Shaving Money ($42,888.33)

As I look for more ways to save money in my routines, I had an unexpected insight on saving money with something that costs more than you realize…shaving. About a month ago, I had the pleasure of seeing Tristan Walker speak at an event. He’s the creator of the Bevel shaving system and an amazing entrepreneur in Silicon Valley. He talked about a problem he experienced with modern shaving products, which was razor bumps. Nasty little ingrown hairs caused by shaving.

He said in the 70’s and 80’s, Gillette and other companies started introducing multiple blade razors claiming they provided a closer shave with less irritation. This just wasn’t and still isn’t true (maybe a closer shave but at the cost of your skin health). Pure marketing BS. Gillette has had to settle false claims in the past. In fact, research is showing that depending on your facial hair type, multiple blade systems are more damaging to your skin and create more ingrown hairs. Specifically, men of color tend to have more curly facial hair and are more prone to these razor bumps. Again, depends on your facial hair type.

I had an aha moment because over the years I have had annoying razor bumps but never thought about my shaving routines. Gillette brilliantly sent me a Mach3 razor when I turned 18 and I mindlessly never looked back. After some research, I found that people are going back to the double edge safety razors because they cause less irritation and they’re a hell of a lot cheaper. A couple weeks later here I am with no more razor bumps.

cartridge_v_double

from hairfreelife.com

Disclaimer: Do what works for you. If you have never used a double edge safety razor, be sure to do some research on how to shave with this type of razor because it requires different techniques.

Gillette Fusion and Mach3 blades cost approximately $2-4 per replacement cartridge, but many of us just pick up a multi-cartridge pack for $20-35. The replacement blades for my current razor…100 blades for $10-14!! Each blade gives you 4-5 shaves. The blades are a lot cheaper and better for the environment because they reduce waste (no plastic). Once you’ve stockpiled enough blades, you can dispose of them properly depending on your city’s metal recycling program. Save money. Reduce waste.

On a separate note, my wife and I took a chunk of savings and threw it at the school debt. $42k left to pay off. It’s happening!

What other creative ways have you found to save money?

Feel the Pain ($57,693.77)

I haven’t posted in a while. Guilty as charged. I got the taxes done and after all the stuff related to running my photography business alongside the fact that this was the first year that I filed as married, we got a sizeable tax return. Guess where that’s going? Straight to Navient and that good ol’ student debt. Damn I have made some good progress. Yes I am bragging. I have earned it. A couple years ago I was almost $130k in debt (school loans and credit cards). As I look back at my student debt journey, I have been trying to think why I have been so motivated and what keeps me going. One would think it is the satisfaction of seeing that debt number go down every month when I make a payment whether it is small or large…but that just isn’t the case.

It is the pain that has motivated me.

carrot_stick2

(from teen10mag.com)

That is sort of sick. What’s the story? At a basic level, we can think of motivation as the stick or the carrot. The carrot is the dream of being debt-free which is a long term goal, but even the short term goal of seeing the principal balance go down isn’t that satisfying. It’s like trying to lose weight and you’re only seeing a pound of progress per month. It is progress but it isn’t enough to celebrate like crazy. Short term progress over time will yield big results, but for me and my debt, it is the daily pain that has pushed me.

Introducing…the daily interest calculation or DIC for short. And this metric really is a dick. How do you calculate this? This is copied verbatim from the Navient site:

The amount of interest that accrues on your loan is determined by a simple daily interest calculation:

 Your current principal balance

× The number of days since your last payment

× Interest rate factor = interest rate ÷ 365.25 (number of days in a year)

= Your daily interest rate

If you have multiple student loans, you likely have multiple interest rates, so you will need to do this calculation for each loan, and add them up to see all the daily interest.

Once interest is capitalized, it becomes part of the principal balance and interest begins to accrue on the new principal amount.

At the end of each year you should receive a tax document from Navient and each of your loan servicers detailing the exact amount of interest that you paid.

The good news is that the IRS treats capitalized interest as interest for tax purposes and is deductible as payments of the principal balance are made on the loan. However, no deduction for capitalized interest is allowed in a year in which no loan payments were made.

Let’s use my current situation. Current principal balance is $57,693.77. Last payment was 1 day ago. Interest rate is 6.125%. Using the formula above that would be:

$57,693.77 x 1 day x (.06125 interest rate ÷ 365.25) = ~$9.67.

In other words, I am paying $9.67 every single freakin’ day on INTEREST. Every 30 days, $290 is going to nothing but interest. Ouch. Pain. Motivation. That’s a solid meal in downtown Minneapolis every day. That’s a car payment every month. That’s money towards an investment that could earn me some money. That’s a kid’s tuition savings. That’s seeing a movie every day. That’s a couple drinks at happy hour. Whether it is a frivolous purchase or a responsible long term investment, that is cash money going out your pocket and into The Man’s. The opportunity cost of that money is pain that we don’t always think about.

Some people have low interest rates, which is why they don’t feel compelled to pay of their debt in an aggressive manner. I would argue that the interest you’re accruing is actively working against any positive interest you’re gaining. All depends on your unique scenario, I know.

There you have it. Some more insight into what is driving me to pay this beast down. What motivates you?

Celebrating Major Momentum ($65,587.95)

When you’re paying off debt like a madman, the week-to-week motivation is draining. When you have a longer term goal it feels so far away…because it is. You see friends buying houses, cars, vacations, and there are definite moments of jealousy. I remind myself that I made the decision to go to college and grad school, and I know these decisions are a long term investment…yet I still feel bad like I’m behind or something. First world problems, right? Yep, they sure are. This is why it is important to quit the pity party for one and look backwards to move forwards. I spent a moment to look back at the past 12 months, and it is absolutely bonkers how much progress I have made. Re-motivated. IT IS PAYING OFF!

cute-success-kid-1920x1080.0.0

(image from theverge.com)

In 2015, I have paid a total of $31,392.61 towards my student loan debt. Boom. About 16% of this ($5,121.88) was interest, but that is expected because the amount 12 months ago was just under $100k with 6.125% interest. Am I bragging? Yes. I earned this and it feels great. In May, I paid off my second-to-last student loan so now I only have one payment which is the big consolidated loan that had a principal amount around $80,000.

The average class of ’15 college grad (who took out student loans) has about $35,000 of school debt. So if I were average, I would have just about paid my debt off, but I’m above average…which isn’t so awesome in this case. I made some poor financial choices and I am learning from them big time. When looking back to the time around 2011/12, my financial life really felt like it was out of control…15 payments every month including rent, cable/internet, cell phone, car/renter’s insurance, electric, 6 student loan payments, 2 credit cards, Netflix, and a gym membership. Nearly $6k in credit card debt on top of all my student loan debt.

Fast forward to the end of 2015 and here I am with just over $65k left to pay off. I’ve paid off just a little more than half since I finished grad school. I am really proud of the financial work I have done this year. Not to mention we had a wedding and honeymoon in there that we cash flowed. For those of you that want to pay off some debt…you can absolutely do it. I kicked some major debt butt this past year, and my wife and I are scheming up ways to try and pay off even more in 2016.

It feels good to reflect on 2015 for a lot of reasons, but I’m taking a moment to celebrate my financial progress. Cheers to you for all you’ve learned in 2015 and here’s to a great start to chapter 2016!

P.S. The wonderful people at NerdWallet included some advice I gave for recent grads in a recent blog. Check it out and be sure to follow their blogs!

(Un)Conscious Holiday Spending ($71,257.45)

This blog post is probably a few days too late. The holidays are officially upon us, and with this time comes an attitude of gratitude and multitude of guilty spending. Raise your hand if you actually sat down with your partner and created a budget for your holiday spending. Yeah, me neither. Although I chose to be in the office on Friday I still took a break from work and did some holiday shopping with my wife. We treated ourselves to a few things. I feel a little guilty…just a little.

holiday spending

Don’t let Grumpy Cat win…

Life update: I just realized I haven’t posted since September 7th. Deanna and I got married on September 27th and then went on our honeymoon in Maui for 10 days in October. We then had a family reception in Madison a couple weekends ago. We still aren’t sure if we’ll do a gathering with friends in the twin cities. At this point it doesn’t seem like it is worth it to do a reception in the cities. We’ve already spent plenty of money and with the holidays here, everyone is getting busy. Please don’t be offended, and please know that we are incredibly grateful for everyone’s support.

Holidays bring an array of emotions. For me, it is fun to see my extended family and hear what they’ve been up to but it’s also tough because it is the first Christmas without my grandma who truly was the matriarch of my mom’s side of the family. I always find myself reflecting a lot more than usual during this time of year. I often think about my friends I grew up with, and I am reaching that age where many of those friends have families of their own and we’ve lost touch. I know it’s part of life. I feel a sense of accomplishment for all I’ve done this year, and I also feel a sense of anxiety not having clarity on what I want next year to look like for me and my family. I feel happiness, sadness, excitement, and anxiety for those around me as well as holidays can bring joy and a terrible amount of pain.

With great emotions come impulse decisions. When it comes to buying behavior, we suddenly see deals on things we don’t really need and with a click, tap, or swipe we’ve made a purchase without thinking about it. Dumbest thing I bought online on Friday was a NFL football. Yes, an official NFL football. Mine is flat with a hole in it, so at $52 it felt like a good price to replace it…my dang feelings won.

Just take a piece of paper and write down who you want to buy gifts for and a price limit. That’s all you need to do, or at the very least make a mental budget. If you haven’t made a budget for holiday shopping, then stop to think, “do I actually need this thing?” If you do have good reason to buy, then think about how you can get the best deal on it, and do not fall for the retail game. I needed a new winter coat. I’ve had the same one since high school. Yes. I’m serious. I saw one at Macy’s where regular price was $400. Lies. With the ‘50% sale’, it was going to be $200! More lies. I pulled out my Amazon app, scanned the jacket’s tag, and it popped up for $159. If you need to buy it, at least do some research and get the best deal that you can. My new jacket is incredibly warm and I no longer look like I’m ready for a middle school ski trip…oh Columbia jackets.

When it comes to holiday spending, check yourself before your wreck yourself. I don’t want to see you or myself spending hard-earned money on things we don’t really need. You also don’t need to buy things to show someone you love them. You can make them something instead. It’s more special that way. My mother-in-law makes super kick ass handmade cards and they mean a lot to me! I found a couple cool sites here and here for those of you who want to be craftier and save some cash in the process.

Happy holidays and don’t go broke or depressed in the process. You can do it. Be mindful of your spending, not mindless. Comment below with your holiday spending tips!

P.S. I dialed back the aggressive pay down on the student loans for a few months, so we could do our wedding and honeymoon debt free. Success! I’ll have to write about this later…

Planning Life, Not a Wedding

wedding meme

This post has two purposes. One, to inform friends and family what we’re doing and why we’re doing our wedding this way. Two, I thought I would share some reflections we’ve had through the planning process from a financial and general life lens.

A few months ago, my fiancée expressed her frustration doing some google searches. I remember her saying something like, “there’s so much online about planning a wedding and not much on planning a life together.” Big a-ha moment for me. We recently wrapped up pre-marital counseling and it was a great experience on planning for our life, but what about the wedding?

Disclaimer: Don’t read this as me judging you for how you did or are doing your big day. Given our preferences, this is how we’re rolling.

I’ve hit the brakes a little bit on the aggressive student loan repayment plan because we’ve got a wedding to plan! On one end of the spectrum would be a traditional wedding complete with a ceremony and reception for 200 to 300 people (spending tens of thousands of dollars that we’d rather use for other things), and on the other end would be going down to the courthouse and getting married by a judge with our dog as witness. We’ve decided to go an alternative route somewhere in the middle and we’re getting married in…less than three weeks!

Between student loans, wedding planning-related stress, and just wanting to keep things simple we are having a tiny ceremony with just our parents in Duluth on September 27. Then, Deanna and I will have our honeymoon in Maui next month. When looking at the cost of catering, venue rentals, flowers, attire for wedding party, cost of logistics of our families and friends, and much more, we just decided we want to do this in our own way. My family just can’t contribute what they would like financially, so we really don’t want to create a financial pinch for anyone. For those who know my story, you get it.

I’ve learned a lot about weddings from attending friends’ weddings and taking photos at other weddings. I usually hear some form of this phrase, “…well this day is more for the parents than anything.” While that is definitely true, I think we just wanted to challenge the idea of ‘how’ we go about making our parents happy. We spoke with our families and they’re happy about the idea and we get to make it a full weekend of activities with just our parents. It will be some quality time we haven’t had in a long time. For example, me having dinner with my parents hasn’t happened in a smaller setting since I was 13 years old before they got divorced. It’s going to be weird in a happy way.

A friend of mine who is a couple decades older than myself once told me not to spend so much money and stress on inviting people to your wedding you will probably lose touch with in the next 5 years. While this is sad to hear, it’s probably true. Life happens. A big party is memorable, but weeding out who you invite and who you don’t can come with some tough conversations that just aren’t worth it in my mind. I don’t want random co-worker friends of my parents whom I have never met showing up for our big day. It is your day, so you choose the guidelines for who makes it and who doesn’t. In our case, we are just keeping it to our parents, which is absolutely not a reflection on my feelings for the people who aren’t there.

And…the honeymoon?

We originally wanted to get married in Hawaii, but we’re going to have our honeymoon there instead. We’ll spend 10 days in Maui, so we are very excited about that trip in October. We’re planning to rent through Airbnb which appears to be a lot cheaper than the “nice” resorts in the area (Let me know if you have any suggestions for Maui).

This is all fine and good, but what about a reception? What about your friends and families?

We’re kicking around a couple different ideas. One is having a wedding reception happy hour here in the twin cities where we keep it low key and invite anyone and everyone to stop by for a beer and say congrats. For my family back in WI, we’re thinking we might do a separate small family party there. Not sure yet, still figuring it out.

There you have it. Our wedding, honeymoon, and tentative pseudo-reception plans. I am extremely pumped to marry my best friend and partner-in-crime on September 27. Wish me luck!

Lessons in Lending ($85,686.42)

Just a reminder, when I consolidated the majority of my loans the standard repayment plan was going to be 30 years (360 payments) and the interest that was going to accrue over that 30 years would be…

Interest

Deep breath in and…damn it. This was the panic I had before and what had prompted me to write President Obama about the future of people like me. It has been a great journey and I decided I’m going to be public about how much is left for me to pay in the title of my posts as I make progress. I had a stretch goal of $3,000 each month and I decided to bump it up so I’ve been paying $3,500 per month towards my student debt. I continue to find opportunities to make money and cut expenses. I just wanted to share a few things I have learned about student loans. Some of this might be old news or new news, but this is what I have learned.

Paying extra doesn’t automatically go towards the principal. When I started paying extra on my loan beyond the minimum, I would get to the next month and wonder why they weren’t asking me to pay. It was because the loan company used the extra amount to go towards next month’s payment. Depending on the lender, they typically don’t use the extra amount by default to pay down the principal. You usually have to tell them what to do with the extra amount by writing them a letter or making a note on the electronic payment. Some lenders don’t have that option electronically so they make you snail mail the payment with a note. God forbid the lender have a default action that helps the person borrowing the money save on interest. Jerks. Below is a screenshot from my errors and learning moments where I paid extra and it was going towards the following month’s payment. You have to tell them what to do, they are evil and want you to never pay this shit off.

Payments

For lenders that you have multiple loans with, be aware. I had one lender that I had multiple loans with that could not consolidated because of the type of loan. For example, I borrowed $2,000 in one year and another $2,000 the following year, so it’s the same lender but multiple loans at different interest rates. You need to tell the lender how you want your payment to be applied. If the minimum payment is $100 and you want to pay $200 that month, you need to tell them how to allocate the extra amount across the various loans. Otherwise, they just default to applying it equally across all loans and you may be losing money in interest depending on the rates.

Automatic payment may be convenient but it doesn’t get it paid down quickly. I had enrolled in automatic monthly payments and I stopped. Why? Awareness and motivation. Most lenders cut you a “deal” by .25% for enrolling in automatic payments but really it’s a ploy to suck you into minimum payments and only paying on the interest so you never actually pay off the principal. I also found that it created a feeling of pain manually paying each month which I’ve used to motivate my behavior. I’ve learned to channel that frustration into something productive and it forces you to be more aware of where your dollars go every month.

Read your FAQs. Grab a coffee and read through the frequently asked questions (FAQs) on your lender’s website. It’s boring but it will save you money and energy. Each lender is different and evil in its own way. At one point, I had 5 different lenders to log into. Now I have 2. I am hoping to pay another one off in the next 2.5 months.

In January and February, I paid $7,000 in total towards student debt. We can do this!! What lessons have you learned about loans?

President Obama Writes Me Back

Throughout college I used to send letters to the President of the United States on a variety of topics (for both President Bush and President Obama). Everything from education to community issues to my thoughts on the future of our country. I’ve received electronic responses that were usually general responses like the one below.

Obama Letter Electronic

If I remember correctly, I wrote a letter sometime in late 2010 and resent again in April, 2011 about my loans. I didn’t write only to complain, but I wanted to share the challenges that lie ahead for myself and for my generation. The tone was frustrated but hopeful, and a concern I shared was that people like me weren’t going to have families until later for career and financial reasons. I was also concerned that people like me would not be contributing to the housing market as quickly and that the interest being paid on student loans would be a whole bunch of money that could be invested in our country’s economy in a variety of ways.

The President responded.

I initially received the email below and thought it was spam.

Obama Letter 01

They sent me a PDF copy of a handwritten note and offered to send the original to me. The letter arrived in the mail in an ivory envelope. It read…

Eric – Thanks for the letter. I know what you’re going through – Michelle and I had $120,000 in combined debt after we got out of law school. That’s why I’ve made it a priority to expand college grants and a better deal on student loans. So please don’t be discouraged; you are incredibly young, and as the economy comes back, your investment in your education will pay off.

Sincerely,

Barack Obama

Obama Letter 02

Democrat, Republican, or otherwise, it was cool to get a handwritten letter from the President of our country. I was also insanely jealous that his combined debt coming out of law school was $120,000. It was a reminder of how badly I screwed up on my financial aid decisions, but a wonderful reminder that I am, as the President put, incredibly young.

I’m just sharing an update with you Mr. President that I am making some serious progress on paying off the beast. I’m about 4 years older now and the debt is down from ~$128,000 to ~$89,000 (most of that paid in the past year and a half). Seeing what I’ve paid in interest has angered me and motivated me like no other.

If I can pay this off quickly, maybe I can take a run at being the President some day? Just kidding, I’m not eligible for the Office of the President because I was adopted from South Korea. More importantly, it is the most stressful job in the world and most of us can’t plan our lives accurately for the next 4-8 years let alone the future of the free world. I empathize with whomever is in office. Sounds terrible.

While my student loan interest rate is 3 times higher than mortgage interest rates currently, I’ll continue to pay off that school and put off buying a house as long as possible, but I am making progress!