I Think We Need A Change...

Photo courtesy of Forgotten memory



As you know if you've been around us for even 5 minutes, we've been at this for almost 2 full years now! September 13th - which also happens to be my birthday - will make it official.





Within those 2 years we've picked up a lot of personal insight and we've also tweaked a number of techniques to find a more 'custom' fit than most of the major programs provide. We took all of the info and then applied our personal filter to it based on our beleif system, our financial situation at the time, and our decisions based on just how aggressive we wanted to be at the outset. Once we got the hang of it we essentially just let it run it's course without much change. Sure there was a streamlining process that we had to go thru but it mostly happened as a result of our weekly budget meetings and in very small increments.





But now I'm coming to a place where I feel we need a change in strategy. And I'd prefer for it to be a MAJOR change! At times I question if we are somehow too 'comfortable' with the pace we've settled into lately. Quite honestly there are times where I dont feel very "Gazelle Intense" at all about what we're doing.





And then when you couple with that the fact that we are quickly becoming role models through the ever-extending reach of this blog, Facebook and Twitter it becomes a challenge sometimes to manage a balance between what we're doing as a household vs. what we want to empower you to do as a person/family.





The bottom line is that I feel the need to possibly change the way we are approaching our debt. I'm looking for a way to make it 'fresh' again to us in spite of the fact that we've accomplished so much and are now at our virtual halfway point in the journey.





I'd love to hear ideas from any of you who have felt this same way and done something about it! Please leave me a comment below or hit me up on Twitter with your suggestions!





See ya next time,

@W




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How I would save GM… The Great Auto Lotto of 2009!

Photo courtesy of jhoweaa

GM is a car company right? So how would I save a car company? I would sell it’s cars! Put on your thinking caps boys and girls, it’s time to do some math!

Our Government has committed roughly $50 billion to bail out this automaker. So let’s say the average GM car cost $26k…

($50,000,000,000 divided by $26,000 = 1,923,076 brand new cars)

Let’s keep the math neat by rounding the figure to 1.9 million… that’s a lot of cars right? So then the question becomes, “Who would those cars go to?” And I would answer that question easily, “The GOVERNMENT… duh!”

In my scenario essentially, the government just contracted out GM to operate their entire fleet of vehicles. Everything from FBI cruisers, surveillance vehicles, even the *motorcades of Diplomats and elected officials can be covered by this $50b ‘contract’. (*President Obama already has a stable of tricked out limos produced by Cadillac, a GM brand, so there ya go!)

Next question: “What if the government doesn’t need all 1.9 million vehicles for it’s own use?” Answer: They raffle off the excess vehicles to the public… after all WE did pay for this bail out with our own money right? Any US citizen with the means could essentially enter a lottery to get a crack at the leftover inventory of vehicles. They could buy as many tickets as they like to increase their chances of getting a brand new vehicle for a DIRT CHEAP price.

For example if the government used 1 million of the vehicles to replenish/upgrade it’s stock of fleet vehicles, 900k would be left. Again, to keep the math clean, let’s say that 300k have a price range of $0 - $10,000. They would be raffled off at $100 per vehicle. That would equal $30 million instantly pouring back into the economy. Then let’s say that 300k have a price range of $10,000 – $30,000. These would be raffled off at $500 per vehicle. The proceeds would equal $150 million for this group of vehicles! Then lastly, we have a final group of 300k vehicles with a price range of $30,000 to $50,000. The raffle price for these would be $1000 per vehicle because of the premium/luxury nature of the lines offered at this price. This group would bring in $300 million.

Now keep in mind this is just a basic experiment and it only takes into account one raffle ticket sold per vehicle… but as I said earlier, the buyers could buy as many tickets as they like. The total revenue from the scenario we just did comes out to $480 million, and THAT does not take into account taxes, tags, and freight charges on the vehicles themselves – which again goes back to the government. I would also add a stipulation for any raffle winner that they could sell their current vehicle for no more than equal value of the raffle ticket they purchased! This would again, instantly create a secondary car market and most likely DOUBLE the figures I just gave at the very least.

And what’s more, GM isn’t the only auto company in need of this type of “bailout”. This would serve as the perfect catalyst to reinvent both the US auto market and the overall rules of engagement for the consumer they sell to.

Now, I’m sure some one reading this is going to ask, “What’s the point of the Government spending $50 billion on this example just to make back a minimum of $480 million?!” But to that I ask this question: “What’s the point of the Government bailing out GM with $50 billion and having no plan other than to ‘keep it afloat’ operationally while the company still slowly bleeds to death in this economy?!”

GM is a car company… and something needs to be done with the cars right? I don’t care how much you say you don’t like American made cars… if you could get a brand new one for $100 to $1000 you’d be down for it!

What would you do?
@W

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Simple Secrets: Paying on it vs. Paying it OFF

Photo courtesy of Tea & Jam

Ok folks. In my last post we went over the basics of the 7 Baby Steps that have helped us pay off over $53,000 in debt in the last 20 months. But today, I'm going to let you in on a little secret: There should actually be 8 baby steps!

Step Zero: Stop using currently established and available forms of credit, and also stop accepting NEW forms of credit.

This step contains the key to your Total Money Makeover, and it's such a radical shift from 'the norm' that it causes many to fail even before they start. Some folks just cant get their head around living off of CASH.

When you really get the point of this program, you will soon realize that you really don't need credit at all. Not for credit reports, or FICO scores, or for your cash back rewards. You don't need it.

Minor tangent: Speaking of cash back rewards... how much CASH are you really getting BACK when the creditor is charging you interest for the use of your credit line? Think about it!

Now, in my last post I promised to tell you why we REALLY chose to stick with this system, and here is the reason: Because at first we felt like we were doing something WRONG. And when I say 'wrong' I mean we felt like we were being disloyal to the credit industry in some way. It's hard to articulate, but Visa and MasterCard have become so prevalent in our society and in our spending habits, that it felt truly odd to simply make the decision not to use our charge cards! How sick is that?

The entire credit system is propped upon the fact that they NEED you to NEED them. They constantly send the message that if you aren't using credit in some way, you simply will not be able to 'compete' with or keep up with the average consumer. It's a very Pied Piper mentality!

Once we realized why it felt so wrong, it lit a fire in us! And it opened our eyes to the many tactics and tricks that are pressed upon the average consumer.

THIS IS A WAR PEOPLE! And if you haven't noticed, take a look at what this nation has been through in the last 16 months as proof. The housing market collapse, the banking and financial institution implosions, the economy woes, the employment issues. They are all mutations of one virus: CREDIT...

Credit tells you it's ok to spend more than you actually possess. Credit tells you it's ok to borrow against your future, to acquire something today. Credit can erode your character and your sense of delayed gratification, and it can also ease you into a place of irresponsibility and 'living for the moment' emotional purchasing.

Because of this, you are required to make a change in your approach toward money. This is where the title of my post comes in. People who are comfortable with debt, have no problem "paying on" something far longer then they ever intended to, because they get lulled to sleep by the convenience factor of a payment plan.

Meanwhile, those who have had enough of this game of debt become addicted to "paying off" things as quickly as possible so that they can free up their income and truly live a life that's not dictated by a three digit score, and the limits on their cards.

Thanks for tuning in, I hope you're enjoying this expose' series.

Next up: "The $1,000 Scramble"

You are worthy of the journey!

@W







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These "Baby Steps" AIN'T for Babies!

Photo coutesy of Bettina.Schwarz

In the last 2 posts I've kind of gone thru a sort of 'reset'. Maybe it's a second wind of sorts? I dont know. But I've felt the need to simplify the emotions and actions WE (my wife and I) faced when we first started out so that YOU can duplicate them as much as possible.

In the first post of this mini-series, I laid out exactly what we're doing and how it has helped us pay off $49,000 in debt in only 19 months! In the second post I continued to zoom in on the mindset and underlying philosophy of "Living Like No One Else".

Luckily we never felt overwhelmed with the process, and I think that is in part due to what I intend to share with you in this post. In his book The Total Money Makeover, Dave Ramsey calls them the Baby Steps. They are meant to be simple bullet points on your journey to debt freedom.

But please dont sleep! Just because these steps are simple, doesnt mean they're for 'simple' people. It takes vision, committment, and perseverance to see these steps through to completion!

I want to take a few moments to list them out below, but I'll delve deeper into each step in future posts.

Step One: Save $1000.00 CASH as quickly as you can to start "Emergency Fund"

Step Two: Pay off ALL debt in order from smallest to largest using "Debt Snowball".

Step Three: Save 3-6 months worth of expenses, to fully fund "Emergency Fund".

Step Four: Invest 15% of income into Roth IRA's and Pre-tax retirement.

Step Five: Begin funding your childrens' College Educations.

Step Six: Pay off your home early

Step Seven: Build Wealth & GIVE! (Mutual Funds, Real Estate, ect.)

Step "Zero": STOP using any forms of credit and accepting new forms of credit.

Pretty simple and straight forward right? Well yes, and no. Yes, because they set a framework for you to follow. No, because if you dont follow the framework that has been set... you'll only be making it harder for yourself. In addition, these steps can't tell you how aggressive to be in your Total Money Makeover. The intensity level must be left up to you.

The downfall to the simplicity of this plan is that so many "SMART" people in this world think they need to re-invent the wheel and make it more sophisticated. But as the saying goes "K-I-S-S" (Keep It Simple Stupid).

As I said before, I'll be breaking each step down and explaining why the order is so important. I'll also be sharing exactly why we REALLY chose to stick with this system. As you become more and more familiar with the steps, you will inevitably feel that something is "wrong" about them. This is natural! At first, I did too, until I realized how CONDITIONED i had become by the FICO scores and the credit card industry! They NEED you to NEED them, and they're NOT going to make it EASY for you to cut them loose!

We'll talk about that further in my next post where I'll address the 'objections' I've heard toward getting out of debt. The reason objections is in quotes is because the people objecting were spitting out all the BS that is fed to them daily by the media and credit card industry.

Next Episode: "Paying On It VS. Paying it Off"

You are worthy of the journey!

@W







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You Want Me To Do WHAT?!?!

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In my last post I left you with this thought:

"Live like no one else, so that one day you can LIVE like no one else."

Please try and get that into your spirit whether you choose to get out of debt with us or not! It's going to apply to whatever obstacle you need to face in order to reach that goal you fantasize about.

In our case though, that statements speaks to our financial situation in a very powerful way. My wife and I were blessed enough to start getting out of debt in 2007 which was way before the economy went south. The reason I call it a blessing is because it would have been 20 times tougher for us to go through some of the things we've faced, if we were just starting at during a time like this. But in no way am I saying it can't be done. I know of many people who started their jouney to debt freedom when things were at their worst, which to me is all the more commendable and impressive.

But let me get back to my point. "Living like no one else" means letting go of all the credit cards, charge cards, department store cards, gas cards, the loans ect. "Living like no one else" means living only off of the money you earn from your salary. And let me tell ya people, it takes serious guts to do this! This might be the equivalent of a life-long meat eater going Vegan "cold turkey" as they say. Or I guess more fittingly "cold to-furkey" lol.

But for me a far better and meaningful example is the commitment, determination and surrender a person undergoes when they give their life to Jesus Christ. This process can be nearly as liberating and transforming for your finances. "Living like no one else" means doing what others are afraid to do because it might cost them something trivial on the front end!

Let me make one thing clear real quick. Just because I'm not spending all of my money on watches and flat-screens NOW, doesnt mean it's ALWAYS going to be this way for me. In fact I have just over a year left to go before I can get back to truly ENJOYING my money again, and yes even BLOWING some money on material things. But that will be just fine because at that point I'll be able to AFFORD IT!! I made a decision to SACRIFICE for just 2-3 years of my life so that I wont have to sacrifice for the REST OF MY LIFE!

Unfortunately, too many people have been sold the idea that they simply cannont exist without credit. It's become unrealistic to many because all of their 'dreams' reside far outside of means!

"C'mon, who really pays CASH for a car nowadays? That's just not realistic! I'll never have a nice ride, if I go that route!"

"Can you even get a house without having a MORTGAGE, is that even possible?"

"And just forget about paying for your children's college education unless you refinance that mortgage! Raising enough cash to pay for it outright?!? Is that even possible?"

"Is that even possible?!" This might be the second most popular question I'm asked when it comes to our debt journey. And at least for us, I'd have to say "Yes, it's very possible."

"Living like no one else" requires a paradigm shift, or rather a change in your thinking. But take heart, you dont have to undergo that shift overnight! This is where the "Baby Steps" come in...

In the next episode: "These "Baby Steps" ain't for BABIES!"

Stay Tuned...

@W







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What the HECK are you DOING?!?!

Photo courtesy of Whysteriastar


The title says it all... it's the number one question I get from family and friends when they ask how we're doing with "the debt thing".

Four years ago, my financial routine was as follows: To spend nearly all of my money on multiple pairs of the same sneaker in the same color, a PlayStation game or two, and the latest DVD release from Best Buy for that week. Once those major priorities were taken care of I'd make sure I had enough money left to cover breakfast, lunch, and dinner from McDonald's, and enough gas money to get me back and forth to work. No savings, no 401k, no responsibility. I didn't even know HOW to budget, let alone consider following one! But me? Man, I was living THEE LIFE! ...Right?

My how life has changed! Before we started this journey to evict our debt, I was barely making a salary above $40 Grand... but flash forward to today and we've paid off $46.5k! (Stop it, you're making that face again.)

So what changed? In short, it's a simple phrase but in practice it's anything but simple:

"Live like no one else, so that one day you can LIVE like no one else."


Over the next few posts I'm going to introduce you to what that really looks like in my everyday life.

In the next episode: "You want me to do WHAT?!?"

@W



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Simple Secrets: Understanding CashFlow

Photo courtesy of 'morena7



Cashflow is simply the way money moves (or flows) into and out of your household.



Just as it's not safe to play in a swelling river if you don't know what you're doing, if you don't understand the cashflow dynamics of your financial situation, you will get swept away by the current of your currency. (Admit it, you liked that phrase lol.)



This simple principle is not to be underestimated. For instance, if you and I have the exact same budget and the exact same income to work off of, but only one of us has a grasp on the power of cashflow, our situations will go in very different directions.



One thing that is crucial to learning how to master cashflow, is gaining the understanding that cashflow planning and budgeting are not the same things, although they do work in concert.



Budgeting is telling the money where to go.



Cashflow planning is telling the money when to go.



That's it!



Effective cashflow planning can mean the difference between consistently coming up short each month for a bill, or having enough for that same bill and maybe one or 2 others.



So in a few quick steps I want to give you a template for finding the sweet spots in your cashflow.



First, analyze the due dates for your expenses, especially the problematic ones. Also make sure those due dates are listed on your budget when applicable. Is there a bill being paid at the start of the month, that isn't due until the end? Consider moving or splitting that expense across more than one check. I'll explain splitting more in the following points.



Second, for constant expenses such as gas, food, groceries or blow money, I'd recommend splitting them into equal amounts across the paychecks you receive for that month. For example, if your house brings in 4 checks each month and you have a budget of $200/mo for groceries, split them into $50/check increments.



Third, for items that are constant monthly expenses, but are just too large to pay in one paycheck (like a mortgage or rent) split the total amount into amounts that are more manageable on a check-by-check basis. Allocate more towards the payment amount on larger checks and less on smaller checks .(Say, if the amount per check is not the same, or if you work more than one job.) As the month goes along you will envelope the funds as you build them up to the full payment amount. *Unlike step 2 the goal of this suggestion is not to split evenly across your checks. **This type of method almost always works better if you are already using a Zero-based budget.



Fourth, watch out for expenses that may not happen on a monthly basis like car insurance, smarttag fees, or even oil changes. For these you either want to create a line in your budget that is enveloped towards. Whether you do this on a monthly or per check basis will be up to you. *This can also be done for one-time annual fees such as membership dues - just take the total amount, divide it by 12 and let that be your "monthly" payment amount for that expense.



Fifth, watch out for 'Leaks'. A leak is any seemingly small expense or habit that drains your income over time. A leak can come in the form of anything that you purchase but do not document or budget for. Do you frequently get chips out of the vending machine at work? Or pick up a lotto ticket while pumping gas? Or maybe you decide to get that tabloid on a whim while standing in the checkout line. When you add up how much you've spent on that expense at the end of the month, you'll quickly identify your leaks... and trust me, you'll be shocked.



Like I've said a few times in this post, understanding your cashflow just cant be stressed enough. I hope some of these pointers will help you financially "stem the tide"!



Until next time,



@W




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The @Risk Bailout Plan...

Dow: Down 778 points in one day...

Congress: On crack...

The current bank that holds my account: Changes by the minute....

Financial outlook: Bleakest we've EVER seen...

Personal Opinion on this whole mess:

THIS IS WHY I NEED TO BE DEBT FREE!!! (And why you do too!)

What are we waiting for? What's it gonna take? Why are you surprised?

And most importantly, what are you going to do about it?

Oh and lets end this on a high note.... this just in: Oil is now $95/barrell!

(See, it aint ALL bad news!)

This too shall pass,

@W







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Food Bank: 5 Ways to REALLY Boost Your Food Budget

Photo courtesy of shine_dorydevlin

You've heard yourself say it a time or two... "I cannot possibly cut anything else out of this budget!" But just humor me by going along with this mental exercise.

The biggest and often most overlooked place for savings is your food expenditures. There is no way around the truth in this statement: "You ARE what you EAT."

If you have expensive tastes, your bills will be too. This can quickly be compounded when you are married with no kids, because you will most likely eat what your spouse eats in the evening. So if he/she has a thing for eating out frequently... good luck!

It is with this in mind that I came up with 5 simply profound ways to impact how much money you spend on food. This applies to both your grocery shopping and dining out. If you even try just 2 of these I promise you'll see a noticeable drop in what you spend.

If you don't have time to read each of the 5 points below, I think I can sum them up in one sentence.

Don't spend money buying things that are available for FREE!

While reading these points ask your self how that statement applies. Except for point #3, just don't do it.

1. Drink more WATER

Water is the cheapest most plentiful food resource we have available to us. Usually it can be found for FREE where ever you may be. If 'public water' is just a little more adventurous than you can handle, invest in a filtration method for your home. They can easily be added t your sink, or you can buy various pitchers from Brita or PUR on the cheap.

Drinking water throughout the day will also help you eat less, loose weight, and stay properly hydrated.

2. Buy less COFFEE

I'm not Anti-$tarbuck$ or anything... but $4? Everyday? Plus a pastry or sandwich or CD....

7-Eleven, Dunkin Donuts, Panera, McDonald's, Seattle's Best, & Bengal Traders (Exxon) are not exempt either... it's a ripoff!

I would venture to say there is not a workplace in America that doesn't offer free coffee and tea. Does it really taste better just cause you paid for it?

3. Stop buying ALCOHOL... period

Literally, It's one of the oldest sayings in the book, (and yes I AM talking about the bible)

"EAT, DRINK, and be MERRY"

It's found in Luke 12:19 (NIV) , but it's not an endorsement for "buying out the bar" as hiphop loves to proclaim. In fact it's the opposite. Let's read it in context:

18"Then he said, 'This is what I'll do. I will tear down my barns and build bigger ones, and there I will store all my grain and my goods. 19And I'll say to myself, "You have plenty of good things laid up for many years. Take life easy; eat, drink and be merry." '
20"But God said to him, 'You fool! This very night your life will be demanded from you. Then who will get what you have prepared for yourself?'

I just have one thing to say about that...OUCH!

If you drink socially, odds are you pay almost as much per alcoholic drink as you do for your entree... and lets face it, who buys just ONE drink? (Whew, I thank God I don't drink alcohol anymore!)

4. Stick with the Small or Medium sized "Value Meals"

Since the start of the year I've really cut down quite a bit on eating fast food. (It helps to mention that I've completely QUIT drinking soda as well, as this truly makes a difference.) Ah but Wendy's still has a hold on me. Sometimes when standing in line, I hear other people order a #6 (mmm the Homestyle Chicken Breast meal...) but they make one mistake. They order the "Great-Big-Ole-Biggie" size for the soda and fries. When they do this it ends up costing nearly $8 bucks! Then later when I'm eating in the restaurant, I see them toss the half-eaten meal in the trash.

Solution: Stick with the small. I only buy one meal from Wendy's now. The "DoubleStack Attack". It's $3.49 and it's more than enough for me to eat as a lunch meal. I just ask them to add lettuce and tomato (which they do for FREE!) and I've got the equivalent of whatever 'Feature' burger they're offering.

Another tip that I'll throw in for free is to not buy a 'meal' at all and just get the sandwich. I do this when I go to Burger King. I get 2 Whopper Jr's, no cheese. (They charge .40 cents per slice!, which after tax drive the cost up a full dollar.) 2 Whopper Jr's = $2.10 and I'm FULL! Need something to drink with it? Wait till you get home to eat it! I know you have juice/soda at home c'mon.

5. Brown bag it

It's unfashionable, It's borderline miserly, and it can be boring. But it save a whole heckuva lot of money! (and time)

The only con, if you can call it one, is that you have to prepare this ahead of time. But it's time well spent, rather than money spent poorly eh?

I apologize I know this post was a bit lengthy, but as I said if you incorporate just 2 of them you'll see improved results.

God Bless ya,

@W

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