It's awesome to see how far I've come....

For whatever reason, I decided to check out my blog today.  And to my surprise, today is the 1 year anniversary of this blog.  One year ago I wrote my first post titled "My Last Christmas With Debt".  Reading through that was awesome.  It made me think about "the place" I was in just a year ago...how I was feeling....where I lived....what I just went through....how I wanted to change my life for the better.  It made me think of the amount of debt I started with on this journey.  It made me remember how difficult it was to really get started on the journey.  I can still remember the overwhelming feeling that I seemed to always feel when I thought of my financial situation.  I remember feeling trapped, like there was no way I'll be able to follow my dreams or achieve my goals or at the very least.....exit the rat race.  There was a time that I thought to myself that the way I was living just had to stay the same....that it was what most people go through and that I was just another person working hard to barely get by.  I didn't see a light at the end of the tunnel for retirement.  I remember thinking that I would have to continue working till I just physically couldn't work anymore.  For some time before I started this blog and before I started my debt free journey, I was just another guy trying his hardest to provide for his family and doing what everyone else does to make that happen.

Thank God for this journey.  What a difference a year makes.  I live in a nicer home where my kids can run around freely.  I don't have that same stress around how to pay the bills and still afford to buy some gifts for my family.  I don't have anymore credit card debt!  I have an emergency fund.  And because we've made so much progress on our journey, doors have been opened that at one point in time I thought could never open again.  It's the feeling of freedom...the simple thing of having options....it's a wonderful thing.

This blog has been a blessing.  I can look back and see just how far I've come.  I think it's very important for me to remember where I came from...how big of a hole I had to climb out of.  I never want to get back to those days, when I felt trapped and thought freedom from debt was just a pipe dream.  I like where I'm at right now....and it will only get better from here.  I hope to look at this post a year from now and think.....wow, I really liked life back then.....but I'm lovin life now! 

Thankful for....

At Thanksgiving dinner the other day, someone commented that I don't blog anymore.  So, that prompted me to pull up the blog and read a few of the older posts.  I realized that my first blog was almost a year ago from today (about 11 months actually)....I also noticed that I haven't posted anything for several months.  The first thing I thought was that it was cool that people still reference my blog even though I haven't been active on it for awhile.  And after reading a few of my old posts, I was inspired again to share more of my stories.....

Given that it's right after Thanksgiving, a pretty obvious post topic would be to list all the things I'm thankful for.  I thought about that for a minute and realized that I truly have so much to be thankful for in my life....probably too much to type about.  But I do want to share the things I'm thankful for as it relates to my debt free journey.

First and foremost, I am so very thankful for my wife and kids.  As I've mentioned several times in this blog, the debt free journey is not easy.  There are sacrifices, bad habits that need to be broken, total mindset shifts, and more sacrifices.  It's so easy to get back to old ways....it's like any other addiction.  And this one is being demonstrated all around you....by everyone.  Heck, all of the advertisements/TV commercials/etc....tell you it's ok to be in debt.....or at least entices you to get into more debt.  Can you imagine a commercial that pushes for people to do cocaine....making it look so easy to get it done....well, that's what these car dealerships try to do with their 0% financing isn't it?  Get back to being in debt....we'll make it so easy and painless for you....  Anyway, throughout this entire journey, my wife and I have supported each other.  It really helped to have someone go through this journey with.  It's such a tough life change that you need constant reminding of the importance of the mission and you need empathy when your mind starts to head down old ways.  As for my kids, they have followed us on the journey and I hope that they learn enough that they never have to go through this again as adults.

I can't emphasize enough how much support I've had by so many people throughout this journey.  And for all of them, I'm thankful.  The support has come from extended family members to old friends to acquaintences that have sent positive comments through this blog.  It's a combination of all their support that keeps me driven each day to keep chugging along the journey.

Passion IS Key!

Well, after 6 months after starting this blog, it seems like I've lost interest.  I just looked at my last post and it was several weeks ago.  My goal of doing 4 posts a month (i.e. one a week) has not been met.  I find it a chore or extra work to start typing on this blog.  I don't "make time" for this blog, it just doesn't seem like I'm very interested anymore.  So, what happened.  I remember when I first created this thing in December of last year.  It was part of my New Year's resolution and I was stoked about it.  I wanted to tell the world my story and help others achieve what I have and bring people on the journey with me so that they can see for themselves that anyone can do it.

After thinking about it for a little bit, I figured out what the problem was.  I really lost my way.  I forgot what my original purpose of this blog was.  It was supposed to be an outlet for me to share my thoughts, struggles, accomplishments, etc....with no holds barred.  I was going to really tell the details of my journey and what it meant to me, my family, my friends, my acquaintances, etc...  It was supposed to be my life on a blog and through my life experiences, hopefully people could learn or be inspired or at least walk away with a smile/laugh after reading what I wrote.  And I was gung ho about it.  I wrote diligently everyday.....for a month.  Then things changed....and now I know what went wrong.

Back in January, I started to get all this feedback from different people.  There were people who I knew would read it (since I practically forced my family to read it by continuously telling them to....:)  But then there were other people who read it and gave encouraging feedback.  Since I posted it on Facebook, Twitter and LinkedIn to expand my audience, I was getting people who I haven't heard from in years or old colleagues who could ping me or e-mail me and let me know what they thought of my posts and how it either inspired them to go on a journey or just made them feel happy for me that I've begun mine and accomplished quite a bit.  I had people tell me that they would wait up at night till the next post came as it was a part of their daily routine.  I had people tell me that they were debt free and loving it and were glad that I decided to go down that path....they gave me encouragement and re-assurance that the path is the right one for me and my family. The blog even became the topic of discussion at family parties, and (coolest of all) it was awesome when I would meet someone or see someone that I haven't seen in awhile and the first thing they would say to me was....I read your blog and it's good stuff....keep it coming.

After all those experiences, why is this the first blog post in weeks and how come I haven't been writing consistently?  At first, I blamed it on time.  I blamed my day job or my desire to spend all the rest of the hours with my family.  Then I blamed it on the topic....I said to myself that I've basically figured out how to be debt free, I don't think I have much more to say on the topic....maybe I should write about different things, like building wealth or how to start a business or anything else.  But now I know the root cause and it has to do with passion.  I lost it...for this blog.  Because this blog's purpose had changed without me fully realizing it.  As I mentioned, this blog was originally supposed to convey my message and my life experiences, specifically around my debt journey.  Well, along the way, this blog morphed into a "how to" on becoming debt free.  It became a place where people read various ways to change their mindset on money and perform steps that could get them out of debt and into financial freedom.  In a nutshell, this blog wasn't driven by my passion to tell my story anymore.  Instead, this blog turned into a place where I "taught" people "how to" be debt free and "how to" become financially free and "how to" be smarter with their money.  Well, it turns out I don't have passion around being a personal finance guru.  I don't have passion around being an amazing writer (in fact, I really don't like writing at all).  And I definitely don't have passion around teaching structured subjects (i.e. the "how to's" of personal finance).

And what I've found is that without passion, the "thing" (whatever the thing is)....dies!  It gets put on the back burner, it never gets prioritized, you'll forget about it, it'll become a weight on your shoulders.  That's what this blog became to me.  I started over-thinking the posts I should write because they had to be perfect for people to want to read them and follow me.  There are several posts in "draft" that I just didn't think were good enough to be posted.  And because I over-thought the posts, they took longer to write.  I was scrutinizing them for grammatical errors, formal writing rules (like did the post come full circle or was the message clearly articulated, stuff like that) and I even wanted to make sure that I wasn't repeating topics and shared new lessons each time.  The other thing that killed me is that I started reading other blogs and I wanted to be different than them and didn't want to repeat their messages.  I also wanted to become a better "blogger" so I started to incorporate hyperlinks and boldings/underlines to my posts....as opposed to just writing away.  In essence, it became a full-time thought process to get a post done and I didn't have the desire to spend that much time on something I specifically didn't have massive passion around.

Whew, I'm glad I got that out.  So, now I can move on.  I remember what my original intention was for this blog and I intend to go back to it.  I think there's a lot of value in getting my message out and I feel/know that it can help others.  So, I'll tell my stories and hope people will get something out of them.

Salary vs. Total Income

The further I go down my debt free journey, the more I realize that it's more a mentality shift as opposed to a numbers game.  Don't get me wrong, at the end of the day, the numbers tell you whether or not you're succeeding in your goal towards financial freedom.  But "how" you get there is the hard part.  I've read through some of my previous posts and I've discovered that I have several themes.  I talk about: motivation, going against the grain, changing the way you think.  I haven't really discussed the specific actions associated with money.  In other words, I haven't talked about "how to make more money", "how to invest your money", "how to spend less money", etc...  And now I'm starting to realize why I haven't focused on those topics.  At least for me, my debt free journey was much less about the money tasks.  It had everything to do with getting my mind wrapped around the concept of being debt free and modifying my lifestyle to comply with the concept.


The concept of living off of your salary and not your total income is not new.  Some people reference it as "living below your means".  But the first thing I ask when I hear this is, "what comprises of your total income?". I've read many personal finance books/magazines/blogs and a recurring theme is the concept of passive income.  Passive income is basically extra money that you make which doesn't require too much of your time and effort to maintain.  Popular examples of this are: income from rental properties you own, income from side businesses, dividends and interest from investments, etc...  So, my very next question is, "how can you afford to obtain passive income?"  This is something I've struggled with for a very long time.  I'm sure you've heard the saying, "it take money to make money".  Well, to a certain extent, that's true.  So, I used to think that I would really start my road to financial freedom when I can start my passive income endeavors.  That used to be my focus.  I used to stay awake at night thinking of how I could get to the point when I could finally live below my means.  Because at the time, I was dead focused on figuring out how to get all this passive income so that I could start living freely off of my day job's salary.  If only I could get lucky and find an awesome rental property or if I could just launch one of my many money-making business ideas or hit the jackpot with a hot stock, than at that point I would really be on the right track towards debt/financial freedom.

But little did I know that I was sitting on the answer to living below my means the entire time.  You don't need to make more means to start living below them.  You don't need to own real estate or side businesses or a huge investment portfolio in order to gain passive income.  You just need to segregate your primary income into active and passive.  I give all the credit to my wife for this concept since she's the one who had the AHA moment around this.  We were doing our monthly budget awhile ago and we were both elated to see that we have come to the point where we have a substantial amount of money leftover after our budgeted monthly expenses.  This is huge for us since it wasn't that long ago when we had essentially nothing left at the end of the month (the classic living paycheck to paycheck scenario).  At that moment, she said we should classify the money we are using towards monthly expenses as our "salary" and the difference between that number and our overall take home pay as our "investment/business money".  It was such a little/subtle change in the way I thought of our income, but it makes the world of difference.  By living off of our "self-defined" salary, we have conditioned ourselves to target that salary for our lifestyle.  Also, we are able to obtain our "self-defined" passive income each month without having to put in the extra effort of starting up a new business or going into more debt to purchase an investment property.  It's basically a new definition of passive income: income that is obtained with absolutely no additional effort above and beyond your primary income.


To illustrate this concept with numbers, this is how I see it:

• If your total household income is $100,000/year and your self-defined salary is $75,000/year
• Then you automatically have $25,000/year in self-defined passive income

Once the concept makes sense, the more difficult part is executing it.  We are in the process of radiating the concept throughout our lives.  Using the above numbers, it means that we HAVE to live off of $75,000/year.  In other words, we need to train ourselves to think that that's all we have and we can't go over.  This pertains to all income levels...if you made $50,000 and you tried to convince yourself that you only made $40,000, it would be the same difficulty in terms of not wanting to tap into the extra $10,000 that you know in the back of your mind that you have.  But first thing's first, you need to define the salary that you will be living off of, then you need to start truly living off of that targeted salary.  I can do a whole other post on how to live off the targeted salary (and I probably will) but I wanted to first introduce the concept that has kept us on the right path during our debt free journey.

6 Figure Income...and not living large!

I read this article the other day and it really hit home.  How to go Broke on $100,000 a year

This really details out in black and white just how people with six figure incomes can easily get into debt without even really living extravagantly.  After seeing this, two main thoughts come to mind:

1) There are many more people that are in the same situation I was in.  If nothing else, this article validated the fact that I wasn't the only one with very decent income that fell into debt.  I really didn't think I was alone but this demonstrates just how easy it is to go down the debt path.  Debt is definitely not associated with lower income households...it's linked with people from all income levels.

2) This article really hit me with the reality that "making 6 figures" isn't equivalent to living luxuriously.  I guess it might have meant that in previous generations but it sounds like 6 figures just doesn't go as far as it used to.  I remember growing up thinking that if I made 6 figures, I would be filthy rich.  I'm talking MTV-type lifestyle :)  Heck, I was amazed at the thought of making even half that.  But that just isn't the case.  Don't get me wrong, people/households that make 6 figures should not be "complaining".  There are many more people that make much, much less.  And you should totally be able to live comfortably with a 6 figure income.  I'm just saying that the high priced toys and expensive adventures need to be put on hold.  On hold till you become debt free and have accumulated crazy wealth!  :)

The AHA Moment!

I had a deep conversation yesterday around what it takes for people to realize the true benefits of financial freedom.  In other words, what is the triggering event that forces people to change their financial lives?  What's that AHA moment?  We came to the conclusion that there isn't just one type of event or moment that makes everyone say.....OHHHH, I get it now!  Also, there's not one specific thing that I can say or do that will make someone else realize what I have realized, no matter how logical my argument could be.  Having said that, there are many life changing events that could prompt someone to re-evaluate their personal financial health:  death, newborn, career change, job loss, major injury, marriage, divorce, etc...  But I hope people don't wait for these extreme situations to make sure their personal financial house is in order.

For me, I can clearly recall my AHA moment.  Don't get me wrong, I have had many, many more lessons learned and self-realizations along the way that have pushed me down the path that I'm on.  But the following event was truly my life changing trigger.

AHA...I really need to start my debt free journey...and I mean really start. 

I remember the meeting so vividly.  My friend referred me to a local financial advisor that practiced Dave Ramsey's Total Money Makeover steps.  Just to back up a bit, this same friend was the one who suggested that I pick up Dave Ramsey's book in the first place.  I read the entire book (which is a major accomplishment for me since there are plenty of books that I've started which I just couldn't make it all the way through).  I thought the book was great, the steps were easy and the success stories referenced in it were absolutely amazing.  So, I proceeded to do what most people do after reading a book like that....I did nothing :(  So, fast forward to this meeting with the financial advisor.  I'm not sure what I was really expecting out of the meeting.  I guess I was thinking he was going to say something like, "stop eating out so much" or "you might want to hold off on a couple vacations for a little bit".  And I guess I was expecting him to have this grand plan laid out for me that would quickly get me out of debt and on track to build wealth like crazy.  I mean, that's what all the success stories in the book did....so why couldn't that happen to me?  I guess I was a bit nervous going into the meeting as I knew I had a lot of debt and I knew I wasn't being very frugal.  But hey, on the flip side, I had an awesome income and all the success stories in the book had crazy amounts of debt....so my situation shouldn't be anything he hasn't seen before and dealt with.

After the first 10 minutes (getting all the get-to-know-you stuff out of the way), it was time to get down to business.  I pulled out my laptop and showed him my spreadsheet that neatly listed all of my income and expenses on a monthly basis.  I felt so proud of how organized I was and how prepared I was for this conversation.  I was thinking inside that he was going to tell me that I knew what I was doing and that my debt problem would probably just fix itself, being that I'm so on top of things.  For the record, he did think I was organized and prepared :)  But more importantly, he was not at all impressed with the contents of my spreadsheet.  What happened next, I wish I could just erase from my memory.  We proceeded to walk through the details of our financial life and it was clear to me that he was truly amazed.  Only it wasn't in a good way!  I remember the summary was something like, so....you take home over $10,000/month and only $500 of that can be put towards paying down debt?  This summary was followed by a long, uncomfortable silence...at least that's what I remember.  I was waiting/hoping/praying he was going to follow it up quickly with...."don't worry, all you have to do is.......".  But nothing...it was like we stumped him....like our situation was something so bad he was a loss for words.  At that very moment, I knew something had to change...and change drastically!

I won't say the guy didn't have any feedback because he certainly had a few comments on what some potential next steps could be.  But he absolutely didn't have a full plan for us and I didn't leave his house feeling warm and fuzzy about my financial future.  In fact, it was flat out depressing.  Although, as hard as it was to recognize the truth of my financial situation, it was probably the best thing that could've happened to me.  My AHA moment served as a wake up call.  I used it as motivation to "fix" the problem and get on the right path.  It opened my eyes to what I really needed to do...it forced me to do things that I wouldn't have considered in the past.  In short, I'm grateful for the AHA moment...as it provided the necessary "push" in the right direction!

As hard to swallow as my AHA moment was, I'm very fortunate that it wasn't a result of a tragedy.  Moreover, I'm very thankful that I was able to do something about it and I'm ecstatic about the position my family and I are in today!  Actually, one of my reasons for sharing my stories with the world is in the hope that others will realize their AHA moment as soon as possible....or at least before their situation gets too out of control!

Excuses Excuses

Wow, I just looked at the date of my last post and it was one month ago from today. Then, I read the content of the last post...it talked about scheduling things you want to prioritize in your life. It went on to talk about how I wanted to make this blog a priority, and that I would start physically scheduling time in my schedule to commit to it. WHOOPS! So, obviously nothing was scheduled, and this blog never made it to the top (or even upper half) of my priority list. Don't get me wrong, I was very productive. I have spent many hours working my day job and spending quality time with my family. But I must admit that I've also had my fair share of "wasted time". It's almost embarrassing to admit how many TV shows I've been sucked into and the endless web sites and blogs that I have perused...instead of working on my own blog.

I had lunch with my blogging buddy today and I walked away from our chat thinking that I probably used every excuse in the book to try to justify why I had stopped consistently blogging. Fortunately, he was pretty nice about it and didn't really rub in the fact that I was just slacking. It's funny to think of the recap of all the excuses I talked about today:

1. My day job was sucking up a lot of my time, so I didn't have any "extra" time to spend posting.


2. I had to dedicate all the rest of my free time with my family.


3. I had writer's block


4. I lost my passion for the topics on this blog


5. I couldn't think of any new and unique topics to write about


6. And the excuses just kept on rolling....

So, here I am, writing on my blog again...telling myself that the excuses have to stop. And when I started listing all of the excuses I was using to prevent me from achieving one of my current goals (i.e. consistently posting on my blog and sharing my message), it hit me that excuses directly relate to the debt free journey.

I don't know what the exact percentages are, but I'm pretty sure that the overwhelming majority of Americans are in debt. So, you can even say that it's the "norm" in our society to have debt. Thus, to begin a debt free journey and fight your way to financial freedom is crazy hard. You've got everyone/everything around you saying that it's perfectly fine to be in debt. In other words, you have a plethora of excuses at your disposal to prevent you from following through with the journey. And sadly, most people never follow through. This explains all the people at retirement age that can't retire and will need to work till they die. This explains all of the families that "need" to have both parents work full-time just to pay the bills. This explains why so many people stay at jobs they hate and feel like they have no other options. Well, just like I should get past all the excuses I've created that prevented me from following through on this blog, I hope more and more people get past all of the excuses that prevent them from following through on their debt free journey.

Here are some of the excuses I had prior to diving into my journey, I'm assuming most people have similar thoughts when thinking about being debt free and obtaining financial freedom.

1. I can't be debt free because that would ruin my great credit score. Although there might be some truth to that (I'm not entirely sure because I don't really care about credit scores anymore), you need to ask yourself why you need to have a good credit score. For most people, they want that high score to get into more debt (get a good interest rate on mortgage, car loan, etc...)....seems pretty ironic to me. I do know that the credit score is used for other things (i.e. new employers run your credit report and if you are renting/leasing a home, they'll run your credit)...but there are workarounds for those things. Bottom line, I'd much rather be debt free than have a high credit score.


2. I can't be debt free because I need to own high quality things. Although I still believe it's better to buy quality over quantity...I now know that you shouldn't do that if it requires you to go into debt. I know for me personally (who is the unhandiest man alive), I used to convince myself that I had to buy new cars because I couldn't fix them myself and it would cost me way too much to maintain them over the long haul. I also took that same mentality with houses. Of course I had to get new houses....so I didn't have to deal with all the maintenance of an older home. The concept just expanded to all of my purchases. Soon, I was surrounded with high quality items and its associated mountains of debt. Like I said before, you can have and you should want nice, quality things....just make sure you can truly afford them.


3. I can't be debt free because my family has needs. First of all, "needs" has to be delineated from "wants". I would be willing to bet that one of the main reasons why people are in debt in the first place is that they think they "need" a helluva lot more than they really do. I'm all about taking care of my family, and I now know that it's actually much easier to support your family's needs when you are debt free.


4. I can't be debt free because I can't make anymore money. This actually was a big excuse for me. I remember getting so frustrated because I thought I made very decent money but it just seemed to leave my checking account as quickly as it got there. So, if you're like me, this could be one of the biggest reasons why you haven't started your debt free journey. But what I finally realized is that you need to look at both sides of the equation when attempting to be debt free. Of course you can attempt to make more money, but probably more importantly, you need to figure out how to spend less. In fact, we have accomplished the majority of our debt free journey without making a penny more than when we started.


5. I can't be debt free because no one else seems to be able to do it. When I first started my debt free journey, most of my family, friends, and co-workers were in debt. So, this was a very real excuse I used to tell myself. It was normal to just stay in debt and everyone else was in the same boat. But I've come to realize that there are many people out there that are living debt free. I've heard from several people that have read my blog that they are living debt free (people that I had no clue would/could be). And if you don't know anyone that's done it, "find" someone. I've always found that it's beneficial to surround yourself with people that have similar goals/aspirations. This is no different. If nothing else, it's a great supporting cast to have....which you go through your journey with.

Wow, I guess when I sit down and really focus on writing for this blog, it can actually come to fruition. Anyway, no more excuses, I want to continue to share my message and related stories in hopes of inspiring/motivating others to follow their debt free journey. So, next time, it won't be a month in between my posts.

Scheduling helps make it happen...

"To make sure you get around to it, schedule it". I heard this in a video seminar I watched a few weeks ago and it really hit me. The point was that there are so many things you could do at any given point in time. So, you really need to figure out what you want to focus on and then formally schedule it. By putting it on your schedule, you're less likely to flake out on it. I thought about this for a little bit then realized how true it was. Think about when you get invited to a party or some event that you RSVP to, you put it on your "schedule"....and most likely you make it. Think about your work schedule, you have meetings that you attend because they are on your schedule. Conversely, think about all the "work" you procrastinate on and you really don't have anything to remind you or hold you accountable...because it's not on a formal schedule. It's kind of like just because you have something jotted down on your schedule, you make an unconscious commitment to doing it. I use my Microsoft Outlook calendar as my master schedule but you can use anything...even if it's just a scratch piece of paper.

I still struggle to figure out what priority to give things. I mean, there's just so many things to do and it feels like not enough time to do them in. Let's take this blog for example, I really wanted to start making it a priority. But then my day job started sucking up major hours...and when I got home to hang out with my family for a bit....I needed get to bed for a few hours of sleep before doing it all over again. But you know what I found out, all the things that I actually put on my calendar got done. Even with putting more hours in at work and preparing for a big family weekend....EVERYTHING I jotted down to do on my calendar was accomplished. So, maybe there really is something about this scheduling theory. Anyway, one thing I'm going to start doing is scheduling time to post on this blog. I'm hoping this allows me to get into a nice cadence for continuing to share my thoughts on my debt free journey.

So, how does scheduling apply to the debt free journey? Well, I'm sure you've heard of many personal finance books telling people to make it "automatic". This refers to scheduling certain financial transactions to execute automatically so you can't change your mind and prevent it from happening. This refers to things like direct deposit of your paychecks into savings accounts so that you don't even get a chance to spend the money. Or investing in your company's 401k plan by taking pre-tax dollars our of your paychecks. Or paying yourself first by stashing away a percentage of your income every month before you pay any other bill or spend on anything else. Bottom line, the idea is to setup certain transactions that will help protect you...from yourself. If you never see the money, you'll never be able to spend it...is the theory.

Besides making things automatic, you should utilize your schedule to help facilitate your debt free journey. We've decided to make weekly budgets and withdraw our cash for expenses according to that schedule. We scheduled our first staycation in which we chatted a lot about our debt free journey accomplishments and future endeavors. I highly recommend scheduling these staycations/planning sessions/strategic offsites....whatever you want to call them. For one, it's a great escape which allows you to re-charge your batteries and more importantly, it allows you and your spouse to have focused discussions around the debt free journey. Speaking of which, we need to put our next event for the upcoming quarter.

The debt free journey can be long and tiring. To make sure you keep up with it, scheduling certain things can definitely help you stay focused along the way.

Losing money doesn't help you become debt free

With this post, I will fulfill my monthly posting quota. It's a self imposed quota but I also made a wager with a friend of mine to help motivate me to regularly post on this blog. This month was pretty rough at work, so I sadly have not posted nearly as much as my original goal. But I hope to change that in the upcoming month. I'm going to actually follow my own advice and schedule time to make this blog a priority (see last post on scheduling).

Although the bet I have riding on this blog isn't for that much money in the grand scheme of things, it's still never a good idea to lose money....ever. So, here I am, typing to not lose money. :) All this talk of betting reminds me of one of my favorite past times. I really enjoy gambling. Now, I've never been a big time high roller or anything like that....but I used to really enjoy my visits to Vegas (even if it meant that I made my share of contributions towards their high electricity bills). "Putting money on it" always makes things more interesting and exciting for me. From blackjack to craps to March Madness to Fantasy Football...heck, even pickup basketball games at the park. OK, I admit it, I've been known to purchase the occasional lottery ticket as well....even though I know it's truly a tax on the poor or at least a tax on the people who don't understand probability. :)

I bring up "gambling" because it's a topic that people can easily relate to, in terms of situations where people lose money. Because I'm not a big time gambler, I don't lose a whole bunch of money doing it. But the point of this post is that everyone has their own "gambling" fix...something that makes them lose money. I think my main things are eating out and travelling/attending events. Yours could be shoes, clothes, gadgets, cars, etc.... Whatever it is, you need to identify it and take control. Because in the debt free journey, losing money on things you don't need really makes it difficult to achieve your goals.

Save For A Rainy Day?

When I first started my debt free journey (and I mean really started), lots of things made me nervous. How was I going to reduce my spending if I didn't really think I spent that much? Will I really be able to stick with the program for the long haul? Can I really rely on used cars since I can barely change a tire, let alone fix up a broken car? Is it worth it to sell off my stuff just to pay down debt (especially if it feels like it's not even making a dent into the overall debt)? How would I handle emergencies that require immediate payment? Of all the excuses I just rattled off, it's that last question which really prevented me from diving into the debt free journey at first. It's also the same concern that prevents many people from cutting up all of their credit cards. I think we've all been conditioned to think that credit card debt is bad but that it's sometimes a necessary evil in the event of an emergency. This is the lesson I was taught way back when; "Don't use your credit card unless it's an emergency!"

So, I did what I was taught. I carried a credit card for emergencies. But like most people, my emergencies weren't true emergencies. Couple that with the fact I wasn't following a budget...and what you get is crazy debt. It's funny to think back on what I used to think were "needs" and "emergencies". It's amazing how easy it is to talk yourself into buying something you don't really need. Have you ever said, "I really need to take this trip because it's a once in a lifetime experience?" Or how about "I need to get this really high quality but very expensive (fill in the blank with clothing item, furniture piece, electronic thingy, etc...) because I'll cherish it for a long time. And my all-time favorite, "I need to go out and have a nice dinner and drinks with family and friends sometimes. I need to go out and to live life and that forces me to spend money sometimes." Now, don't get me wrong...I'm not saying that you shouldn't travel and enjoy special events. I'm also not saying that it's bad to purchase high quality things. And I'm wholeheartedly not saying that you should lock yourself in your home and never do anything fun. But what I am saying is that you need to realize that those things are truly "wants", not "needs". And more importantly, you should only be doing these things when you can truly afford them (i.e. GETTING INTO DEBT FOR THESE THINGS IS TOTALLY NOT WORTH IT).

OK, so now that we've defined what's NOT an emergency, what is? Well, what do we really need to live? I'm sure there are a lot of definitions out there but the one that my family has adopted is "SHELTER, FOOD, TRANSPORTATION, CLOTHING". These are the buckets we've identified in which we will focus on in time of need. That means that if something unfortunate were to happen to our financial situation (i.e. layoff, firing, major illness, etc..), our family knows to focus on the 4 categories for survival. That's right, cell phones, cable, entertainment, etc....just didn't make the survival list. Although, I was at one point trying to convince myself that internet should make the list...I mean, how am I going to post to my blog? :) So, after you define your survival needs, you need to figure out how much it would cost to buy that stuff a month. That's your true living expenses. And I'm sure most everyone has heard that "experts" recommend that you save about 3-6 months of living expenses as an emergency fund. This is the dollar amount you should target to stash away for rainy days. This is the money you will be able to use instead of credit cards and debt...when real needs come your way.

One last point on the emergency fund....if you're like me, you're probably wondering what to put your money towards first during your debt free journey. My family has adopted Dave Ramsey's model in which we saved up a mini-emergency fund then put every other penny towards paying down debt. This has worked out great for us because the mini-emergency fund has taken care of true emergencies as we continue to aggressively pay down our debt. Once we are completely debt free, we will focus on completing the 6 month emergency fund. We chose 6 months as it gave us more piece of mind to have a bigger emergency fund. But there's nothing wrong with just keeping a 3 month fund. And I've even read/heard of others that go in the opposite direction and want the piece of mind of a 9-12 month emergency fund. I guess whatever tickles your fancy....the most important thing is just to HAVE an emergency fund. This will allow you to be prepared for any rainy day!

I'M BACK!

Man, it's been awhile since I've posted something on this blog. I have all the excuses in the world...I've been working crazy hours; I've been trying to spend every other minute hanging out with my family; when I come home from work the last thing I want to do is open up my laptop and start typing again, etc.... All of those are valid excuses in my mind. But the fact of the matter is that I just didn't make this blog a priority. We all have to prioritize things in our lives because we can't do everything all at the same time.

So, I was becoming content with my accomplishment of starting this blog, getting it out there and even maintaining a daily post for at least the first month of the year. Hey, that's probably the most I've ever stuck with a New Year's resolution. :) I just chalked this blog up to the countless number of ideas and "things" that I've started and abandoned. Man, if I had a nickel for every great idea that I had....I would be a very rich person. But specifically over the past couple of weeks, I've realized that this blog is different. It's actually something that I want to keep going for a number of reasons:

1) It allows me to realize the struggles I've gone through in my journey and reminds me of all the success that's been achieved.

2) I've seen/heard first hand from people that were positively impacted by the content I've posted.

3) I'm passionate about this!

It's very important to me that I'm reminded of the hardships that I've endured and am currently experiencing throughout this debt free journey. I don't want to forget all of the obstacles I've overcome because that helps ensure that I won't repeat them. There have been many times that I've stopped to think to myself....wow, I used to do/think 'that.' The outcome of this debt free journey is not just to have zero debt....but more importantly, the outcome is to result in a different mindset. And for me, having reminders as to where I used to be and how I used to think....really helps me realize that my mindset has changed. I am no longer embarrassed to drive a beat up Honda Civic and I don't feel deprived when I can't buy the newest/shiniest toy. My mind is set on only buying things I can truly afford and never borrowing again. Another benefit of rehashing my journey is that it reminds me of all the things I've accomplished. It's so important to remember all of the success that has been accomplished along the way and use that to push forward along the journey. Someone the other day reminded me that I got rid of $100,000 of debt in one year....if that's not motivation to keep going...I don't know what is.

Just in the last couple of weeks, I've talked to several people about my blog who were totally unrelated to each other. And I wasn't the one who brought up the subject. This really hit me the other day when I realized that my posts were being read by all kinds of people, and in fact, impacting them in a positive way. Someone told me that they would open up my blog everyday to see if a new post had come in. Another person told me that they now talk to their spouse about their financial future together. And probably the best story I heard was that someone said my blog inspired them to begin their own journey and they've already gotten rid of over $20,000 worth of debt.

So, that's my story. Making priorities is all part of the debt free journey. I promise to keep this blog going. And I'm not just promising you, the readers, but, hey, I'm also promising myself.

Blow Money

What is "Blow Money"? It's money that you set aside in your budget that you use on "you". This is a critical component to everyone's budget. Don't forget about this line item, it will help you from going over-budget and hating life while you go down the road of debt freedom. It's so easy to get caught up in penny pinching and tracking every cent within your budget that you start hating your new "debt free journey" life. Actually, I think that's one major reason why people don't stick with it. It gets too hard being so disciplined every day/week/month/year. So, you need to cut yourself some slack and giving yourself some blow money is one way to do that.

So, the next time you sit down to create your budget, make sure to add a line item for your own personal slush fund. My wife and I have budgeted $100/month for each of us. This number will obviously be different depending on the size of your budget. It should also be reviewed periodically to see if it's sufficient or too much to be allocating for this purpose. One other thing to note about this budget item is that it doesn't have to be the only line item in your budget associated with "having fun". For example, we still budget for certain date nights and other events we plan on doing/attending. But this slush fund provides even greater flexibility around just doing something for yourself. It's also great for enabling you to purchase surprise gifts for your spouse....something you can't do with the rest of the budget since both of you should know exactly where every penny is going.

What are some things you can use your blow money on:
- massage
- night out with the guys/girls
- toys for yourself
- extra movie night (not covered in the rest of your budget)
- extra dinner out (not covered in the rest of your budget)
- book/magazine
- facial/manicure/pedicure (Rachel likes this one more than me)
- extra gambling money at the casino (I like this one more than Rachel)
- basically, anything you want to splurge on....for yourself

Reflecting on my journey so far...

Well, it's been about 2 weeks since my last post on this blog. It seems like forever, especially since I was diligent in posting everyday for the entire month of January. My New Year's resolution was to submit a post every single day for the entire 2011 calendar year. Well, I have failed at that goal. But by pushing myself to accomplish that goal for at least the entire first month, I was able to realize a few things about myself and this debt free journey that I've taken on!

Here's a list of some of the things I've learned from starting/maintaining this blog:

• There are A LOT of people that are interested in this topic of becoming debt free so that they can enjoy true financial freedom.
• This blog forced me to think about how my debt freedom journey impacted my life everyday and it even surprised me in how much of an impact this has been to my overall life.
• I have really learned a lot through this process and I enjoy teaching others what I have learned.
• My mentality towards debt and my overall finances has truly been transformed from what I used to believe.
• Being debt free is definitely not the "norm" in our current society, but there are still many people that have actually achieved the status.
• Changing your behaviour is crazy difficult. I think that goes for everything: every habit, every addiction.
• Definitions are essential for succeeding on this journey. What do you consider debt? What is a true emergency? What is your ultimate dream as well as your interim goals? What is your budget? What is your timeline? What is enough? How do you measure wealth?
• There will be good days and bad days. Truly cherish the good days when you wake up and are thrilled at what you have accomplished and the milestone that are on the horizon. Don't sweat the bad days when you wake up and wonder if all this sacrifice is really worth it. I can confidently say that I've had many more good days than bad, during my journey.
• This journey is impossible if you don't have support. If you're married, that means both husband and wife have to 100% bought in. If you're single, that means you need to have at least one (preferably many) that join you in the journey. In either situation, the more people that are on your side, the better. There truly is power in numbers!
• You can't stop learning! I have read so many books/magazines/blogs and try to take something from everything. There's always little nuggets
• Nike is right! Just Do It! Nothing will change if you don't do anything about it. Thinking about changing your lifestyle, reading on the best practices around personal finance, seeing others make transformations in their financial lives DOES NOTHING FOR YOU!!!! Unless you DO SOMETHING ABOUT IT FOR YOURSELF!

Work gets in the way sometimes...

I've got a bunch of tasks to do for work so my daily blog posts have been pretty thin the last couple of days. I might have to re-think my "daily" frequency so that I can have more well thought out/quality posts. But since "daily" was my New Year's resolution, I wanted to at least complete January with meeting my goal. I'll have to think about how frequently I post stuff moving forward, could be once a week...we'll see.

If nothing else, today has just re-confirmed for me that I'm the right track to get rid of all my debt, build wealth and stop "having" to work. Life should get much easier when you don't "have" to work. I'll still make some income but it will be because I "want" to do the work.

Very Good Night!

Awesome family dinner and an amazing Coug victory makes for a spectacular night! I'm going to watch the game again on replay and I need to wake up really early for work tomorrow, so I don't have much to write tonight.

So, to sum up my day...

I LOVE my family! I'm always PROUD to be a Coug! And I still HATE debt!

Unplanned Date Night

Today was the first day in about 3 weeks in which Rachel felt like herself again. She's had a virus upon secondary virus upon tertiary infection (not sure if that's even close to the medical terms, but bottom line she's had a very rough few weeks). This morning, we went to the mall and did some window shopping. The main reason for the trip was to get the kids out of the house and give them some time running around crazily in the mall's huge play area. It's actually a pretty nice (and free) form of entertainment, especially on a rainy day! Anyway, as we watched our kids play in the chaos, we decided that we needed some alone time. It just felt like so long since we've been able to relax and focus on enjoying each other's company. The only problem is that we didn't budget a date night and being that it's the tail end of our weekly budget cycle, we didn't even have enough cash to take from another budget bucket. So, we left the mall to head home, thinking we would have to put off some alone time for at least a couple more days.

A couple of hours later, I asked Rachel if we should just go ahead and do our date! Since we didn't have any more of our weekly budget left, any money we spent would have to come out of our emergency fund. Obviously this isn't a "true" emergency. But we both felt strongly about spending some quality time with each other (just the two of us). So, we did it. We broke one of the cardinal debt free journey rules. We spent $59.98 out of our emergency fund on dinner and babysitting costs. The kids were only at the babysitting place for about 2 hours but it was 2 hours of peace and quality time with my wife.

Now, we could go crazy over analyzing this scenario and pinpoint all the various things we could've done differently. We could've waited a couple more days and gone on a date after the next budget cycle started. We could've gone to a cheaper dinner or split a meal so we only paid for one entree. We could've eaten at home before we left and just went somewhere free (i.e. bookstore) to enjoy each other's company. We could've called some family members to see if they could watch the kids for a little while, for free. We could've/should've done a lot of different things to stay on track with our debt free journeys' rules. But we didn't. The thing to do now is to make sure not to dwell on it and move on.

I thought this was an important post to write because I wanted to make sure I told my entire story (not just all the good parts). I'm no where near being perfect when it comes to living the debt free journey but I am overwhelmingly more on track than not! There will be many mistakes made along the way so you just need to acknowledge them, learn from them and move on! And make sure (if you're married) that your spouse is right by your side through all of this. Did we go off track today (in terms of the debt free journey)? Yes. Will we allow this to become the norm? No. Was the $60 worth spending some much needed alone time with my best friend and soul mate? Absolutely!

Any amount over budget is not OK

Today was the last day of my weekly budget for my work lunches. I had $8 in my wallet and headed off to my company's cafeteria. I didn't think I would have any issues buying a good lunch with the money I had so I went to the Mexican section to buy a burrito. I don't know why but I was craving a chicken burrito today and this place made really good ones. However, when I got to the start of the line and looked at the prices, I saw that the chicken burrito that I usually get was $8.25. I don't really go to this section of the cafeteria often and never realized how high their prices were. So, I had to shift gears and figure out something else to eat today. I ended up buying a ham and cheese sandwich with some Sun Chips. It wasn't my first craving but it did the trick.

Anyway, the main reason why I wanted to share this story is because it demonstrates some of the debt free journey skills I've developed along the way. Before my journey, I probably would've pulled out my debit card and paid for the burrito without thinking twice. But that would've put me over budget, thus making me pull money from other budgeted items. Or sometimes it would be even worse as I wouldn't really think about replenishing the over budget amount, so it took money away from paying down debt. That was one of the main reasons why we used to have little of no money left at the end of the month to pay extra towards paying down debt.

If you're thinking that going over budget by 25 cents means little and I'm making a big deal over nothing, it's not the specific over budget amount that matters the most. The most important thing is the mentality associated with this scenario. Going over budget once sets a precedence in your mind that it's OK. I'm glad that I've built up the muscle associated with consciously deciding not to go down the over budget slippery slope.

Are you the businessman or fisherman?

I've pasted below one of my all-time favorite stories. Strangely enough, I first read it on the wall of a Jimmy John's sandwich shop in Texas. This story clearly demonstrates the difference between being rich and being wealthy. I'll write a more detailed post on this subject later. Enjoy the story!

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The businessman was at a pier of a small coastal Mexican village when a small boat with just one fisherman docked. Inside the small boat were several large yellow fin tuna. The businessman complimented the Mexican on the quality of his fish and ask asked how long it took to catch them. The Mexican replied only a little while.

The businessman then asked why he didn't stay out longer and catch more fish? The Mexican said he had enough to support his family's immediate needs. The businessman then asked, but what do you do with the rest of your time? The Mexican fisherman said, "I sleep late, fish a little, play with my children, take a siesta with my wife, Maria, stroll into the village each evening where I sip wine and play guitar with my amigos; I have a full and busy life, senor."

The businessman scoffed, "I am a Harvard MBA and I could help you. You should spend more time fishing and with the proceeds buy a bigger boat. With the proceeds from a bigger boat you could buy several boats; eventually you would have a fleet of fishing boats. Instead of selling your catch to a middleman, you would sell directly to the processor and eventually open your own cannery. You would control the product, processing and distribution. You would need to leave this small coastal fishing village and move to Mexico City, then LA and eventually New York City where you would run your expanding enterprise."

The Mexican fisherman asked, "But senor, how long will this all take?" To which the businessman replied, "15-20 years." "But then what, senor?" The businessman laughed and said, "That's the best part! When the time is right you would announce an IPO and sell your company stock to the public and become very rich! You would make millions!" "Millions, senor? Then what?" The businessman said, "Then you would retire. Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take a siesta with your wife, stroll to the village in the evenings where you could sip wine and play guitar with your amigos."

The fisherman, still smiling, looked up and said, "Isn't that what I'm doing right now?"

-Author Unknown

The "F" Word

With a title like that, you're probably thinking I had a bad day. Don't worry, this post won't be about me venting frustration around the mortgage crisis (although, I could do that). And it's not going to be about me documenting the lyrics of my favorite gangsta rap (although, I definitely could do that too :)). Actually, this post will revolve around the bad word many people associate to the debt free journey. Yup, you guessed it, that word is "FRUGAL"! There's such a negative connotation associated with that word. The first thing that pops into people's heads are words like "cheap", "used", "thrifty" and the association to a person that lives below their means. At least that's what I used to think. I thought that frugal people were just tightwads that had issues because they wouldn't spend their money and enjoy life. I never wanted to be considered frugal because those were the people that never had fun and could be very frustrating to be around. Don't get me wrong, I do know some extremists that probably fit that description quite well. But overall, my stance on frugality has completely changed!

This is what dictionary.com has for the definition of frugal "economical in use or expenditure; prudently saving or sparing; not wasteful". The portion of the definition that I have actually had success with for the majority of my life, is to be "not wasteful". Didn't your parents tell you not to waste stuff when you were growing up? I know mine did, especially when it came to food. I'm sure you remember hearing, "think of the kids in Ethiopia who don't have a fraction of what you have"....or in my case, I specifically heard about the relatives and family friends in the Philippines who lived with so much less than what I was blessed to have. So, I definitely learned my lesson around not being wasteful. But the other parts of the definition escaped me. That's the portion of the definition that I associated with cheapskates. I used to think that people who had to watch how much money they spent very carefully were really poor. And saving, what's that? Why save to buy something when you had the power to get it right away and pay for it later...besides, rich people were good for it. So, there you have it, that was my messed up version of frugal living.

But now I know the truth. The debt free journey can only end in success when you have the correct definition of frugality. I now understand that being frugal means to live within your means, not below. I get that you can be frugal and have everything you need as well as some money left over to pay down your debt or save or invest. Being frugal is a mindset, one in which you should adopt throughout your debt free journey. It's the mindset that prevents you from spending frivolously and it cuts out impulse purchases. In a nut shell, it enables you to become a smart consumer. To be labeled a frugal person is not something you should be embarrassed about, in fact, it's something to be proud of. I'm sure you'll like the company, I've read many books and stories about millionaires who lived quality, frugal lives.

Here are a few things that I have changed in my life to be more aligned with a frugal lifestyle:

• Focused on spending time with people I love as opposed to spending money on things I desire
  
• Returned my leased Infiniti G35 luxury sedan so that I can own my very used Honda Civic (it gets great gas mileage, extra bonus with the way gas prices have risen)
  
• Leveraged taking the bus to work instead of driving everyday (good for the environment and the wallet)


• Reduced my eating out expenses substantially (good for the belly and the wallet)


• Utilized coupons and targeted special sales/discounts (gotta love getting a sweet deal)


• Created and consistently stayed on or below budget (seems impossible at first but gets easier the more times you do it)


• Stopped using/carrying credit and debit cards (Cash Is King)


• Learned to drink coffee at home or for free at work (saves a bunch of bucks from going to Starbucks)


• Paid for vacations/trips in full up front as opposed to "getting to it" later (really makes you realize how much is spent on a single trip)


• Taken care of the stuff I do have so that it lasts (i.e. clothing...it probably helps that I don't grow so I can wear the same stuff for a long time :))
  

I've learned that the "F' word really isn't a bad thing. In fact, as I mentioned earlier, it's essential for being successful in your debt free journey. It's just one of the skills that I've adopted which will be useful forever, even when I'm totally debt free and building tremendous wealth.

So, don't curse the "F" word. Rather, embrace being frugal!

Actions Speak Louder Than Words

I watched Obama's presidential state of the union address tonight and heard a lot of things I liked. One thing I remember specifically is when he was talking about the national deficit. He said something like, "Just like many Americans have had to make sacrifices to live within their means, they deserve a government that does the same." Obviously, this eludes to a reduction in spending that has been talked about forever but has not really come to fruition. Although I'm very hopeful that the government will follow these words with the appropriate actions, I'm not holding my breathe waiting for it to happen. This made me think of the time just before I started to go all out in my debt free journey.

I used to talk a lot about having financial freedom someday and I read a lot of books about the topic as well. Just thinking back, I now know that I wasted so much time "planning" for my financial freedom plan. Doing all the planning and talking and debating around the debt free subject didn't do anything to the overall debt balance, imagine that. It wasn't until I actually "did" something impactful that I started to understand what types of sacrifices and execution would be needed to get to my dream. So, make sure you do something about your journey, just don't talk about getting to it someday...because you more than likely won't. I'm so happy I finally decided to put my money where my mouth was...it would be wonderful if the government did the same.

Debt Free Is For More Than Just Me

I get so excited when I hear from people that have either read one of my posts or seen a link to my blog on Facebook or Twitter. It's great to receive e-mails or comments from people that enjoy reading the thoughts I put down on this online journal. But it really felt awesome today when someone unexpectedly came out of nowhere to surprise me with a shout of "Debt Free Huh" to me in the men's bathroom at work. It keeps me motivated to push forward on my journey when I hear so many others are attempting to do the same. I would love to hear other people's stories and would gladly offer up any feedback on questions you might have. I told the guy today that I wished I would've learned all of this stuff much earlier in life. I could be in such better shape financially. But the truth is, I probably wouldn't have learned what I know now without falling down and getting back up over and over again. It doesn't hurt to fail as long as you learn something from it. So, there's no looking back with regret, just pushing forward with happiness! And if I can help others with their journey by sharing the many lessons I've learned, that's just gravy!

Lazy day..no money spent

The last couple of days I've been pretty tired and unmotivated to write a lot on the blog. But since my resolution was to write something everyday, I'm going to stick with it. I'm not sure if I'm getting sick again or if my headaches today are a result of my dental surgery. Whatever the case, I'm hungry and really lazy today. I was the stereotypical couch potato today, watching cartoons to playoff football to kids' movies. I think I took about 3 to 4 naps today in between watching the boob tube.

Anyway, just wanted to write that it was one of those lazy Sundays. Hopefully I feel all better in the morning because last week was a lost week at work. I was sick for the first few days and then took Friday off to get the dental surgery done. So, this week will be a lot of catch up. As a result of the lazy day, I didn't spend any money. So, I guess lazy days could be good for the debt free journey. Well, I'm going to turn in early and take some pain meds for my mouth.

I still want to retire early...no matter what others say

I'm totally wiped out today so I'll keep this short. I have a killer headache, I just hope I don't end up getting sick again. Anyway, I actually caught a little bit of the Suze Orman show earlier tonight and one thing she said really caught my attention. She said repeatedly that people should start focusing on retiring at 67 years old. This lady called in and wanted to get an opinion as to whether or not she could retire at 60 and I think Suze got a little offended. It turns out that Suze will be turning 60 this year so she doesn't really think that 60 is that old. Maybe that's one of the reasons why she was strongly urging people to not think of retiring till 67. Her rationale that she gave for this is that people can easily live for 25 years after 67....so there should be no rush to stop your income.

Although I think she's right about how much longer people will probably live (at least I hope I get to live that long), I am still very focused on retiring early. My current goal is 50 years old. This doesn't totally mean that I stop working cold turkey when I hit the half century mark but it should mean that I won't HAVE TO work if I don't want to. So, that's still my focus and I guess this means that I'll probably have about 42 years of enjoying retirement before I leave this world as opposed to the 25 Suze quoted. That sounds good to me! :)

Good Debt vs. Bad Debt = Same Difference!

Today I had a crown lengthening procedure done on one of my teeth. For those of you who don't know what that is (I had no idea until my dentist said I needed it), it's when they cut your gum so that they can push it down to expose more of the tooth. In my situation, they had to do it so that they could place a permanent crown on that tooth and they just didn't have enough tooth to latch onto before this operation. The lesson I learned from this entire experience is to take care of your teeth! This kind of stuff is not fun! Although I'm not in any major pain, I am very hungry. I had to watch my family eat this delicious pizza for dinner while I tried to consume some really soft spaghetti noodles. Anyway, I can't wait till I fully heal up and can get back to my regular diet (mmmm....fatty foods :))

OK, I know the opening of this post does not relate to the title whatsoever but I swear I'll get to the point. I was at Walgreen's today waiting for my pain medication to be filled, so I decided to peruse the book/magazine section. (By the way, I haven't taken the pain meds yet...yup, I'm that tough.) After gazing at the massive selection of romance novels and diet books I came across the one personal finance book. That's the one I decided to pickup. I realized that I haven't really been reading other personal finance books since I've started my blog. But it's always good to continue to learn many different perspectives on this subject as there are often several nuggets of knowledge you can find in every point of view. As I skimmed the book for the highlights, I came across a chapter labeled "Good Debt/Bad Debt". This really caught my eye so I decided to read that section specifically. Sometimes you need to read other people's perspectives and compare them with your own thoughts/principles. With this topic, I had some major disagreements with their message. So, when I got home, I did some additional research on the subject by looking at other personal finance sites/blogs. It was very interesting to me that this topic was addressed by so many others. Although, I did find one blog where they pointed out that this was probably the "old way" of thinking.

The definition of good debt vs. bad debt is probably exactly what you're thinking. A lot of people think that having a mortgage could be good debt because you get to own your home. Many more people think that student loans are good debt because it opens doors that wouldn't be open if you didn't possess a degree. I think the other big bucket for "good debt" is small business loans for starting up a business. The thought here is that it enables you to get your business off the ground. Assuming the business is successful, you should be able to payback the loan relatively easy and fast. Conversely, bad debt is predominantly related to credit card debt. It also refers to debt associated with items that traditionally depreciate (i.e. cars and boats). Those are the most common forms of "bad debt" and I actually think most people think of debt in terms of the bad stuff. After reading up on this good debt/bad debt distinction, I realized that I USED to think like that! Actually, it wasn't that long ago. All of my good debt was justified in my head and apparently I had a lot of "personal finance experts/gurus" agreeing with me. No wonder I didn't see anything wrong with my situation!!!!

Based on my real-life experience (and I think many "experts" are starting to say this now too), there's no such thing as "good debt". ALL DEBT IS BAD!!!! When you have debt, that means you owe someone else something. When you have debt, you can't really call the thing you bought "yours". When you have debt, it's very difficult to have positive net worth or build wealth. This is probably one of the most important things to truly believe as you go through your debt free journey. You must hate debt and I mean all debt. It should piss you off even if you have a cent worth of debt. Don't get mad at the credit card companies or big banks or even the government...you need to focus your hatred towards the debt as your goal should be to get rid of it as soon as possible!!!!

To illustrate my point on the fact that there's no such thing as good debt, let's look at 3 very real scenarios:

Mortgages - Over the last couple of decades, one of the American Dreams has shifted from "owning a home" to "mortgaging a home". The problem is that the great majority of folks didn't see a difference in those two phrases. Since most people equated owning their home with obtaining a mortgage, that was the thing to do. At first, it was very common to get a 30 year fixed mortgage and come up with the 20% down payment. But then, both the government and big banks really made things easy for people to get into homes by offering many different types of mortgage flavors. No one thought there was anything wrong with this since it enabled a huge amount of people to "own a home". Obviously everyone knows about the mortgage industry's collapse so I won't talk about that here. But the one thing I will say is that the phrases owning vs. mortgaging your home works just fine....if home prices continue to rise. Actually, if you looked at one of my definitions of "bad debt" above...it's when purchased items depreciate. Hello, that's what houses are doing now! Bad Bad Debt! But I'm not saying that mortgages are bad debt just because of the recent collapse. I'm saying it's not a good debt anytime! I mean, look at the first example I gave (the 30 year fixed mortgage). Just think about that product's name for a minute. Do you realize that if I entered into a 30 year fixed mortgage today, I would be 65 years old when it was finally paid off. Talk about killing your dreams! That means I would have to commit to living in the exact same place for 30 years (way after all my kids have left the house) and probably put off many of my other dreams like starting a business or possibly being able to save for my kids' college education since the mortgage payment is typically the largest monthly expense in all your bills. I just read an article about this elderly woman who was about to be kicked out of her house for missing her last payment. And I mean the last payment on a 30 year mortgage, that's payment #360. Can you imagine living in your house for 30 years and missing the very last payment (she was ill and in the hospital and trying to catch up on medical expenses)? The bank just about foreclosed on her. If that doesn't make you realize that you really don't own your home until you fully pay for it, then I don't know what will. My thoughts on mortgages is that you should avoid them at all costs. If you don't have one now, don't get one and continue to rent until you can afford to fully pay for a place to own. If you are unfortunately in a current mortgage, do everything possible to pay it off ASAP!

Student Loans - I understand the theory around why this type of debt could be considered good. Basically it will allow you to make more money in your lifetime....but at what cost! Just to make it real, I'm almost 12 years out of college and I am still paying off my student loans. Unfortunately, I don't believe I'm the exception to the rule. Now, I could just become pissed off at all the "rich kids" that had their parents pay for school and didn't need student loans. Or I could blame my parents for not saving money for me so that I didn't have to take out these loans in the first place. But when it comes to debt, I have decided that there's no one's fault but my own. I absolutely agree that going to college is not only a fun experience (Go Cougs!) but it does enable you to demand higher paying positions as well as open doors to opportunities you may otherwise might not have known about. However, if I were to do it all over again, I wouldn't go in debt for it. I would apply for grants and scholarships like crazy. I did receive some free money but I could've put in a lot more effort and secured much more. And if I couldn't get all the money for free, I would work my butt off to earn the money needed to obtain the degree. Student loans are just like all other debt, you are enslaved by it until you finally pay it off. And the other major issue with student loans in particular is this notion they they are associated with such low interest rates. I fell into this trap, it's when you tell yourself that you should go ahead and pay off your higher interest credit cards first or you should put your student loans in forbearance so that you can qualify for a mortgage or car loan. But guess what, the debt just doesn't go away and it sticks around for a long, long time if you never prioritize to pay if off. There will always be something, that's why I still have mine outstanding all this time....and mine is only for my bachelor's. I can't imagine what some loan balances are for master's students or worst yet, doctors. My stance on student loans is that they should be avoided just as much as all other debt. I feel pretty good knowing that my kids will either pay college via grants/scholarships or the college funds that I will have ready for them.

Business Loans - I think this last form of "good debt" is the least common. Although one of my dreams is to own my own business, many people don't share that same dream. Nonetheless, you don't have to strain your brain imagining how horrible this form of debt can be. Just look at the percentage of businesses that "make it" (it's very low). How easy is it for them to repay these loans? Now I know that many businesses need start up capital to begin but I think a smarter way to go would be to find investors as opposed to creditors. Besides, if your business idea is good, there should be some wealthy people out there willing to invest in it. The other approach one could take (it's what I'm planning on doing) is to raise the capital yourself. This way, my business will not start out with debt and it's my hard earned money that funded it. I think this gives you more skin in the game too. It hurts much more to lose your own money than what you perceive as someone else's money. If it take you "x" number of years to save the money to start the business, you're probably going to do everything in your power to make it work. Again, this is my approach and a valid reason why business loans are unnecessary.

Whoa, I wrote a lot tonight. It was crazy, I sat down at the laptop about an hour ago and have just been typing away. I guess when you are really passionate about something, it's easy to talk about it. Please forgive any grammatical errors or run-on sentences, I'm too tired to proof read all of it tonight. Hopefully it all makes sense :) If you only took one thing away from this post, I hope it's that there's no such thing as good debt!

Cheap Entertainment

Truth be told, I actually had a really good topic to discuss for today's post. But it's getting late and after putting the kids to bed, I just want to veg out on the couch and watch the season premieres of all my favorite sitcoms. With that said, one thing that we have focused on during our journey is to figure out cheap entertainment alternatives. Watching TV has been one of those forms of entertainment. We've really leveraged our cable TV service. We use Comcast and our package comes with the STARZ channels as well as their On Demand service. We've also upgraded our DVR to a bigger hard drive so that we can store more movies/shows. Anyway, this has enabled us to cut out movie rentals and going out to movies. It comes in very handy for the kid movies that are played over and over again. I know this may not be the cheapest form of entertainment possible but we seem to get a lot of use from it. So, the point being, one key component to your debt free journey plan needs to be the focus on cheap entertainment. This is essential for getting your expenses under control, which is necessary for making substantial dents into your debt.

What's the dealio?

Clearance, Limited Time Offer, 50% Off, Buy 2 Get 1 Free, 90 Days Same As Cash, etc...you've seen them all! So many promotions and "deals", so little time. They are very enticing, you don't want to miss out! I mean, how would you feel if you didn't pull the trigger and the price doubles the next day? Or how much would it suck if you procrastinated and the item you wanted to purchase wasn't in stock anymore? There's so much internal justification that goes on in your head when you see something you want to buy associated with one of these amazing "deals". Basically, if you would be able to get exactly what you wanted at a lower price than what you were expecting, why wouldn't you do it? It's so logical....except if you don't really have the money for it! Or maybe you have the cash but it was planned for savings or allocated for something else. In those situations, no matter how tempting the offer, it's best to just walk away. I know it's tough and it probably won't make total sense at the time, but this is the type of discipline that will get you to the debt freedom promise land!

This topic is very timely for me as I experienced this temptation today! As I've mentioned in prior posts, we've come to a point in our journey where we have acheived so much progress that we have more freedom to dictate where our money should go. On that note, we've decided to celebrate our success a little more this year and reward ourselves with some vacations. We've been extremely excited, thinking of all the various places we could go and the exciting things we could do. So, we started searching for ideas on the internet and were inundated with deals left and right. We've priced out everything from plane tickets to cruise rates to resort accommodations, etc... One common theme is the special price/limited time offer promotion. My historical mentality when it comes to travel shopping is to search for what seems like a great deal and snatch it up before the opportunity goes away. This mentality has gotten me into a lot of trouble in the past (i.e. debt trouble) and now I know better after going through this journey. So, instead of locking something up today as I would've done in the past, I simply stopped searching so that I woudn't be tempted anymore. I'll resume my search once we have planned the appropriate budget for the trips.

The key here is not "the deal", it's "the timing". The deals are not the problem. In fact, I'm the first to proclaim my love for deals. Anytime I don't have to pay full price for something or I can get much more for my money, I'm all over it. But what's just as important is to evaluate your readiness for purchasing the deal. You need to prioritize your preparedness to buy the item or service with cash, above and beyond the value of the deal. I would guess the majority of people don't do this prioritization and end up buying the deal because it was such an awesome value. But without thinking about whether or not you're ready to buy it, the likelihood of going into more debt is high. This is true even if you don't buy it on a credit card as this purchase will replace something else you were already planning to buy. Thus, you end up not buying the other thing, or even worse, still buy the other thing....on credit.

As mentioned above, I could've paid for the trip with cash today but it wasn't planned for. I didn't want to dip into the emergency fund because this was clearly not an emergency and I didn't want to re-allocate the money we already had set aside for other expenses. These are the types of tough decisions that everyone has to make during their debt free journey. Although your decision-making will be easier with practice, the temptations that provoke these tough decisions will never go away. One principle that we have adopted is this: "We will never borrow money again!" Guess what, if you live by that, you will never accumulate another penny of debt...it's impossible. But notice that I didn't say that I will never borrow money from credit card companies again....or from family members again.... Nope, I said I will neve borrow money again....period....actually exclamation point! That includes borrowing from yourself. If you stand by this one principle, you will do just fine in your debt free journey.

I Have A Dream!

OK, I guess I'm a day late on this, since Martin Luther King Jr. Day was yesterday. But now that I think about it, MLK's life directly relates to the debt free journey. How? Well, he fought to achieve a dream that most people didn't think was possible. Unfortunately, I know there's still racism out there but society has come along way. There's all sorts of other prejudice in the world but I still think America is a great country, one that at least gives you the opportunity to live free. With that said, this is a place where dreams can still come true. Maybe all of your dreams won't come to fruition and achieving your dreams might not come easy. But nonetheless, you should dream and reach for the stars. If Martin Luther King Jr's life doesn't inspire you, I really don't know what will. He had everything against him but his passion and persistence made a difference. He had a dream for equality and did everything in his power to make that dream a reality.

The debt freedom journey can feel at times like an impossible task, like a war or a fight you just can't win. It will feel unfair as others live the lives you think you should have. You will be tempted to give up because it's so tough and being in debt makes life so much easier (that's what most people think). Worst of all, there will be many people in your life that potentially won't support you or just don't understand why you've decided to make such drastic lifestyle changes. But what you need to remind yourself of, is that debt limits your freedom. It makes it very difficult for you to live the life you want to live. In short, it kills your dreams!

I have had many dreams in my life and I feel that I have gone after most of them. One that comes to mind was my dream to play in the NBA. I made it to varsity high school basketball and have played just for fun since then. Hey, that's an accomplishment for a guy that stands 5' 3" on a good day. I dreamed of becoming an actor so I quit my high paying job to move to LA and give it a shot. I can say that I was successfully able to become an actor for a short time. Although I didn't "make it", I had many awesome experiences that I will cherish forever. While I was in LA, I dreamed of potentially singing for a living. I got my 7 seconds of fame on American Idol and I'll be content with that. I've also always dreamed of having a family of my own and providing for them the best I could. I have been blessed to have an amazing wife and 3 awesome children. We're also very blessed to have everything we "need" and a bunch of stuff we "want" as well. But my dreaming hasn't stopped, sometimes I feel like a kid as I often ask myself what do I want to be when I grow up.

Before I started the debt free journey, I was confident many of my remaining dreams were unattainable. Since I needed to continue to earn the high salary I was getting so we could continue living our lifestyle, there was no way I could quit to open up my own business. Since we were basically living paycheck to paycheck, there was no way I was going to save any money to contribute to my kids' college funds. And since I wasn't going to ever strike it rich doing what I was doing, I guess I would have to wait till I was 65 or older like everyone else to enjoy a retirement. Those were 3 dreams that I just couldn't imagine would be possible in my lifetime. But thank goodness I finally saw the light and started my hatred towards debt. Now, my wife and I have a concrete plan that will enable me to start the business I've been talking about for so long. The best part of the plan is that I won't have to worry about maintaining our lifestyle because we've learned how to live without things we don't need. I have piece of mind that I can leave my job to start my dream business per our plan and our family will be just fine. We also have the kids' college education expenses planned for. Without debt, we're able to take that money that used to go to creditors and direct it to savings for our children. We're also going to push them to get grants and scholarships but in the unlikely event they can't secure any free money on their own, we'll be prepared to have them covered. Last but certainly not least, we have a master plan to truly retire by the time Caitlyn graduates high school. That means being able to live off the money in our nest egg for the rest of our lives, without having to work another minute. There's no more waiting till I'm 65 or later to start retirement, I can realistically begin much earlier. And in case you're wondering, Caitlyn will graduate when I'm 50.

Like Dr. King, I have a dream for freedom! Although our dreams are quite different on the surface, the underlying principle for freedom is the key. I'm so blessed to live in a place where I have the opportunity to pursue my dreams and I now know that debt won't be something that holds me back!

You are not alone...

The title of this post is much more than just one of my favorite Michael Jackson songs. It refers to the massive amounts of people that have completed or are in the process of or will soon begin their debt free journey. This is a very important thing to remind yourself since it can feel very lonely at times along the way, especially when you think everyone around you is buying new things and going on cool vacations.

I've got to really keep this post short because I'm not feeling too hot. I've caught a nasty virus and I'm afraid I might be hurting for several days. But I couldn't break my streak of consecutive posting days. It's kind of funny because this has been the best I've ever done with a New Year's resolution...and it's still only the 17th of the first month....hahaha. One thing that this resolution has made me realize is that I think about my debt free journey everyday. Some days it's obvious (i.e. I'm paying the bills or making a budget) but other days it's much more subtle (i.e. tossing my change into the jar or bringing my lunch to work).

Another great benefit of this blog is that I've been able to talk to many people about their debt free journey as well. It's really cool to know that others are in this thing with you. Best of all, it will be awesome when all of us reach the finish line and can truly live with ultimate freedom! I hope that day comes soon for all of us. But in the meantime, I feel even more confident to know there are so many others doing this journey. I hope my thoughts and experiences help you in your journey, just as I have been able to learn from so many others.