struggling to make ends meet.  The money I earned working 40 hours a week was more than enough to continue paying off debt and to begin pursuing some of my other ambitions, so…

Erin and I booked a trip to Aruba.

Even though I still had debt, a balance between delaying gratification and living in the moment needed to be struck.  Instead of waiting for the ideal financial moment, a moment that would be years in the future, I seized the opportunity to pursue my dream of world travel rather than continuing to delay my life.

Fiscal responsibility doesn’t mean a life of suffering and slavery to your debts.  It means finding a balance, one where you meet or exceed your financial obligations while still leading a fulfilling and meaningful life.  When I was working seven days a week, my life wasn’t fulfilling or meaningful but it was what I needed to do at the time in order to put my life in a place where I was able to find meaning and fulfillment.

I wanted to change my life and I have.  I no longer need to rely on my credit cards and I do not carry a balance from one month to the next.  I don’t need to rely on payday lenders to make my rent payment at the beginning of the month.  I have paid off the remaining balance on my car loan and have begun repaying my Student Loans.

All the while, I am chasing after my goals.  Since traveling to Aruba, I have spent the majority of my free time visiting places around the world.  Belize, Germany, Iceland (Mexico, Honduras, Grand Cayman).  I spent a month visiting National Parks around the United States.  I have paid for all of these things with cash from my pocket as I continue paying down my debts.  I’m not waiting for someday.

It could be argued that I could pay off the last of my remaining debt much earlier if I were to sacrifice even some of the traveling that I do.  Absolutely!  It would be possible to get out of debt earlier, though I see no reason to sacrifice the precious moments I have now in order to become debt free a little sooner.

“Accomplish Your Goals While Managing Your Finances”

It is possible to do both and I encourage you to find the balance you need in order to turn your dreams into a reality while meeting your financial obligations, not only in debt reduction but also in savings and planning for the future.  Waiting for someday to live your life is a sure way to waste the life you have at this very moment. 

Find balance.

Ask the Readers: Savings or Debt?

I have been working towards building my Emergency Fund to my target of $5,000 while also trying to pay off my Student Loans.  This approach is restricting my ability to accomplish either very effectively since my money is being divided between both.

I have given this situation a lot of consideration over the past year or so and had settled on trying to pay down my debt while also building my Emergency Fund, though now I am beginning to think this may no longer be the best choice.

The high interest portion of my Student Loan balance (I have a total of $32,157.96) that I want to pay off within the next year lingers at $14,417.68 with a 6.8% interest rate, which translates into $980.40 a year ($81.70 a month) in interest charges.  I am paying $350 a month towards this debt.  I am eligible for grants and have earned a small scholarship which I hope to be able to use towards paying down some of my Student Loan debt.

My Emergency Fund balance is $1,907.03 and will cover 2.5 months of living expenses.  The interest rate on this account is 1.10% which, at the current balance, is $20.98 a year in earned interest.  I am contributing $100 a month into my Emergency Fund.

If I continue to save $100 a month, I will reach my goal of $5,000 in December 2012 and my Student Loan balance will reach zero by June 2014, a far cry from my ambitious goal of having it paid by May of next year.  On the other hand, if I apply the extra $100 a month that I am saving towards paying off my Student Loan, I will be able to reach my goal a year earlier.

There is another option.  I could throw all of my current savings at my Student Loan debt, which would lower this portion of my Student Loan balance to $8,789.68.  This would drain all of my savings and put me in a precarious financial situation and I am not honestly considering this as a viable option.

Clearly, the choice that makes the most sense mathematically is to focus all of my energy towards eliminating the Student Loan balance.  Mentally, having a cushion of money to fall back on is reassuring and allows flexibility in my lifestyle.

This money in savings (not my Emergency Fund) also allows me to pursue many of my ambitions such as travel.  It could easily be argued that until I have paid my debt that I should not be traveling.  Fair enough, though I believe that finding a balance in life is the key to happiness and I make sacrifices in other areas of my life in order to pursue my passion of travel.  I would not be happy without the freedom to move.

I’d love to hear your thoughts and opinions about my situation.  I know what I want to do but I feel like I would be making a mistake by ignoring my savings goal.

Livin’ Like a Drug Dealer

“They must be drug dealers.  How else could they possibly afford to live the way they do?”

On the outside, my life might seem glamorous, the life of a drug dealer, full of money and expensive trips around the world.  In the last year I spent a week in the Las Vegas area, went on a month long road trip on the west coast and returned to California a month later to camp in Yosemite, went cruising around the Caribbean and last week was spent visiting a friend in Germany.  In two months I will be visiting Iceland and a month later I will spend two weeks in Kauai, Hawaii.

Most people only ever dream of traveling to the extent that I am able and some speculate that such a lifestyle can only be attained through illegal means, such as dealing drugs.  What many people ignore are the sacrifices I make in my daily life in order to afford to live the way I do.  If you want to live like a drug dealer, I can show you exactly how I am able to do it, no drugs necessary.

Rule 1) You Can Have Anything but You Can’t Have Everything.  When we are kids our parents tell us that we can grow up to be anything we want to be.  It is true.  With enough hard work, we can become anything that we want to be but we can’t become everything we want to be.  You can have anything you want in life, for me this is travel, but you can’t have everything.  You have to make a choice.  Do you want to travel or do you want to drive a sexy sports car?

Rule 2) Stop Paying Attention to Others.  We only see what other people want us to see.  People do not want us to know that they can’t really afford exotic vacations, expensive designer clothes, luxury automobiles, dinner at exclusive restaurants and drinks after work.  Our society believes that being rich means looking rich.  We spend our money trying to keep up appearances, all the while completely undermining our financial stability.  Being rich and having money has nothing to do with what you drive or the clothes you wear.  Ignore other people and focus on your own financial situation and on your dreams.

Rule 3) Stay Out of Debt.  If you are in debt, get out.  When you are always paying for the past, you are unable to focus on today or the future.  Since beginning this website I have eliminated my credit card debt and paid off my car loan.  Now I am able to apply that money towards doing other things in my life, such as travel.  Debt holds you hostage.  You become a slave to your lenders and you spend your days working for the banks and credit card companies.  The money you earn does not belong to you and until you eliminate your debt, you are not in control of your life.

Rule 4) Stop Buying Shit You Don’t Need.  Really.  If you want to live life like a drug dealer, you can’t spend all of your money on stupid shit that brings no value to your life.  My money is spent on plane tickets and hotel rooms, the things that I value and bring enjoyment to my life.  I do not spend money on media, cigarettes, alcohol, clothing, etc.  I live minimally and only try to spend my money on the things that I need.  Stop buying shit you don’t need and you will have money to spend on the things that you want to do in your life.

Rule 5) Make Life a Priority.  Stop thinking about all of the things that you want to do in life and make them happen.  It took me a long time to stop making excuses.  There is always a reason not to do something and so long as you continue to use these excuses as justification for not pursuing your desires, your life will never change or improve.  If you want something in life, you can’t expect for it to happen to you, you must make it happen.  You have to be aggressive and punch life in the face!

The rules of living life like a drug dealer are simple, totally legal and can work for anyone.  You don’t need to earn a lot of money to live a great life.  You just need to be smart with the money you earn and prioritize the things that are important to you.  Once you begin to follow these simple rules and apply them to your life, you can be certain that your life will begin to take shape in exactly the way you have envisioned in your mind.

Personal Finance Update

At the beginning of the year I wrote an article titled Attention to Detail: Finances where I discussed my financial situation as being weak.  Having focused almost entirely on debt elimination, I have left myself in a position where my goal of becoming debt free is able to be undermined in an instant.

While I was paying off debt, my savings account was ignored and I emptied my Emergency Fund in order to pay off the last of my Auto Loan.  While all of my effort has been for the greater good, I have been living from week to week as a result.  To find balance in my finances, I made the following declaration:

“I will establish a savings plan to compliment my debt repayment plan.  In doing so, I will create a balance in my finances which will help accomplish both goals simultaneously.”

By the time February arrived I still hadn’t been proactive in finding a balanced approach to my finances.  Instead, I was focusing exclusively on rebuilding my savings account.  I managed to put away $650 in that time, however, my debt repayment plan was pushed aside and largely ignored.  I even procrastinated on personal financial obligations in order to boost my Emergency Fund.

While I succeeded in creating a small financial cushion, my other goals slipped through the cracks and I lost an entire month of repayment.  Instead of further perpetuating this imbalance in my finances, I made a promise to create a budget that would balance my savings goals with my debt repayment goals.  I am happy to say that today, that goal is accomplished.

I have a budget that allows both savings and debt repayment.  The only disappointment in this budget is that working at both goals simultaneously slows down progress on each.  I had hopes of being able to pay off about $15,000 of Student Loan debt in the next year and a half.  This was highly ambitious to begin with and now seems even more unrealistic.  Regardless, I will do all that I can to pay down my debt as quickly as my financial situation allows.

In addition to creating a budget, I have created accounts specifically for the expenses outlined in my budget including Household Expenses (Rent, Utilities), Variable Expenses (Cable, Internet, Cell Phone and Food), Auto Insurance and Emergency Fund.

It is a start, and while there are flaws, it is a beginning towards a more stable and balanced approach to my finances.

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