By: K. Jade
One of the first headlines that I read in the wee hours of the morning on November 9, 2016, described Donald Trump's election as a "Repudiation of the Establishment." This headline referred to the approximately fifty percent of the American populace who chose to vote for a candidate that they felt would dismantle an American political system that had "forgotten them", and "left them behind (please envision air quotes here)." My immediate thought upon reading this headline, was that the result of this election didn't feel like a repudiation of the establishment, it felt like a repudiation of my very right to exist in this country. This election felt personal, this election felt painful. In the days since, everyone and their mother has written about the number of reasons for the election of a man with a lip-curl inducing personality. What was abundantly clear, in all caps, bolded, underlined, and has come into even greater focus in the days since, is that this was a referendum on the Other, and that hurts.
I recently saw the much hyped film The Birth of a Nation, about the life and times of Nat Turner. There is a scene towards the end of the movie in which the rebelling slaves, and their white nemeses are rushing at each other in a flurry of weapons, and violence, and emotion. Much to my surprise, I started to cry. I started to cry because this scene seemed like an apt metaphorical representation of what has recently bubbled to the surface of our great American melting pot. I have heard it said time and time again during this election cycle by people that lack an understanding of history and probably a significant number of IQ points, that "this country is more racially divided than it has ever been," a statement usually followed by a sentiment along the lines of "thanks Obama." Ours is a country founded on racial division, resulting in deep, centuries old wounds to the collective psyche of the black community; wounds which have had salt rubbed into them time and time again during this election cycle. This is not about sound bytes and the elitist liberal media brainwashing us to think that things are worse than they are. If you have been brainwashed to think that you've been brainwashed, and that this is all overblown, and people are overreacting, and that this election had nothing to do with race, or fearing the Other, have a blessed day.
So I would like to thank our President-Elect for running a campaign that reminds of us that these chasms still exist. It seems that we had become too comfortable under eight years of Obama. His election was an affirmation of our right to exist and to thrive in this country, and we appear to have underestimated those who took issue with that shift. By "our," I am not referring only to black people. Included in the intended exclusion as we know, is any group that doesn't fit into the Norman Rockwell-esque America, that is the epitome of the Great America we will soon be returning to. The day after the election, someone said to me that they couldn't understand why their LGBT friends were so upset about the election results. In a calm, non-threatening voice, I remarked that they, and many others, are probably fearful that rights they have fought so long and hard to obtain, seem to now be in jeopardy, and hoped that was a sufficient explanation, because that was all the chill I could muster at the time. I would like to take a moment to point out that this was not the most ridiculous thing that I heard that day. That award goes to a white male who told me proudly that he had voted for Trump, and then had the audacity to tell me that we are basically all slaves today, so it doesn't really matter. I ended that conversation very quickly, because at that point, I could muster no chill.
The fear associated with the election of Donald Trump has become very apparent in the days since the election. This fear, real or imagined, is not unfamiliar, but is unfamiliar to many of us in this context. I feel very deeply for an older generation who has known fear like this before, and in this context, after fighting so hard to never be back here. Before this election, we were worried about microaggressions. This election has brought macroaggressions eerily reminiscent of an era we mistakenly presumed bygone. So yes, this election has brought fear that people will lose their health care, fear that our newly elected traffic cone does not have the temperament to make it through four years without starting a third World War, and apprehension about who shall now sit on the highest court in the land. But there also seems to be a much more visceral fear, the sort inspired by the similarity between images such as those depicting the hatred directed toward black children during the desegregation of schools, and those depicting the recent vitriol displayed by some at Trump rallies. I mean, if you're endorsed by the Grand Wizard himself, the leader of an organization which sought to keep communities of color "in their place" using cruel and lethal tactics, a certain level of fear is to be expected.
So please do not presume to tell me that I am overreacting, lest I presume to tell you that Donald Trump's win was fueled by a water tank-sized vat of White tears (http://verysmartbrothas.com/white-tears-explained-for-white-people-who-dont-get-it/). That, ladies and gentleman, is an overreaction of the grandest sort. I hope I'm wrong about the next four years of Donald Trump's presidency, but what we have seen leading up to this election speaks for itself. The writing is on the wall. It says #makeamericagreatagain. It was written by people who voted against their own self-interests to preserve a way a life that they felt was threatened by the Other. Here we go.
The next time you see a car commercial watch a little more closely. You will likely notice that the advertiser lists the lease price of the car at the end. This is because the car lease is the best financial deal…for the car dealership. Many buyers may not know that car dealerships actually make very little profit when a buyer comes in and writes a check for a car. In most cases, the money is made on leases, financing, and maintenance. The car lease can be a financially devastating decision. Particularly for those of us who are trying to build wealth and gain financial independence (this should be everyone!). Let’s explain why.
First, we have to pick a car to lease. A number of stories have been written about millennials leasing luxury cars at a rate unseen in any other generation. I’m feeling a bit fancy today so let’s go with the 2016 Mercedes Benz C300 4MATIC® Sport Sedan. The listed MSRP for the car is $40,950. I’m in no position to lump down 40K for a car, so how about a lease? Eureka! I can lease the car for $389 per month for 36 months! The car just went from out of my price range to within reach. I’m getting a deal, right? To find out we’ll continue the example. But first, let’s revisit CARS 101 for a second. A general rule is that the largest depreciation in a car’s value occurs in the first 3-5 years of ownership. In those years, the biggest loss typically occurs in the first year. So we immediately know that by signing a 3 year lease we are driving the car at what is mathematically speaking, the least cost effective time to drive any car. It's actually a pretty genius idea by the car dealers. Have people like you and I eat the depreciation and give it back to them after that to sell for a profit. Okay, back to our example.
We are ready to lease our car for $389 per month! But, there is $4,683 due at signing. So, we are essentially making a down payment that we will never see again on a car we are renting! This cost includes the first month’s lease payment. With these costs together over 36 months we will pay $18,298. Now, let’s take a second and discuss what MUST be true in a car lease. In order for a car lease to make money for the dealer (If it doesn’t make them money they aren’t going to do it) the amount the lessee pays must cover the full depreciation costs of the car AND some extra to put money in their pockets. At this point you are likely starting to see why this is bogus. But it gets worse.
As a part of the lease agreement they only allow us to drive the car for 30,000 miles over the 3 years. If we exceed that limit we will pay excessive wear and tear fees plus $0.25 per mile over 30,000 miles. According to multiple outlets (Kelley Blue Book, Carmax, Time Business) the average mileage on a car per year is 12k-15k. But, we are allotted only 10k. This means that we are either bound to exceed the mileage and encounter more fees or we are going to have to park the car we are paying an arm and a leg for and drive something else to avoid going over the mileage. No freaking Bueno! We also have to consider that at the end of our lease we will have to pay either a $595 vehicle turn-in fee or use our purchase option and buy the car for $27,169 plus taxes. Keep in mind that means we will have paid a total of $45,467 (if we didn’t exceed the mileage) not including taxes for a car whose cost brand new was 40,950. But, we will assume we return the car at the end of the lease.
Okay, let’s do some quick math.
Total Lease Payments: $389 x 35 months = $13,615.00
Cash due at signing: $4, 683.00
Cost of driving average mileage (Assuming you drive 12,000 miles per yr):
6,000 (2,000 miles over each yr) x 0.25 = $1,500.00 plus excess wear and tear fees.
Vehicle return fee: $595.00
Total cost: $20,393 plus excess wear & tear fees
Kelley Blue Book estimates the value of the car to be 22-23K after 3 yrs at the mileage rate above. That means the depreciation in the car was about $17,950.00 but we paid them $20,393.00 AND we have to give back the car so we have nothing to show for the money. THIS IS A RIP OFF!
Lastly, let’s consider the opportunity cost. Instead of flushing our money on a rip off car lease how about we spend half of that cost on a car in year 1 ($10,000). And invest $398 a month for 36 months.
Money made starting with 0 and investing $389.00 over 36 months:
If you average 10%: 16,996.19
If you average 8%: 16,366.54
Not only would we still have our car, (because we weren’t renting it) we could also have nearly $17,000 in our investment. And think, even if you invested your money and did not make a dime you would still have $14,004.00 compared to losing every cent of that money in a lease. Something to consider.
You may or may not remember a post from last week that outlined 5 Reasons Beaches are Overrated. If not, you can check it out HERE. Well, not everyone agrees. Here is a fun response on why the beach is in fact an excellent vacation spot. At the bottom there is a poll for you to pick a side!
Posted by: K. Jade
It has recently come to my attention that haters gon’ hate - especially on the beach. As a beach lover, I find myself taking offense to the misguided complaints about beach-going that are often lodged by the aforementioned haters. Perhaps these curmudgeons haven’t been to the right beach, perhaps they went to the beach on the wrong day, or perhaps one traumatic beach experience has forever marred their ability to appreciate the beach. Whatever the reasons the beach haters use to justify their distaste for sandy, sunny, fun-laden beach days, there remain those of us for whom a day at the beach is akin to a day in paradise, and now I will tell you why. If you are not convinced by the end of this, there was no convincing you to begin with.
1. Sand is amazing
Sand is a natural exfoliant. If you arrive at the beach with feet commonly mistaken for cracked leather, you will leave with feet soft as a baby’s (insert body part here). So a few uncomfortable grains of sand between your toes is a small price to pay for the velvety skin you will get in return.
Sure, when you are forced to take off your flip flops and wade through the sand to your eventual spot on the beach, the sand may be approximately 130 degrees. This is where the power of positivity comes into play. There are people in this world (mostly ones going through midlife crises and with a large amount of disposable income) that pay thousands of dollars to attend “retreats” in which the culminating event is walking across a bed of hot coals, so that they may prove to themselves that they can do anything if they just put their mind to it. At the beach, there are miles of white, sandy hot coals for you to prove your mettle on. And for far less money. And surrounded by people you actually like.
And if your main complaint is that the sand is lumpy, get a beach chair.
2. The Crowds
If you love people-watching as much as I do, the beach is like the kobe beef of people-watching. Admittedly, different beaches boast different populations of people, but people-watching doesn’t discriminate (except it does). First of all, where else can you go and see hundreds of people basically walking around in their underwear, something they would never do in public if they were actually wearing underwear. This phenomenon alone is worth the trip. Also, watching people try to corral their children at a destination that boasts such dangers as getting lost, millions of gallons of water, jellyfish, and shark attacks, is its own breed of special.
If you go to the beach without children, you can literally lay at the beach, and people-watch all day. There is no hurry to move on to any other destination. This allows you to truly observe patterns of human behavior that you had only before viewed on MTV or read about on urban dictionary.
Beaches that allow alcohol take the show to a whole different level.
3. The tan
Some people only burn - those people should probably not go to the beach. Everyone else should put sunscreen on to mitigate their chances of getting skin cancer, and get your glow on, so you can go back to work and everyone can tell you how good you look, and you can flip your hair and say “Thanks, I was at (insert name) beach, this week. NBD.” And you will bask in the attention until you return to your natural skin color with undertones of sadness and late night glasses of merlot.
4. You can pee in the ocean
You can pee in the ocean. It’s liberating. Again, no $4,000 retreat necessary.
5. It is incredibly relaxing
Before you go to the beach, you can spend hours searching the Oprah’s book club list for a beach read that you feel will be the perfect intersection of intellectual stimulation and excitement. Then, you will not pick any of them, and you will bring Twilight. No matter, the point is that you are now free to sit in your beach chair that is conveniently located inches above the lumpy sand, and read for hours on end. Your only interruptions are to occasionally glance up at an extremely hairy Eastern European man who has decided to rock a speedo today, or to take a dip in the cool and refreshing salt water commonly known as the ocean. There is nothing like body surfing a giant wave that you can see coming your way, and waiting for it, giddy with anticipation similar to that of the children your beach neighbors have been trying to corral all day.
At the beach, there is no hurry. You can sink into a mindset which allows you to forget for the moment about all the stressors of your life. Your boss, your student loans, your car troubles, your cat troubles etc., can all be blissfully ignored, drowned out by the sound of crashing waves. You might even fall asleep in your beach chair, working hard on that tan without even being awake. And during your day at the beach, if you absolutely cannot just relax and stay in the moment, you can satisfy your brain by thinking about all the fun things you will do that night after the sun goes down, and your beach town transforms and serves up fun of a different variety.
To conclude my defense of the best type of vacation you can take - go to the beach. Relax, don’t overthink it. Bring a book, a chair, and some sunscreen, and you are ready for a day of sun and water-soaked enjoyment. You will return to your “real” life rejuvenated and refreshed, ready to grind out the next 358 days until your next beach vacation.
Tax deductions. We hear about them all the time and they are often advertised as a benefit of carrying a mortgage or student loan. But, do you actually come out ahead? As always, this post is not a “what to do” or “what not to do” post. Instead it is simply me sharing the results of a ton of reading, investigating and some basic math. For the sake of our discussion we will walk through an example using a student loan and one using a mortgage.
As of 2014 the US median household income was $51,939. Therefore, that will be our point of reference in our example. Okay, let’s say our family has $30,000 in student loan debt to go with their $51,939 income. Federal student loans allow you to deduct up to $2,500 per year in interest as a tax deduction. Very quickly let’s go over how a tax deduction works. A tax deduction allows you to deduct a specified amount from your taxable income. For example, if you have an income of $100,000 and you have a $10,000 tax deduction you will only pay taxes on $90,000. Got it? Good. Let’s return to our example. We will assume our family will get the maximum $2,500 deduction. If we subtract our $2,500 deduction we will only be taxed on $49,439. But, what is our actual savings? Well, a couple married filing jointly with an income of $51,939 will be in the 15% federal income tax bracket. Therefore, the tax deduction savings will be the difference in the taxes paid on $51,939 vs taxes paid on $49,439. Let’s to do math:
$51,939 x 15% = $7,790.85
$49,439 x 15% = $7,415.85
Tax Savings = 7,790.85 – 7,415.85 = $375
Using the calculations above you will see that our tax deduction saved us $375 in taxes. In this example, we sent the student loan company $2,500 in interest to avoid giving the government $375 in taxes. To make things worse, $2,500 is the maximum deduction. Therefore, even if you paid $10,000 in student loan interest you can only deduct $2,500. So the situation could be even more lopsided than our example! Hmmmm. Let’s try it again with bigger numbers and see if it changes the math.
In this example we will use a family that has a higher income and a mortgage. This time the family has a household income of $150,000 per year which places them in the top of the 25% federal income tax bracket. The family is in the first year of a $250,000 mortgage (The most interest is paid in the 1st year) at 4% interest. By the end of the year they will have paid ~$9,099.96 in interest if they had a 30 year mortgage. Using the tax deduction, their taxable income will become $140,900.04. Let’s see how much this tax deduction will save them.
$150,000 x 25% = $37,500
$140,900.04 x 25% = $35,225.01
Tax Savings = $37,500 – 35,225.01 = $2,274.99
In this example the math again does not work. This time, we sent the mortgage company $9,099.96 in interest to avoid giving the government $2,274.99 in taxes! I should also note that in the United States we have a marginal income tax system. This means only the amount of money that exceeds the higher tax bracket is taxed at the higher amount (We will discuss this more at a later time). The point I am making is that the equations I have used overestimate the amount of income tax one would actually pay in these scenarios and the math is still abysmal.
The take home message: Tax deductions are definitely something to utilize if they are available in your situation. However, they ARE NOT a good reason to keep a mortgage or student loan around instead of paying them off. Something to think about.
What would you say if I told you that the origin of the word “Mortgage” literally means “Death Pledge” (Mort=Death Gage=Pledge)? Might be cause to stop and think before getting one, right? One of the pillars of adulthood in western culture is home ownership. In general, it seems to be a good idea to own the place you live rather than renting for your entire life. However, when to buy a home is the big question for most people. The purpose of this post is not a “when to buy a home” post (I don’t even own a home yet). Instead, I did some research on the 30 year mortgage and I am simply sharing what I found. To be honest, the math is startling! I will also note that this post will not address the variable rate 30 year mortgage or 30 year mortgages with “balloons.” We will save those for another post.
Okay. Let’s say we have a family who hopes to buy a $160,000 home and they have $5,000 saved for a down payment. This family goes to the bank and is approved for a 30 year fixed rate mortgage at 4% interest. This means they will have a mortgage for $155,000. So, what will it actually cost them?
Monthly Payment: $739.99
Annual Amount Paid: $8879.88
Amount Paid After 30 Years: $266,396.40
Interest Paid After 30 Years: $111,396.40
In the above example the 30 year mortgage cost us an extra $111,396.40 above the cost of the home! This excludes fees that the mortgage company tacks on to the amount that you borrow. This also does not include Private Mortgage Insurance (PMI). PMI is insurance the bank forces you to buy for them so that they are covered in the event that they have to foreclose on you. PMI is charged until the bank has a 20% equity position on the property. In other words, until you have paid up to 20% of the home’s value, you will be paying PMI. Side note: PMI can be avoided altogether with a 20% down payment. PMI is typically about $100 per month for every $100,000 borrowed. In our example PMI alone would cost $16,785.02 over the life of the loan! Now, let’s consider the appraisal fee (~$500) and the lenders home inspection fee (~$250). At this point we can update our cost list:
Monthly Mortgage Payment: $739.99
Monthly PMI: $148.54
Annual Mortgage Amount Paid: $8879.88
Mortgage Amount Paid After 30 Years: $266,396.40
Total Interest Paid: $111,396.40
Total PMI Paid (Paid until 20% or mortgage gone): 16,785.02
Appraisal Fee: $500.00
Lenders Home Inspection: $250.00
Total Cost: $283,881.42
Cost Above the Initial Home Value: $128,881.42
The 30 year mortgage cost us an additional $128,881.42! We could have bought our initial house and another one just like it with a few less amenities! If nothing else, this example illustrates that the 30 year mortgage is designed to benefit the BANK! Not to do you and I a favor. Just something to think about.
Well, I have degrees in Human Nutrition and Public Health so it was only a matter of time until a health related post appeared on the blog. Right? I have never been a huge soda drinker but I do understand the occasional desire for the bubbly sweetness of an ice cold soda. I get it. Many of us know that as far as our health is concerned there are far better beverage options than soda. But, what if you don’t want to give up those cold crisp bubbles? I’ve got just the thing! Mineral water! Here are 6 reasons to ditch soda and pick up mineral water.
One of the best things about an ice cold soda is the bubbly goodness that we all know and love as carbonation. No worries, when you switch to mineral water you get to keep the fizz! Depending on what brand of mineral water you select there are varying levels of “fizziness.” But, rest assured you will not have to sacrifice your carbonation when you make the switch.
2. No Sugar
At this point most people are aware that sugar is perhaps the worst thing in the American diet. Worse than fat, worse than cholesterol, worse than all of it. In fact, John Yudkin, PhD who was a nutritionist and physiologist tried to warn the world of this truth in 1957. What happened? Well, money happened. Companies like Coca-Cola funded studies to try and silence Yudkin and his findings. Why? Because sugar is cheap and profitable. As a result people moved to low fat food products which typically replace the fat with sugar. Obesity sharply increased and people were left wondering what just happened. With mineral water you avoid this altogether. There is no sugar. Simply water and bubbles.
3. Flavored Options
I may have scared off some soda fanatics in #2 when I mentioned that mineral water is just water and bubbles. But, you do have flavored options! Options like mango, lemon, lime, orange, passion fruit, coconut, apricot, grapefruit etc. Even better, the flavored options have 0 sugar, 0 artificial sweeteners and 0 calories! For this reason they are also a far better option than diet soda. As an aside, drinking a diet soda that is full of chemicals that your body can't process is likely a bad idea anyway. But, we do it in the name of holding on to our soda. Why not make the move to natural sweeteners?
4. Obesity and Dental Cavities
Drinking soda and other sugar sweetened beverages is linked to obesity and dental caries. Additionally, being overweight or obese is often accompanied by comorbidities like cardiovascular disease, diabetes, depression, hypertension and various cancers. That seems like a heavy price to pay for soda. Unfortunately, the statistics surrounding consumption of diet soda are not much better.
5. Caffeine Free
Mineral water is caffeine free. That’s pretty much it.
6. Soda has No Nutritional Value
There is literally nothing good that comes from drinking soda. No vitamins, no nutrients. Lots of empty calories and sugar! Mineral water contains small amounts of minerals and none of the previously mentioned empty calories or sugar.
Making the switch will require a small adjustment period. You will have to get used to the fact that mineral water is simply not as overwhelmingly sweet as a soda. But, this is an adjustment that will be reflected in your overall health, the way you look and the way you feel! Also, sparkling water & soda water can also be good alternatives!
Last month marked the end of an era for me. I completed paying off my student loan! After doing this, I posted a picture of the “Paid in Full” notice that I received from the loan servicing company in hopes of inspiring other people to get out of debt. Everyone was very supportive! But, I got one question several times. How?! Well, here is what I found to work best.
1. Get Pissed Off
This step is really about establishing the reason that you want to get out of debt. In other words, getting out of debt for the sake of getting out of debt is NOT enough motivation. The process is hard and can take a lot of time! So why is it worth it? For me it was a combination of several things.
The first thing was math! Let me explain what I mean. Let’s say you buy a brand new $25,000 car and you finance the car over 60 months (5 years) at 5% interest. That means you would have a monthly car payment of $471.78. At the end of the loan you will have paid $28,306.85 for a car that will be worth only $10,000 after five years if it depreciates at the average rate. To summarize, you will have paid $28,000+ for a car whose highest value was $25,000 but is currently worth only $10,000. No Bueno.
In my personal situation I paid off $23,071.28 in 9 months and 22 days. For comparison, if I would have waited until the loan repayment period started and carried out the loan over the suggested 10 years I would have paid back $34,200.00! So paying aggressively saved me $11,128.72!
In the earlier example I discussed how paying off my student loan early saved me $11,128.72. But, that is not all of the money that staying in debt longer would have cost me! You also have to consider opportunity cost. That is, the amount of money that you lose as a result of losing the original money (which in our running example is $11,128.72). Confused? I’ll explain. In our example, by waiting for my loan to move from deferred to payment status and paying on my loans over 10 years I would have lost $11,128.72 to interest. However, I would have also lost the amount that I could have made had I invested that same $11,128.72 over that 10 year period.
To continue this example, let’s say we invested the $11,128.72 and over the course of 10 years we made an average of 7% on our money (The stock market average return is around 11.3% so 7% is fairly conservative). After 10 years we would have $21,891.86 which means we made $10,763.14. In this example the $10,763.14 is what the lost “opportunity” cost us! Therefore, once you consider the actual amount you would have paid together with the opportunity cost you see that paying my loans more slowly would have taken an extra $21,891.86 out of my pocket! That is essentially “paying back” $42,391.86 (The amount lost to interest and opportunity plus what was borrowed) after borrowing only $20,500. Hopefully now I have illustrated how actually doing the math on debt will begin the process of getting you pissed off!
What do You Want for Yourself & Your Family?
After doing math the next step to getting pissed off and motivated is thinking about what you want for your family. For me it is simple. I want more time to spend with the people I love. And I want generational wealth to leave to everyone that comes after me. I want my children and their children to be secure because of the foundation I have laid. When paying money for debt you are building that exact thing…for the family of the lender you are making payments to. When you realize that your student loan payment is costing your future child a college fund or inheritance you are starting to feel it. Or maybe it is costing you the opportunity to spend more time with the people you love as opposed to grinding your whole life to keep up with payments. Simply put, debt dictates your life. When you have a certain number of payments that need to be made you lose the freedom to decide what you want to do and why. Instead, you make decisions based on what you HAVE to do. It doesn’t have to be that way! YOU CAN CHANGE IT! Think of what you want your life to be and what you will do with your money once it’s not flying out the window every month. Once you get that motivation. You are ready!
2. Give yourself a SMART goal
The goal you set for your debt payment should be “SMART.” That is, specific, measurable, achievable, realistic and time-bound. For me, the “Time-bound component was the most important. When you make a SMART goal you will likely be surprised to find that you will push yourself to beat it. My initial goal was 1 yr and I finished in just under 10 months!
3. Make a budget & Cut Expenses
You have to make a budget. Every time you earn a dollar it becomes an employee for your personal company, You Incorporated. If you were hiring an employee would you tell them “just do what you want every day. I’m not going to give you any specific tasks?” No! Of course you wouldn’t! (If there are places out there that do that I want to know about them! Best job ever!) Your money is the same way. Every one of your dollars needs a specific task. Otherwise, nothing is going to get done! Your budget will really become the business plan for You Inc. and tell you where your business is going.
This is where the sacrificing begins. You have to cut out everything that is not necessary! It hurts. It is annoying. But, it is temporary. Eating out multiple times a week? Gone. Vacation with your friends? Gone. Morning coffee stop? Gone. Cable or Satellite? Gone. Depending on your circumstances, the extent of the sacrifices that you make will be different. However, sacrificing to cut expenses will truly commit you to the process. It will also motivate you to get done so that you can stop sacrificing!
4. Work Your Butt Off
You have to find any extra money that you can find. That means working multiple jobs, having yard sales, whatever. If you have time to binge watch TV shows then you have time to work your butt off for a finite period of time to make your life what you want it to be. DO NOT MAKE EXCUSES! Too busy? Then figure out what part of your schedule must change. Too tired? You’re going to have to get over that. Being tired is a symptom of aggressively paying off debt! Cutting expenses and increasing income are the only ways to improve this situation. The harder you sacrifice on both sides, the faster the process goes (and the more money you save)!
5. The Debt Snowball
If we are being honest, I did not follow the debt snowball exactly. I had one debt smaller than my student loan but I still paid my student loan first because the big number overwhelmed me and I wanted it gone. However, the debt snowball is probably my favorite method of debt reduction and I think it works the best! I learned about the debt snowball from Dave Ramsey whose book “The Total Money Makeover” is a must read for those who are getting out of debt! Here is how it works. You list your debts from smallest to biggest. You pay minimum payments on everything but the smallest one. On the smallest one you pay as much as you possibly can. Once it is gone you move to the 2nd smallest debt. At this point you have all of the money that you were paying on the first one plus any you were paying on the 2nd one to get the 2nd debt paid off as fast as possible! You keep going until you have paid off all of the debts! The reason this plan is so successful (as described in the book I mentioned) is because you have a series of successes resulting from paying off the smaller debts that provides motivation throughout the process!
Honestly, that is about it. There are no secrets. No secret money making methods. No secret expense cutting methods. It really comes down to a lot of sacrifices and long hours working. Remember though, these are short term sacrifices for long term gains. True enough, some people with more debt may have a plan that spans 5 years rather than 9 months. But, that too is a relative short period of time when you consider the reward of being financially free for the rest of your life! YOU CAN DO THIS! I know you can!
OK, so there are a few things in life that it seems we do because we are supposed to. We don’t completely know how or why these traditions started and frankly we don’t give them any thought. For example, prior to my family starting the tradition of injecting turkeys with wonderful flavors and frying them in a grease-less fryer, I wondered why we had to eat turkey on thanksgiving. I would have much rather had a juicy steak than a giant dry bird that had to cook for 8 hours and be drowned in gravy to have any flavor whatsoever. But, it is tradition right? In November try asking your family to serve steak rather than turkey and watch how they react. *Spoiler alert* you are not going to get the steak. Anyway, I have long wondered this same thing about the beach. What is the source of the allure that draws every vacationing family to the beach? I don’t understand. I mean…It’s pretty. But so is Alaska and nobody in my immediate peer group has ever vacationed there. So, I thought I would compile a list of reasons that the beach is overrated to me.
1. Sand is obnoxious.
I’m going to come out firing. Sand is so annoying! Let’s picture a person sitting in a sand box. They lay back attempting to relax only to find that the lumpy sand is not nearly as comfortable as one might imagine. It gets into literally every nook and cranny of your body and feels really weird. I swear every time I have ever been to a beach I left with sand in the pockets of my swim trucks and somehow inside them! Now, let’s quickly think of one way to make sand more annoying than it already is. Ummmm. I got it! Get wet and then get back in the sand! Now the annoying sand is literally sticking to every part of you that it touches! Why would anyone want sand sticking to everything? It drives me nuts!
You ever go to a mediocre restaurant that everybody somehow loves? You are only going because it is the place that everybody else picked and you want to be with your friends. When you get there you have to wait an hour for a table, endure loud patrons, and you’re rewarded with average food that you probably paid too much for (think Applebee’s at anytime other than Happy hour). I have essentially just described the beach. For crying out loud why are so many people always there? I get it, people want to throw Frisbee, pass a football, read, have a drink etc. But, those are all things you can do just about anywhere. Why does the beach make it more fun?
3. You Have to Actively Prevent Yourself from Cooking.
In general I tend to not have fun in places that require me to apply anti cooking cream (some call this sunscreen) to my skin. Remember all of the activities I described in #2? Why is it fun to do those while trying not to drown in sweat or cook to death? I would much rather enjoy a drink, book, or throwing a football at a comfortable temperature without sand involved in any way whatsoever. What happens if you forget to put on anti-cooking cream or don’t wear enough? You will have cooked skin and spend the rest of your vacation avoiding the sun and in pain. Not interested. Additionally, I won’t even discuss the practice of laying in the sun and sweating your butt off in attempt to be a little more brown and leathery than you were the day before. (OK so everyone does look a little better with their summer glow but making fun of laying out helped my argument.)
4. Where is the Restroom?
I’m just going to come right out and say it. I pee in the ocean. There, it’s off my chest. The last time I went to the beach there was no restroom in sight. So what did I do? I waded into the salty abyss and provided a small contribution to the rising sea levels. I didn’t think twice about it until I looked at the thousands of people I was sharing the ocean with. Was I the only ocean pee-er? I think not. It gets more interesting in the off chance that someone has to do more than pee. Well, I guess you will be hiking to find a restroom.
If you are an ocean pooper you are dead to me.
5. It’s not Relaxing.
All of the aforementioned criteria paint a picture of an experience that is not fun or relaxing! Let’s review. You arrive at your overcrowded, overpriced beach town hotel. Yippee! Time to get in those bathing suits and head to the beach! Wait, let’s apply this anti-cooking cream to our skin so that we feel sticky and palpably saturated when we get there! Also, we don’t want to fry! Alright, we have packed our beach bag and we are ready to go! Halfway between the beach and the hotel you are already sweating. Awesome! Now you have reached the sand. It’s lumpy and you awkwardly walk while trying to keep sand from getting between your foot and your flip flop. You fail. Ultimately, you are forced to take off your flip flops and go barefoot. Hopefully there are no sticks, shells, rocks, glass or anything else waiting to be the demise for your foot-bottom-skin. You sift through the crowd only to find that all of the places you wanted to setup your mini beach camp are taken. You settle on a spot further from the water than you would like and put down your towel.
You sit on it and find that sitting on clumpy sand is less comfortable than you thought it would be. You also wish you were one of the people who brought an umbrella to shield the sun. What is the point of that anyway? Either you want to be in the sun or you don’t? Either you’re inside or out. Make a decision and stick with it. Anyway, you have a drink and read a book until you are sore from your position on the sand. You also find that you are way too hot to be enjoying this experience. So, you walk to the water and hangout. The waves whip you a few times and you suddenly discover that you can only stand in saltwater so long before its time to move on with your life. You walk back to your mini-camp. This time though, every part of you that the sand touches is covered in these grainy little annoying pieces of light brown gravel. You make it to your towel and wipe off the sand and water. Now you have a damp sandy towel to sit on while trying to enjoy your day. Then it hits you. You need to use the restroom. You look around and there is no restroom in sight. Now you are seriously contemplating your options. Ocean pee-er vs. Hike to unknown Restroom, Ocean pee-er vs. Hike to unknown Restroom, Ocean pee-er vs. Hike to unknown Restroom. You’ve made a decision. You walk to the water ashamed of the barbarian that you have somehow become. While walking you are trying not to think about the number of people that have made the exact same decision that you just made. You make it to the water and let yourself go (believe it or not it’s actually quite gratifying). As you make the walk of shame back to your towel you think to yourself. Best. Vacation. Ever!
Do you ever look back on things you did when you were younger and reflect on the absurdity of them? Maybe it was that one shirt you had to wear to school but after seeing it in pictures you wish someone had stopped you. Or maybe it was that strange trend of tucking in your shirt in the front above your belt buckle and nowhere else (And people rarely even wore belt buckles. Seriously why did we do that?). Or maybe it was the pocket watch I may or may not have bought at the flea market. Of course I took the pocket watch to school. Taking it out every 15 minutes to ensure that my classmates always knew what time it was. You’re welcome 4th grade classmates. I think you get the picture. At any rate, there is one activity that I did growing up that stands out as particularly outrageous. Ladies and gentlemen, I loved Vienna Sausages. Every day when I came home there was a specific routine. 1. Drop my backpack immediately upon entering the house (my mom hated that) 2. Turn on nickelodeon 3. Vienna Sausage time! I would eat them plain, I would fold a piece of bread around them and enjoy them hot dog style, I would eat them with an array of condiments, and if I was feeling particularly classy on a given day I would stick tooth picks in them and have distinguished hors d’oeuvres while enjoying my early afternoon television. It was great! Life was simple, nickelodeon was in its prime and Vienna Sausages were in endless supply. I know what you’re thinking. How could life have been any better than that? Simply put, it couldn’t. I discovered the elusive “American Dream” at a very young age.
That is until my senior year of college. (Open scene) It was a rainy day. The kind of day that you simply want to spend laying in the bed, watching tv, and trying not to hate yourself for being a 0 on the productivity scale. We’ve all been there. One of those days where the hardest task you intend to complete is getting up and walking to the restroom. And, you only do that when your bladder tells you that if you lay there any longer it’s going to give up the “holding it” fight. I had been quite successful that day. I made it to about 5:00 PM when it hit me. I remembered that I needed to eat to stay alive. I begrudgingly got out of the bed and walked to the kitchen. My pantry and fridge were exactly what you would expect to see in a 21 year old guy’s apartment. I was so disappointed that I went back and laid down to reflect on my next move. After an hour I walked back to the pantry. In the back I found none other than a can (how good can canned meat be anyway? I guess tuna is ok.) of Vienna Sausages. I remembered I had bought them a year and a half prior when I was walking through the store. I saw them and wanted to relive my childhood. However, I forgot about them and they sat in the pantry for almost 2 years. I grabbed them and examined the outside of the can. I was elated to find that after all this time they still weren’t expired! In retrospect maybe that should have been a warning. I danced around the kitchen grabbing a plate and some bread thinking about the nostalgia I was about to experience.
Everything was perfect. The mood was right, the occasion was right, and I was even going to watch old nickelodeon shows. Then, I opened the can. I forced my finger under the metal tab, lifted it and pulled back the lid. There were several observations that were made in a very specific order. 1. A distinct smell oozed out of the can. 2. I realized that I should have drained the broth from the can before I completely removed the lid. And 3. I wondered what the f*** I had just gotten myself into. I poured the mysterious broth down the drain until the can held only the 7 wieners. I stared at them. They stared back. Neither of us wavered. I noticed they weren’t all the exact same color and one of them had a bright yellow spot on the end of it. There was no way I could do this. These things were gross! Everything I knew and loved about this world was a lie. I went through the 5 stages of grief. Denial, this wasn’t real. Clearly the people at the Vienna Sausage plant had modified the secret formula making them totally outrageous in the time that I had been away from the Vienna Sausage game. Anger, I wanted to call every friend and family member that I thought knew and loved me and ask them one very simple question. Why? Why did you sit back and let me eat Vienna’s (Oh yeah, I forgot to mention I just called them Vienna’s. First name basis. We were close.) every day? Did they know what could have happened to me? Bargaining, if only I would have discovered the error of my ways sooner! I could have been the first 21 year old president. Or the first 21 year old on the mars. I had missed so much. And for what? Vienna Sausages? Depression, I ached. Not only had I lost a food. I lost a childhood friend, a hero of sorts. Gone. Acceptance, only now have I reached a point where I can discuss my experience with Vienna Sausages. My hope is that others who share my experience may find strength in my story. If you eat them, good for you. We can still be friends. I won’t judge you. Just make sure you know that they could be the one thing standing between you and that new car or promotion that you have been wanting. I’m not sure how that is possible. But it could happen. No but seriously why did I eat those?
I recently celebrated the proudest accomplishment of my life. After completing my undergraduate degree with no debt I felt compelled to show how smart I was. I promptly borrowed $20,500 for the first year of my Master’s program. Genius, I know. By the 2nd year of my program I realized I was borrowing WAY too much money! I began working 3 jobs and paid cash for the 2nd year of the program. After completing my Master’s degree I enrolled in the PhD program. I learned that the PhD would be fully funded but there was still a problem. Due to interest my student loan had already grown to over $22,000. I was informed that I could defer the payments until after I graduated from the PhD program. However, by doing this my loan would have grown to roughly $26,322.52 before I ever made a payment. The normal loan repayment period of 10 years meant I would have paid back $34,200.00 after borrowing only $20,500.
I knew there was no way I was going to pay $13,700.00 in interest. I made a commitment to pay off my loan as quickly as possible. The result? I paid off $23,071.63 in 9 months and 22 days while being a full time PhD student. Enter, the credit score. One who adheres to the financial dogma of the credit score may or may not be surprised that paying off my deferred student loan in under 10 months dropped my credit score by 36 points! Now, in paying off my student loan I also committed to never borrowing money again. Not for a car. Not for a house. Never again. For that reason, I don’t care about my credit score. Cash purchases simply don’t require them. However, one should still investigate what actually happened here.
Why the Credit Score is MASTER MANIPULATION
Let’s think about this for a second. The financial industry has come up with a way to grade you on how good you are at making THEM rich. The better you are at making them rich via borrowing money and paying them interest, the more points you score! Woohoo! Right? But, what is your reward for scoring a lot of points in this one sided game they have designed for you? Well, you get the opportunity to borrow more, pay more interest and make them richer. See the problem with this yet? Upon reading that description nobody in their right mind would play that game! That is where the manipulation comes in.
By convincing industries to use the score as a prediction of your ability to lease an apartment, have a cell phone plan or buy a car on debt (which is a bad idea anyway) they make you feel like you have to play. And of course we can’t forget the “Don’t you want to own a home someday?” question that makes everyone race to enter the credit score game. Can you do all of the aforementioned things without a credit score (There is a distinction between no score and a bad score)? Sure. Can it be tricky? Yes it can. However, I can put up with said trickiness to avoid being screwed by a one sided game that was not setup with my financial well-being in mind. After all, this game punished me and took away points because I paid back my loans quickly thereby making me less profitable to the lender. When you stop making them rich (by paying off and/or closing account) you stop “winning” their game. A game which you can never actually win anyway. Understand what the credit score actually is. Build wealth for your family, your children and your future. Not theirs.