Make Money. Save Money. (even if it’s embarrassing)

I spent time talking about kicking out the victim mentality and last post, I talked about how I’ve been using Mint.com to stop the bleeding. Using Mint helps me understand where I waste the most money. Spend less than you earn. Eat less than you burn. Sounds easy but requires a lot of discipline. There were a few other categories outside of food that were eating away at my money every month. You have two options. Make more money or spend less money. I drew a line down a piece of paper and came up with ideas for both options. Let’s start with what I did on the left side (make more money).

Disclaimer: This is the post I’m struggling the most to share because it is a little embarrassing to share a couple of the things I’ve done to pay off this flippin’ debt. It’s not that I’m broke. I just really want to be debt free.

I got a promotion. I worked hard and got a promotion. If you work hard, ask to be rewarded. I’ll write separately about career stuff. More to come on that topic.

I started a business. I’ve talked about it since my early 20’s. I’ll start a business when I get older…well I’m not getting any younger, so I started a photography business. I identified a variety of skills/experiences that I have that other people would pay money for and I landed on photography. I already had quite a bit of equipment, I love capturing people and events, and it’s a hobby that has really turned into a passion for me over the past few years. I have been learning so much about small business and it has been an amazing learning experience. I have also met a lot of wonderful people in the process.

I give plasma. I gave plasma on and off throughout college and grad school. I used to participate in some medical studies for extra money in college and would get locked away on weekends for research studies but was getting paid to study for class and meet cool people. I don’t give plasma every week, but it is an extra $60 per week when I do. I started back up because I saw they were giving an extra $250 for new donors. It takes about an hour for me to donate and I get to watch House of Cards on my iPad. Not bad. I’ve made a rule that says I can go out to eat if it uses the plasma money.

I sold stuff on Craigslist. I sold random stuff I didn’t need anymore. I didn’t make a ton of money doing this but it helps. It’s amazing what you can find that someone else will buy and the space you could save by purging some junk.

Now onto the expenses that I have cut out…

I stopped eating out so much. I shared that in my last post.

Use discounts and coupons, and leverage your network. I work at Target. I get a discount. I also love using Cartwheel and my Red Card to save money. Ask for discounts. Barter where you can. Clip coupons if needed. I saved a ton of money by working through someone in jewelry instead of walking into a retail jeweler to get an engagement ring.

I cut cable. I kept internet. I realized how much TV I didn’t watch and mostly watched Netflix, free TV online, or watched live sports somewhere else. That was a good chunk of money every month.

I cancelled my gym membership. I tracked how often I actually went and calculated the average cost per time I went. Disgusting. I wasn’t getting much out of it and there’s plenty of free activities to keep me active. Free workouts online, running, biking, sports with friends.

I haven’t had a hair cut in over a year. Initially, this started as a joke. I tried it once without butchering myself too bad and found it to be kind of enjoyable in a weird way. You can get some nice clippers for $30-40.

I have an amazing fiancée and future in-laws. Just over a year ago, I had the opportunity to move in with my fiancée who lives in an old house that her parents own. Her mom grew up in this house, and all that rent I was spending is now going towards paying back my educational investment. Words cannot describe how thankful I am for this. It’s huge! I was paying over $1,000 per month for my 2 bedroom apartment in south Minneapolis. Not sure how long we’ll be in this situation, but I am forever grateful. I know many of you do not have this option but think about how you might be able to make housing cheaper.

Now that we are beginning to plan for our wedding, I’m doing my best to be extra mindful with money to save for our big day. I check in on my progress on Mint almost every day. Make a plan. Stick to it. What have you done to earn or save more money?

plan meme

(from memegenerator.net)

Stop the Bleeding

We’ve established the why and some of the attitudes and beliefs that I’ve held over the past couple years or so in order to make actual progress. Let’s call those the first 2 steps of my financial aid repayment journey. I just pulled up my 1098-E forms for 2014 taxes, and I paid nearly $6,200 in interest last year (almost $11,500 in 2013). According to Mint, I paid just over $27,000 towards loans in 2014. Boom. Let’s get to some of things that I have done to make that sort of insane progress.

Tax tip: You cannot take a student loan interest deduction if your modified adjusted gross income (MAGI) is $75,000 or more ($155,000 or more if you file a joint return). More info at IRS.

Assess the damage. Step 3. Money in. Money out. Simple, right? I felt no control over money. I didn’t think I was spending that much money outside of my monthly expenses, but at the same time, I did not have a good idea of where all my money was going at the time. I was making good money but still felt like I was living paycheck to paycheck. Mint.com has been my savior. For those of you who aren’t familiar, it is a website that you can sync with all your financial accounts (e.g. checking, savings, 401(k), credit cards). Based on the types of transactions in those accounts, Mint will categorize them. You can customize categories, set goals, and my favorite feature is that you can setup text messages and other types of alerts when you get close to your budget for the month. It recognizes patterns of spending too, so I have it text me for unusual spending, which is a great safeguard for theft.

After I set up my Mint account, I quickly discovered where I was financially bleeding the most. Food! I love food, but I had no idea how much I was spending on eating out. I lived alone in a 2 bedroom apartment at the time and cooking for one is kind of a pain, so going out to eat was both convenient and a social event for me. We’re not just talking about an extra $50 each month going to food, we are talking hundreds of dollars going to eating out every month. Insanity. Working in downtown Minneapolis, I was grabbing lunch every single day and most nights was eating out. I also realized how much I was spending on little things here and there online that I didn’t really need.

bleeding

(from memegenerator.net)

Another moment of anger. I felt like a victim again to my own habits. I heard a powerful phrase this week, which is “patterns are our prison.” It’s true. Behavior is a bitch. Let’s say you could cut back $100 per month on eating out. That’s $1,200 extra to put towards anything. That’s an awesome vacation, a new television, some bling bling for your honey, or of course, extra each month to pay off some debt.

While I have made progress on this one category, I still have weeks here and there where I am terrible. I slipped and fell back into bad habits for a while and just over a month ago, I started focusing on this category again. I created the following rules for myself to guide my decisions and behavior.

  1. Eat breakfast at home.
  2. During the work week, I am allowed to eat out for one lunch per week.
  3. I can go out for dinner up to 2 nights per week, and if it’s with my fiancée, we try to use gift cards that we received over the holidays or coupons.
  4. Have only one drink at happy hour.

Rules have helped me. Since I have re-committed to this aspect of my financial wellness, I have saved a lot of money to put towards school, and I lost 7 pounds. If you focus on one goal, you might find ripple effects in other areas of your life. I’ve also coined January as Introvert January. Winter sucks in Minnesota, so I’m hibernating and saving a bunch of money. Food is just one category I changed my spending in and I’ll talk about other categories (some are very embarrassing) in my next post.

The Victim Mentality

Last post, I talked a lot about why it is important for me to quickly pay off student loans. Again, the ‘why’ is what should drive and motivate you.

For a while, I felt a lot of resentment towards my parents about how much student debt I had. For some reason I thought they should have helped me pay for school. I was very jealous of my friends who did not have any school debt (and still am). I was angry at my universities for how much they charged. I was angry at the decisions I made to study abroad on school loans and go on another international trip in grad school on school loans. I was angry I didn’t budget better in college. I was overwhelmed at the thought of what my paycheck-to-paycheck life was going to be for the next 20 years. Yep. Pissed off and disappointed in myself. I didn’t feel like I was in control at all.

The last time I felt like this was in high school. Early in high school, I had no plans to go to college. My parents divorced at the beginning of my freshman year. I decided to stay with my mom who battles bipolar disorder. At school, many of my friends probably viewed me as the happiest kid walking the halls with my big smile and high energy when it was quite the opposite at home. I could probably write a novel about my childhood but I’ll save that project for later on. I had a guidance counselor at school that saw me come in and out of her office frequently with tears in my eyes in between football/baseball practices, work outs, classes, and my job at a fast food place in town. Frustration about the life I had at home and the sense of resentment I had towards my family. I was jealous of my friends who had parents that were present and active in their lives. I was an angry adopted teenager who felt like he was the victim of some terrible crime. I was overwhelmed by the balancing act of school, sports, work, and life at home.

My school counselor saw something in me that no one had ever vocalized in such a beautiful way. She said, “Eric, you are going to get through this and go to college away from here, and you are going to do what you want with your life.” She helped me fill out college applications and registered me for advanced placement courses my junior year and kept me focused on getting the hell out of Madison, WI.

Fast forward to 2013 and I ran into my guidance counselor back home, and I told her I had a master’s degree and worked at a Fortune 50 company. Tears. Hugs. It was a powerful moment of accomplishment and lesson of gratitude. I’ll have to write more about that later on.

Resentment. Jealousy. Anger. It was happening again but now it was financially driven and had come full circle from my high school hopes to go off to college to escape my life at home. I have been there before and I have won. I could not let the victim mentality win again.

It is easy for us to fall victim to the barriers that lie ahead. The barriers that are between us and our goals. For me, it has been a change of attitude. While the sky seems to be falling, I realize that I still have two feet on the ground. I’m still breathing, and I have the resources to overcome these obstacles. I am in control.

control

(from troll.me)

Now that I’ve spent a few posts talking about my vision for being debt free and the attitude shift I’ve gained, I’ll finally talk about how I’ve been making it happen…in the next post.

Why?

Why? There are two ways to view this question in the world of leadership coaching. Some view this as a question that can raise defensiveness in the person being asked. Some view this as a powerful question to analyze the root cause to a problem. In the context of this blog, it is a powerful question because it motivates the shit out of me. Since my first blog post, I have had quite a few people reach out to me with a variety reactions and inquiries, but my favorite question I have been asked is, “why? why do you need to pay this off so aggressively?”

why-god-why

(from icanhascheezburger.com)

“It’s not bad debt, you should just pay the minimum on your loans because the rate is low and you can invest the rest in retirement accounts.”

This is what a financial planner told me. He clearly did not listen to the goals/vision I laid out below. I’ve also heard this from friends and family. I crunched the numbers on average returns for various accounts over the next 20 years versus having the loans paid off 15 years earlier and investing that $45,000 of interest into anything that gains a return. Lots of free financial calculators online. Do it. The numbers were in favor of my plan over his. Pick a financial planner that has the same values/goals and not just someone trying to sell you bad products, so they can make a commission. Ask them about how they make money and you’ll get a pretty good idea on their intentions.

Disclaimer: I’m still saving through a 401(k) because the employer match is free money. Your financial situation is different and you should do the math or get someone else who is better at math to crunch the numbers. You could even get one of your finance buddies to run some numbers over a beer. Maybe coffee, keeps her/him alert.

Here is why I have decided to pay the loans off so quickly versus the slow bleeding that could occur over 20 years.

  1. Math. Think about what I could do with $45,000 saved from interest in the next 20 years.
  2. Going into my early 30’s with no debt sounds pretty rad.
  3. Financial freedom, so I can save long term for a variety of things like retirement, education funds for kids, a house, etc.
  4. I could take a pay cut some day. I love the community and giving back, so having the financial option to go to a nonprofit would be great. They just don’t pay like a big corporation, unless you’re at a big nonprofit like the NFL. Yes, they’re a nonprofit.
  5. Give money to help others. Whether that is writing a big check to a nonprofit I’m passionate about (not the NFL) or it’s helping someone I know, I want to be able to help others financially when the time comes.
  6. Freedom of choice. The reasons above all tie back to the ability to make financial choices without the financial restraints of a nearly $1,000 minimum payment every month.

Some people have the attitude that debt is just part of life. I don’t want to carry that attitude based on the vision I have set forth in the list above. Whether you’re paying off school debt, trying to lose weight, or debating whether or not to quit your job, I believe it is important to explore the answer to ‘why’.

Let’s have a conversation. Make a comment below and tell me why or why not aggressively pay school loans (or any loan for that matter). Thanks team.

Eric + Blog = Therapy

For several months I have been debating whether or not to start the blog again. Should it have a general theme, focus on my personal stories/experiences, or be complete randomness about whatever crops up in the old noggin? I also was concerned about professionalism knowing my coworkers are reading this right now, but this is who I am and this is my experience.

I have been on a financial journey over the past year. It has been a transformation full of frustration, momentum, and insight…

loans

(from someecards.com)

Student loan debt. My. Living. Hell. SallieMae/Navient, Firstmark Services, Great Lakes, and ECSI are not companies I have worked for but rather, names that have haunted my dreams since 2008 when I graduated college. If your parents paid for any of your school, call them right now and thank them. My parents love me, but my dad’s business went under when I was a kid and the family went bankrupt because Walmart moved to town. Oh and I did a master’s degree shortly after the job market went south. I am making progress, and I am part of the $1.2 trillion of national student loan debt. Selfishly, this blog is therapy for me during my journey. Selflessly, I hope some of you can learn from my experience and be inspired to take some action now rather than 20+ years later.

Disclaimer: Before I go into specifics on the awful epiphany I had just over a year ago about my “progress” on repaying my school loan debt, I will say that I currently have a great corporate job working with very intelligent people who I admire, and I am happy with what I am doing. Not a lot of people can say that, so getting the advanced degree was well worth it.

Sometime in 2011 I began getting those lovely letters about repayment and that my grace period had ended. Once all of them came in, I had about 6 or 7 payments per month from various lenders. It felt like every few days I had a reminder of how stupid I had been with budgeting when I was an 18 year old boy. I made poor financial decisions and I’m paying for them now. I managed for a while and finally felt in control, paying my minimum payments every month while still enjoying my 20’s with full-time employment IN the field I studied. Victory! Minimum payments for 20+ years can’t be that bad, right?

Fast forward to just over a year ago when I finally took some time to check in on my “progress”. Just about $128,000 left to pay!!! Interest was slowly killing me at 3 to 7%. I remember sitting in front of my computer, completely helpless. I felt sick. My head throbbed and I wanted to vomit. I laid around a lot that day feeling angry, sipping a beer. Then I felt sorry for myself. Then I felt angry. Then I felt hopeless. I then went to the google and explored my options for reducing my interest rate, consolidation, and forgiveness options. There are pros and cons to consolidation, interest rates weren’t negotiable, and the only forgiveness option I was eligible for was death

Here we are just over a year later and I am happy to share my progress. I have just over $92,000 left to pay off. It is still a ridiculous amount but man have I made progress. How the hell did I do that? I didn’t get some enormous raise. I didn’t sell some large asset I had. I did a lot of little things from cutting cable when I lived alone to going without paying for a haircut over the last year.

This blog is about taking responsibility for past actions, setting goals, making plans, taking action, and being frustrated and elated along the way. Care to join me?