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.

The Power Of Momentum

Today was kind of a sad day as I watched my beloved Seattle Seahawks end their season. Although I will always remain a Seahawk fan, today's game was really tough to watch. Our team just never really got it going and the Chicago Bears took control from the beginning. The score at halftime was 21-0 in favor of the Bears, who had all the momentum in the game and never really let it go. One thing I've learned from many years of watching football is that momentum plays a HUGE part in determining the winner of any given game. It's what enables the underdog to pull off upsets on some days and what lets the favorite run away with victories on other occasions. Momentum is a powerful force on the gridiron and I've found that it's just as powerful in life!

I believe momentum is essential for succeeding in the debt free journey. It can be triggered a number of ways. It doesn't have to be a huge event or unbelievable experience, it could be little things that pick up steam as time goes on. I can recall many things during my journey that kept the momentum going. Whether it was a major milestone like paying off an entire credit card balance or a small triumph like staying on budget for 2 weeks in a row, all of those things kept the momentum going. And as things started coming together, certain things became easier. Budgeting/Planning became second nature, staying on budget became the norm, paying off debts came much faster, etc... I didn't think twice about things that were weird to me at first (i.e. I started using cash only like I had always been doing it, I said no to buying things when I couldn't truly afford them). I guess you can equate the experience to fastening your seat belt. I feel naked if I'm in a car without a seat belt now but I remember when I thought it was a hassle to buckle up every single time. I guess you can say that I've basically created habits associated with enabling the debt free journey. These are the kind of habits you want to be hooked on and they are all established with the power of momentum.

Another thing that I have found to be true is that momentum brings "more of the same". This is the same theory that is the basis of phrases like "the rich get richer, good things come to good people". Well, I think you can add "debt free stuff comes to those who pursue the debt free journey". Two things that have happened to me recently remind me of this message. A couple of days ago, I was debating whether or not to order more contacts (I wear daily contacts and am just about to run out). I was thinking that I should maybe wait till next month so I could incorporate it into the new budget. So, I called my eye doctor to see how much it would cost and to my delight they told me that it was free because my insurance renewed for the new calendar year. Sweet! That's a nice surprise! And then today, I was trying to plan a cool date night for my wife and I since we haven't really went "all out" for a long while. I remember the other night as we were walking out of Bellevue Square, she mentioned that it would be awesome if we could stay the night at the Westin (we love their heavenly beds). I also remember saying to her that we would probably have to save for a little while to get a room there and we left it at that. Well, today I just randomly searched the Westin web site to see just how much the rooms would cost. And to my awesome surprise, my old hotel awards program had a balance of 10,050 points. It just so happens that the Westin we were eyeing in Bellevue cost 10,000 points to reserve for one night. Woo Hoo! So, we'll be spending our Valentine's Date Night in comfortable luxury! These are just 2 examples that I have experienced recently that truly exemplify how the debt free momentum turns into good things. This journey hasn't just turned around our family's finances, it's transformed our lives. I look forward to continuing the debt free journey and witnessing all of the positive impacts that come along with it!

Attack your debt and reap the rewards

First and foremost, I believe you need to ATTACK your debt in order to be successful in your debt freedom journey. That means, you need to be aggressive in your approach to get rid of your debt as fast as feasibly possible. If you truly follow through on the "attack" mentality, your lifestyle will transform dramatically. You'll end up owning much less, doing much less, spending much less and possibly working much more. This is the approach I took when I began my journey. My family and I sacrificed a great deal because we had finally had enough. We didn't want to be in debt forever and we built a hatred towards it. We sold EVERYTHING we thought we didn't need, including cars, furniture, electronics, etc... We had garage sales and Craigslist postings galore. On top of our fire sale, we cut way back on our activities. We barely ate out, started saying no to certain parties, reduced the date nights my wife and I went on and focused on free activities for the kids to do. We did go on a family vacation (which was all paid for in cash) but I remember thinking afterwards that we should've used that money to pay down debt instead of enjoying a nice break! I think our biggest lifestyle change was in our day to day expenses. With our new budget in place, we have utilized coupons, shopped at thrift stores, and have completely changed our thinking so that we barely consider purchasing clothes that are not on sale/clearance. As for working more, I can't say that I've taken on multiple full-time jobs. But I have done several "side jobs" that have brought some extra cash in. Not to mention that I'm always thinking of new ways to try to earn extra money without sacrificing all of my precious time spent with the family.

Our attack/kill/ultra-aggressive approach worked! The results speak for themselves as we plan on paying off our last credit card bill next month! However, looking back over the last year and a half, I have mixed emotions. Am I ecstatic about the ginormous progress we've made on our debt? You betcha! But I can't help but think that I sometimes forgot to enjoy life. So, although I can't deny the results of my aggressive approach, I could've allowed myself to live a little more. I want to pass this very important lesson to everyone else. We have learned so much during our journey so far and one thing that's certain is that nothing needs to be set in stone. So, as we push forward with paying off our last debt (student loans), we have intentionally planned to "live" more. What does that mean? Well, for starters, we will go on vacation with no regrets. My wife and I plan on regularly going out on dates (with a big time date planned every quarter at least). The kids will start certain activities (Dylan with martial arts, Caitlyn with ballet and Kasey is still thinking about what activity he wants to pursue). And last but certainly not least, we will even start thinking about buying stuff that we "want" again.

OK, at this point, I'm sure you're thinking I'm either crazy or I have an extremely short memory. In the first part of this post, I was going on and on about being on the attack. Then, I contradicted myself in saying that living it up isn't so bad. Well, I'm right twice! As I've been writing this post, I have realized why my mind has changed. Drum roll please.....It's because of where I am in the journey!!!! If I didn't attack from the beginning, I wouldn't be in the position I am today. Because I have MUCH less debt, I have MUCH more money to play with. That means, I have options that I didn't have at the beginning of this journey. And here's the best part, because I've gone through the transformation associated with the attack mode, I have knowledge and skills that will prevent me from ever being in debt again!

So, when do you change your approach to your debt attack? I don't think it's the same for everyone, it depends on your goals and dreams. But no matter when the right time is for you, the evaluation of your past progress and future plans must be constant. In fact, I think one of your goals should be a milestone associated with when the right time is to ease off the attack. Maybe that's set for when a certain number of debt items have been killed (i.e. 8 out of 10 debts have been taken care of). Maybe it's a percentage of debt (i.e. removed 80% of our debt) or specific debt amount (killed $10,000 of debt). It doesn't matter which metric you use, just make sure you have one. This will also give you an interim milestone which should help you continue to push forward as you complete the journey to wiping out all your debt and start living freely.

Just to give everyone context, my wife and I have gotten rid of about $100,000 worth of debt in less than a year and a half. It's taken a major amount of discipline, persistence and sacrifice! It's a great feeling of accomplishment and better yet, an amazing realization of freedom! We have fought for a better life and continue to fight to attain all of our hopes and dreams! Anyway, in a previous post, I eluded to an "eye opening" event. Well, our last evaluation of our current situation allowed us to see just how far we've come and enabled us to begin enjoying life a little bit more. Who knows, maybe we'll allow ourselves to go back to Maui again someday! :)

Eye Opening Day on the Journey

We just got home from the mall and I'm beat. But I wanted to continue my New Year's resolution to post something on this blog everyday. I won't go into too much detail right now but I'm happy to say that this was a great day for our debt free journey. My wife and I sat down and mapped out our high level plan for the next 5 years. It feels good to know we're on the same page and driving towards common goals. And the best part of the plan is that we see exactly how our goals and dreams come true. This was a great exercise for us to do together and I look forward to doing it again soon!

Patience Is A Virtue, BUT....

For many, the journey to debt freedom will take awhile. So, patience will be a necessity when it comes to reaching the finish line. But there's a balance between being patient and being complacent. And to reach freedom at a reasonable pace, you'll need to find that happy medium.

The timeline to debt freedom is different for everyone. However, if I were a betting man, I would bet that most people aren't going to make it out of all their debt real quick. In fact, I would be interested to know the percentage of people that get done with their journey within a year even. I know there will be cases where debt freedom will be reached in a few months or sooner. But I'm assuming that will be the exception, not the rule. Think about for a minute just how long it took you to accumulate all of your debt, it probably took years. So, given that fact, it would be unreasonable to expect your debt to go away at the blink of an eye. Moreover, it takes time to totally change your mindset and behaviour. Even if you start your journey strong, the likelihood that you'll stay on track each and every day/week/month is low. The last point to note on this is that for most people, their debt amounts could be rather large. Remember, my definition of debt is all inclusive (credit card balances, student loans, car loans, even mortgages, etc...). Now, I'm not saying all of this to discourage anyone. Rather, I'm explaining these facts to encourage people to push forward! Bottom line, most debt freedom journeys will take some time. So, don't be discouraged along the way. Keep your eye on the prize and know how awesome it will be once you get there.

The "BUT" in the title of this post is there because I don't want anyone to confuse patience with apathy! Although patience during this process is extremely important so that you don't feel like quitting before you really get started, you can't have a totally relaxed mentality as that will prevent your continued progress. Remember, you need to really "hate" your debt! It needs to be something you just can't live with anymore! This attitude needs to be ingrained in your brain so that everything you do financially aligns with this message! With all that said, you need to always continue your progress. Because even though it will take some time for all your debt to go away, you need to be able to tangibly notice your progress along the way. One rule of thumb I have used is to make sure I capture a "win" every month along this journey. Some examples of these wins are: selling something I own to pay down more debt, paying off a debt in full, paying greater than minimum balances on various debts, staying on budget, successfully saving for a specific goal, etc...

One key to making it through this journey is finding this balance. You need to be able to have the patience and perspective of the big picture with the capability of pushing the envelope so that significant progress is made. This winning combination will result in hitting your ultimate goal sooner than later!

Hiding Money From Yourself

One thing that I've learned during my journey to debt freedom is that it's very hard not to spend money that you know you have. On the flip side, if you're not aware you have extra money to spend, you can't spend it. I've thought of 3 things that you can do very easily to hide money from yourself. Because we all know that the hardest person to control during the debt free journey is....yourself.

1. Directly deposit money from your paycheck into a savings account that you don't use for regular spending. First off, I strongly urge you to get direct deposit for all of your paychecks (hopefully your employer has this option). This takes "you" out of the paycheck handling process. I've found that once you have money in your hands, it's exponentially harder to not spend it. So, don't even handle your paychecks. Then you'll know for sure that you won't be tempted to cash it or deposit most of it with a little withdrawal for yourself. Nope, if it's directly deposited into your checking account, it made it there safely without your grubby little hands on it. Once you do that, a second step would be to setup an immediate automatic transfer of a portion of the paycheck into a separate account which you don't access regularly. Some employers even have the option to direct deposit different percentages of your paycheck into multiple accounts. Either way, at the end of the day, the funds you see in your checking account should be less than what your total paycheck is worth. Start small just so you get used to it, maybe 2% of your paycheck. Then, once you learn to live with the smaller amount of money, increase the percentage that you stash away. You'll soon realize two things: 1) you will prove to yourself that you don't "need" all that money to live, and 2) you will start building up a nice little slush fund that you can use for rewarding yourself when you reach a milestone or use that savings for a specific event (maybe a mini-vacation).


2. Reduce your budget amount. When I started truly using a budget, the budget amount was pretty big. I did that on purpose because I knew I would be more likely to continue using budgets if I succeeded to stay on budget a few times. But one thing I noticed is that more times than not, I ended up using ALL of my budget...down to the last penny. Maybe you have more self control than me, but I've found that if I decide to give myself $500...I'll find a way to spend $500. So, as my debt journey matured, I started decreasing the amount of money I paid myself for "spending". And, imagine that, I found out how to spend every single penny of the new amount. But the beautiful thing was that I was conditioned to stay on budget. And now that my new budget was $100 less, that was $100 more I could pay towards getting rid of debt. Now, there's a risk of going too low with your budget and potentially getting into scenarios where you go over budget. So, reduce it little by little and really keep track to make sure you don't start going over budget. Because although this is a nice trick to increase the amount of money you use to pay down your debt, it's not worth risking the behaviour associated with consistently going over budget. Find that sweet spot and use that for your ongoing budget amount!


3. Dump all your change into a jar that sits in your closet. When I first starting doing this, I thought it was a little childish. I mean, come on, what am I like 7 years old? But this actually turns out to be a nice little bonus when you least expect it. To really make this a daily deposit, remember to always use cash. You should use cash for many reasons that I've listed in a previous post, but it's specifically relevant in this context because you don't get change back if you don't pay with cash. Anyway, continue to just dump your change everyday into this jar and then immediately forget it's there. If it's in a closet or cabinet it shouldn't be in your face....hopefully the "out of sight, out of mind" theory works for you on this. And then periodically cash out the change for some extra spending money. I let it build up for about a year and just cashed out almost $300. I know in the grand scheme of things that's not that much money, but it was $300 I didn't have the day before. Besides, this should be used as an extra fun bonus. Maybe you get the kids to help you roll up the coins and they get to buy something special for themselves. Maybe you use it for a nice dinner out for the family. Or maybe best yet, you are hardcore and use that to pay down your debt even more!

These tricks are great tools to use during the journey. Not only do they maximize the money you utilize for paying down your debt, but they also act as nice little bonuses along the way. They're like nice little hidden treasures that motivate you to keep pushing through the journey!

Constant Communication is Key

This post is targeted for all the married people that are going through the debt free journey. The importance of consistent communication with your spouse about all things related to the journey is paramount. Rachel and I recently had a major disagreement with the overall plan. After sorting through the specific issues, we realized that we were both on the same page on several things but failed to understand each other for some things. Throughout this entire time, I thought that I was being transparent. But apparently I had several thoughts in my head that I didn't openly or clearly communicate. And when Rachel heard about these goals/future plans, she felt left out in the decision making process. For the record, leaving her out of any decision was never my intention. But it goes back to the need for constant communication and it should definitely go both ways. If one person has any issue pertaining to the debt free plan, they need to call it out right away so that both parties can get back onto the same page ASAP.

So, with that, I'm happy to say that we're both back on track after discussing the discrepancies we had. But we didn't stop there. One thing that we've added to our overall plan is to enforce the need to review our progress and update the future plan, on a periodic basis. This is a very similar concept to companies that hold annual planning meetings. Since we feel that it would be beneficial to meet more frequently than yearly, given the point we're at in our journey, we've decided to formally meet quarterly. Now, this doesn't mean that we won't talk about our plans outside of meeting quarterly. But it does force us to formalize a review on a quarterly basis. This way, we ensure we're driving towards the same targets at least every quarter.

With our decision to meet quarterly, we have also decided to make sure it becomes "an event". We're going to secure a babysitter and make sure we have a lot of fun together. It'll turn out to be a more elaborate "date night", not just a meeting to discuss finances. We both feel strongly about making sure that the journey is not all focused intensity without sometimes stepping back and really enjoying the ride. I strongly urge all couples going through the journey to formalize a periodic discussion around your debt free plan...and to always make it an event to remember. Because we all know that we're more likely to do things that bring us enjoyment. And ensuring the constant communication of your progress to date as well as the plan for the future is so vital to your journey that it MUST be something you do.

Rough Days On The Journey

Today was a rough day for me. I've eluded to the fact that there will be days when you feel great about the journey you've started and confident that you'll achieve all the goals you've set for yourself. But I've also mentioned that there will be days during the journey where you are really down and discouraged about all of the sacrifices you need to make to be debt free. Well, today was a major down day for me. I'm not sure what triggered it but I started to have doubts around whether or not I could truly achieve all my goals/dreams. And once you start with one of those thoughts, it snowballs into several other negative things in your head. You begin to wonder if all the sacrifices you're currently making are worth it in the end. It's a very slippery slope.

Although days like this are inevitable, they still hurt "big time" when they come. And trust me, you'll have many days like this along the way. It's human nature. There's only so much you can take until you break. Sometimes these days are triggered by specific events (i.e. a nice thing you can't afford to purchase, a vacation you can't afford to take, an event you couldn't attend because it cost too much). Other times, days like this just happen because you feel discouraged with the amount of time that is still needed to get you to your ultimate goal. Whatever the case may be, you just need to let it happen and push forward once the "down" feeling goes away.

Up until this point, I have written nothing but positive posts. One of the objectives I had for this blog was to record all of the ups and downs. So, in that spirit, I wanted to make sure I recorded my feelings today. Don't get me wrong, I'm still very positive overall with the journey and the eventual outcomes of our sacrifices. But I want to be truthful with the journey's low points so that you know these types of thoughts will run across your head during your journey.

What am I going to do about it? Well, I'm going to kiss and hug my wife and tuck my kids in their beds. Because even though the debt free journey gets extremely tough sometimes, my family is well worth the sacrifice!

Win The Marathon And Every Little Race Along The Way

Yesterday I went out for a run, it was the first real exercise I've had in forever. It wasn't a very long run by any means (maybe a mile) but I'm still sore today nonetheless. After feeling like I do today, 99.9% of the time I would just call it good and forget about continuing any kind of workout. But this morning I did something different, I searched for upcoming races in my area. I found a 5K scheduled for St. Patty's Day and decided to go for it. So, I've got about 2 months to train to run 3+ miles. For you health nuts out there, you probably think that's a piece of cake. But for me, it'll be a challenge. So, to prepare, I plan on setting some weekly goals in preparation for the race. And depending on how I feel after this race, I'll set new goals/targets to reach the next level accordingly. My ultimate desire is to get back to playing basketball, it would be great to join an intramural league again. But I don't want to be winded after running up and down the court just once. So, I figured that paying money to enter some races will force me to get back into shape. I should be less likely to stop working out when money is involved.


The approach I'm taking with getting back in shape is similar to the way I'm going about the debt free journey. I have the ultimate goal of getting rid of all my debt and even though I see the light at the end of the tunnel, I continually need to set interim targets so that I can win along the way. You see, if the only goal I had in this entire journey was to be debt free, I would never achieve it. At the start of the process, the debt seems insurmountable. And even if you build up enough confidence to get started, there are so many failures and let downs that occur along the way which will deter you from finishing what you started. Because this is a life changing process, it takes a tremendous amount of will power to push forward. The biggest force going against you is society. You will have to think and act differently than "the norm". Some things that happen during the journey won't make sense to others. But guess what, it doesn't matter. Let them stay in debt and be enslaved for the rest of their lives. "They" don't have to live with your debt, you do. So, unless they decide to pay off your debt for you, they don't have a say! Anyway, my point is that since there are so many obstacles in your way towards debt freedom, it's VERY easy to give up.


Since the start of my journey, I've learned to figure out different ways to have "WINS" that offset all of the disappointments and hardships along the way. Here are a few ideas I've come up with:

• Make winnable/smaller financial goals
• Surround yourself with strong supporters
• Visualize your progress
• Continue to dream

Make winnable/smaller financial goals - As I mentioned above, becoming completely debt free will seem impossible at times. So, you need to have interim wins to feel the power of success. Some examples I can think of are: Stay on budget (or under budget) for the week/month, Celebrate each time you pay off an individual debt, Take a vacation that you saved for, etc...

Surround yourself with strong supporters - I've already written a whole post on making sure your spouse is right beside you through this entire process. That should be the minimum amount of support you acquire. Getting family and close friends to support you is ideal, although you can't expect all of them to understand your journey. And if nothing else, join a support group. With Dave Ramsey being such a big name in the "debt free" world, there's bound to be Dave Ramsey classes or community groups in your area.

Visualize your progress - I've heard so many techniques people use to track their progress. Some people go with the traditional graph that shows the amount of debt dwindling down as time goes on, others get much more creative. I heard a story of a couple that filled their spare bedroom with balloons. On each balloon, they wrote a specific dollar amount that represented one of their debts. As they got rid of each debt, they would physically pop the corresponding balloon. How's that for visualization? Whatever approach you decide to take, make sure that it's substantial and that it's something you regularly view. I am an Excel spreadsheet geek. I look at my debt free spreadsheet everyday! It inspires me to reach the finish line and makes me happy thinking of everything I've accomplished thus far.

Continue to dream - Out of all the ideas I've shared in this post, this is definitely my favorite way of WINNING. I dream about my life without debt, a life where I don't need to work and am free to pursue my entrepreneurial endeavors. I dream about my kids going to college and not worrying about student loans. I dream about going into car dealerships and negotiating amazing deals on the cars of my choice because I can lay down the full amount in cash. I dream about owning my home outright and never having to pay another monthly mortgage/rent payment. I dream of spending retirement with my wife travelling the world and having enough money to enjoy all of the places we visit. I dream of my kids living their entire lives debt free because of the lessons I taught them. And the best part of all these dreams is that I know they will all come true!

To summarize, just like getting back into shape, getting rid of your debt can be a bumpy ride. There will be so many reasons to quit before you reach the finish line, so you need to make sure you win along the way. The success at the end of the journey is so sweet but all of the accomplishments leading up to the end should feel just as good!

CASH IS KING!

If you've been reading my blog, you probably saw the post where I talked about using cash for all your spending as opposed to debit and credit cards. I can't emphasize enough how important this action is to your debt free journey's progress. I know that it has truly made all the difference in the world to me as it puts a physical limit on spending. Basically, if you don't have the cash in your pocket, you can't buy anything. Wow, what a concept. You mean, if I don't have enough money for something, I shouldn't buy it?

Now, there's many excuses for not using cash. I've used them all and was very reluctant to go with this approach. Some excuses I personally used were: Inconvenience, Embarrassment and Security

Inconvenience - A prime example is filling up the gas tank; going in to pay the cashier cash is much more inconvenient than just swiping your card at the pump. Another excuse I used pertained to buying things on-line. I tried to convince myself that I was missing out on massive discounts because I couldn't purchase things from web sites with cash.

Embarrassment - This might sound really messed up but I used to think that people who had platinum or gold credit/debit cards were really rich. So, in turn, I thought that people who paid with cash/change were just getting by because they had to buy things with the cash/change they scrounged up. Talk about backward thinking huh? Another excuse related to embarrassment that I used to think of was the fear of getting to checkout and not having enough cash in my pocket. I never wanted to be "that guy" who had to return things he couldn't afford. I preferred to plop my card down so that no one thought of me as the poor guy who held up the line.

Security - Another argument I used to not strictly use cash was that carrying a bunch of cash is dangerous. I convinced myself that I would more likely get robbed if I had a bunch of cash on me. It was so much safer to use cards because thieves would have a harder time using my stolen cards than spending any stolen cash.

Needless to say, I have finally squashed all of those excuses and now I use cash for my daily spending, always. Do I feel inconvenienced at times because I'm always using cash? You betcha! But that's the beauty. It's good to be inconvenienced when it comes to spending money. That alone, should help you control impulse spending. Guess what, if you're at the grocery checkout line and you see a couple of candy bars you were craving or you see some interesting magazine covers or you see a funny DVD that might be a good addition to your collection, you can't buy it if you don't have enough cash in your pocket. Or if you need to get gas and you only have $10 in your pocket...well, you just put $10 in as opposed to filling it up. There's no rule that says you have to completely fill the tank every time you visit a gas station. You laugh, but it took me awhile to get that through my head. I used to think that it would cost me more to put in gas a little at a time because I would have to make more trips to the gas station. But even if that's true, it's the principal of only spending what you have that is far more important than the few cents you save from not making multiple trips to the pump. And how about the embarrassment factor? Well, I make it a point to calculate the items I have in my shopping cart so that I feel pretty confident that I have enough cash to pay for it all. And in the rare event when I mis-calculate and I don't have enough money? Well, I simply tell the cashier to remove some items to get me under my budget and I say it proudly. You see, I have it ingrained in my mind now that going over budget is much more devastating than having people you probably don't even know wait a couple of more minutes to checkout. Heck, they should be doing the same thing too if they want to ensure they stay on budget. To address the last excuse, I can say that I've been robbed via identity theft (fraudulently used my debit cards) more than I have been robbed of my cash. So, that kills that excuse right there.

OK, now that you know CASH IS KING, how can you logistically get started using it full-time:

1. Cut up all of your debit/credit cards so it's impossible to use them.


2. Create buckets or categories of your spending needs (i.e. groceries, household items, dining out, entertainment, gas, etc...)


3. Create weekly budgets for these spending needs. I strongly urge a time frame that's more frequent than monthly, even though everyone and their brother uses monthly budgets. I started out using monthly budgets but quickly found that I would tend to borrow from myself in the early weeks of the month. So, by the time the end of the month comes around, I didn't have any money left in my budget. And since I couldn't just starve my family, I would just take money away from the amount I was going to pay down debt with or save, to compensate for the over-budget spending. Weekly budgets have really worked out for my family but you should make a budget for whatever makes sense for you. I know some people who should probably have daily budgets to keep themselves honest.


4. Put the appropriate amount of money in cash into envelopes for each budget category.


5. Before you leave the house for any reason, think through where you will be going and what you plan on doing. Only take out money from the envelopes that are applicable to what you PLAN on doing while you are out.


6. If you run out of money in the envelope, you are done spending for that category till the next budget cycle (daily/weekly/monthly)


7. Replenish the envelopes with the budgeted amount once you enter the next budget cycle. If you so happen to have money left over from the previous day/week/month, then you get a little extra to spend on that category during the new cycle.

****Note - I will probably write up an entire post on budgeting, so I'm not going to go into too much detail now. But one thing I will say is this; think of budgeting like dieting. I strongly suggest that you ease into it. In other words, for your first few budgets, don't go crazy on trying to budget too little. I would initially budget for the same overall amount you captured when you tracked every expense you made. That way, you can at least practice staying on a budget you are pretty comfortable with. This will build up your confidence for sticking to a budget. Then, once you successfully stay on budget a few consecutive times, you can tighten the budget. It's similar to not overdoing it in the gym on your first visit. If you do, you'll never want to go back.

Well, I hope you see how using cash on a day-to-day basis can be very beneficial for your debt free journey. Once you do it and get used to it, you'll want to keep going. Soon, we'll be debt free and buying cars, houses, businesses....with cash! It's amazing how powerful cash can be. The title of this post says it all, CASH IS KING!

Family Time is Free

Well, I told you that some days would be short and sweet and this is one of those days. I just got the kids to bed and settled down at the laptop. It's been a surprisingly long week, even though I had Monday off. In any event, I'm tired and want to go to bed soon. But as promised, I'm committed to writing a post to my blog everyday this year.

Tonight, I had an awesome family dinner with my mom, brothers and sister-in-laws. I brought the kids and my nephew was there too so the next generation cousins had a good time as well. Caitlyn even taught Mason how to act like a dog (long story, hope it's just a quick phase). Anyway, I realized tonight that more nights and weekends like this would be awesome. Not only was it fun for everyone but it was free. Well, I guess technically it wasn't free for my mom since she bought all the food and cooked it. But we could all share the cost if we rotated where we had "family dinners" and had a different family member host it each time.

So, the main point of my post today is that there are still many things you can do that are fun, which don't cost anything (or very little). And for us, one of the main reasons we decided to move back to the Seattle area was to be closer to family. We've definitely reaped the rewards of that decision already (family holiday parties, family birthday parties, etc...) but it's nice every once in awhile just to hang out. In a world where we feel the need to be entertained at all times, tonight was a great example of the fact that you don't need very much money to have fun with people you love!

Share Everything With Your Spouse...Even Your Debt Freedom Journey

This post might not apply to everyone that reads it, specifically because not everyone's married. But I am, and this is a very important point to know whenever you embark on any kind of difficult endeavor. Make sure your spouse is truly on board! If BOTH of you are not totally bought into the debt freedom journey, then you'll either never see the end of your debt or you'll at some point see the end of your marriage. I'm no marriage expert but I feel pretty confident with my last statement.

Before we started our journey, neither of us really bothered to think about our debt. I mean, I knew we had debt, but I wasn't remotely concerned about it. I kept thinking we're fine, we can pay all our bills...with money left over. Well, I wasn't factoring in the fact that the payments we were making towards debt were the minimum. And if you know anything about how long it takes to pay off debts by paying the minimum every month, you would know that it's a problem! The other main reason why the debt didn't bother me has to deal with pride! I was so proud of my nice houses, the nice furniture, the nice cars, the fun vacations, etc... Besides, my peers and co-workers were doing the same thing. And the other people that weren't, well, they weren't rich enough, right? People who saw me probably thought that I was a young, successful businessman that made all the right moves. So, why wouldn't I be proud of myself? Why wouldn't I think I was doing all the right things?

Then, as you've probably read in some of my other posts, there came a point when we realized debt was killing us. Even after that realization, my wife and I struggled to get on the same page to address the issue. I think we both had our moments. There were times when I thought she wasn't pulling her weight to try to get us out of this hole and I'm sure there were times when she didn't think I could lead us out of this mess. There were numerous times when I thought I deserved to buy something just for me or spend money that wasn't officially on the budget. And I know she felt all the pressure on her at times to cut her spending while I freely spent what I wanted. The truth is, I'm sure all of those thoughts occurred and probably all of those actions happened. Unfortunately, we did a horrible job of communicating these things to each other. So, we never got any traction on our debt free journey. That's probably why it took us almost a year to truly go hardcore on this journey, even after having the aha moment about how much our debt is hurting us. Moreover, with all this built up anger/frustration within us, I'm sure it triggered many the argument or fight.

There's no wonder why there's a statistic that says "money" is the #1 reason for divorce. But on the flip side of that, being on the same page as to your family's finances can strengthen a relationship as much as anything else. Rachel and I have finally reached that point. It's not always happy times when we discuss our finances. But the more important thing is that we do talk about it. This includes both our successes and failures. We love talking about the progress we're making towards reducing our debt. It's always a good time when we discuss our future goals and our dreams that we will now be able to achieve as we become debt free. There are still tough conversations like: discussing spending money we didn't plan for or how are we going to budget for birthday parties and Christmas gifts or how much money can we put towards our next vacation. But the vital point is that we discuss these things as opposed to thinking about them and getting upset with each other if an event like the ones mentioned above come up and we're not prepared. And to round it out, we agree on the decision together. There's no more "you said this" or "you wanted that". It's "we decided to" or "we planned to".

Basically, I believe that couples need to be on the same page on their finances and mean it. Remember, actions speak louder than words. Both people need to show they're in it to win it! I'm sure you've heard the saying "two heads are better than one". Well, if you're married and trying to go through the debt freedom journey, two heads are essential for success!

Being debt free is like winning the lottery

Well, I just checked my Mega Millions lottery ticket for last night's massive $380 Million jackpot...and I lost. I know, big surprise right? I keep telling everyone that I'm due since I haven't won a jackpot yet :) But really, I know playing the lottery is a horrible waste of money. I think some people call it "a tax on the poor". But I figure that I'd just give it a shot with the jackpot that big. Besides, if I would've won, the return on investment is hard to beat (invest $1 and get $380 Million)....not bad for a day's work.

Dreaming about what I would do with all that money is fun! In fact, my brothers and I had a pretty long conversation the other day as to what we would do with the winnings. I know the lottery dreaming was widespread, given the size of the jackpot. I've read several Facebook posts over the last few days that talked about the lottery and what people would do with all that cash. All this talk about winning the lottery made me realize several similarities between being debt free and being a lottery winner. I could even argue that being debt free might be better....maybe.

The most common things I've heard people say they would do if they won the lottery are:

1. Quit their job


2. Buy their dream home/cars


3. Pay off all their debt


4. Give to extended family and friends


5. Give to charity

First of all, I find it very interesting that people would call out that they would get rid of all their debt. It just goes to show you that people think they should be debt free but it's actually kind of sad that most people think that the only way to become debt free is by winning the lottery. Even though people probably won't admit that, I know from experience that thinking about being debt free seems so far fetched at the beginning. It's really discouraging when you think about the huge uphill battle you would have to fight. But I'm telling you it's possible, although it's definitely not easy.

When I look at the other 4 things people would do if they won the lottery, the common theme to me is freedom. Guess what, it's the same kind of freedom you can have when you're debt free. Think about that for a moment! That's right, I'm saying that if you were debt free, you would be able to accomplish all the same things you would want to do if you landed a huge lottery jackpot. Of course, it's not a completely straight forward comparison. Winning the lottery today would be an immediate life changing event as your financial position transforms literally overnight. On the other hand, becoming debt free will take a lot of hard work and determination that occurs over a certain period of time. However, if you look at it from a totally different perspective, going through the debt freedom journey will equip you with skills that will ensure you build wealth forever. One issue with lottery winners is that they have no idea how to handle the money that was just given to them and that's why you hear all the sad stories of lottery winners that have lost it all as fast as they won it.

So, although I wouldn't deny a jackpot if I someday was lucky enough to have a winning ticket, I'm extremely excited to become truly debt free and enjoy building wealth forever! This is the type of perspective that keeps me extremely motivated to get rid of my debt ASAP! This freedom is what awaits everyone who reaches the debt free milestone. And if you compare the two approaches to freedom (i.e. be diligent in your journey towards debt freedom OR continue to buy lottery tickets and hope you get lucky), I think one approach is clearly better. And that's why, being debt free is for me!

Getting Started on the Debt Free Journey

Yesterday I sat down to pay my monthly bills. My filing cabinet houses all of my important documents and it has a drawer dedicated to organizing my bills. I have a folder for each month so I re-use the same folder every year. When I opened up the January folder, I was shocked at the amount of statements filed away from last year. To give you some context, I had 27 bills last year compared to 11 bills paid out this month. An even better indication as to the amazing progress that's happened in just a year is reflected in the dollar amounts:

• January 2010 bills expense ~ $9,500


• January 2011 bills expense ~ $4,000

Woo Hoo! Wow! Isn't that craziness? In just one year, our bills decreased dramatically! How did we do it? Well, it was a lot of things and I'll be sharing all the nitty, gritty details through this blog over time. When I take a step back to reflect on our progress, I can't keep from smiling! This is especially sweet since I know just how tough it has been to get to this point. It's taken a complete turnaround in mindset and behaviour towards our personal finances. Working on this blog has opened my eyes to all the changes associated with our transformation. It's actually been a very rewarding New Year's resolution so far as it forces me to realize all of the amazing accomplishments and successes that have transpired in our journey so far. And believe me, patting yourself on the back is really tough to do through all of this. There's been many days where I'd wake up and wonder why I'm putting myself through this impossible mission. But I guess I'm living proof that it's not impossible after all.

The first step of the journey towards debt freedom is to simply get started. There are a countless number of books and people who can give you advice as to what specific steps you should take. I should know, I have read A LOT of them. But the one underlying message that is in everyone's advice for getting started, is to do just that...GET STARTED! Do something about it! Don't procrastinate! Don't wait for the perfect time to start because it will never come! Don't spend forever mapping out your comprehensive plan, you can start right away! I'm telling you from experience because I studied and learned, trying to come up with the perfect plan that utilized all the best steps from all the pieces of advice. And it unfortunately took me about a year to actually get going. If I could do it all over again, I would do something/anything right away and make adjustments along the way. You can't underestimate the power of getting the ball rolling. So, what should you do? Well, like I said, there's so many things to choose from (it takes a lot of work to completely change your mindset and behaviour). It's like unlearning everything you've ever known about personal finances and replacing it with debt free skills. Anyway, here are a few things that I think can and should be done right away.

• Understand The Problem


• Stop The Bleeding


• Be A Debt Hater

Understand The Problem - I know, I sound like I'm reciting the AA rules. But this is very key. First, you need to admit that you have a debt problem. Then, you need to figure out how big of a problem it really is. I listed out every single bill that needed to be paid. On top of that, I started jotting down each and every thing I spent money on. Have you ever gone to an ATM and taken out $20, $40, $100 and not really known how it was spent? I used to do that a lot. So, I tracked it, every penny. The results were jaw dropping. I was spending a fortune on going out to lunch, and dining out in general. I always used to think that I was a pretty frugal guy. I mean, come on, it's not like I go to the mall on shopping sprees...I don't even like shopping. But it's amazing how all of those Starbuck's runs, fast food lunches, restaurant meals with the family add up. I finally came to the realization that my "shopping spree" was eating out. Everyone has something, maybe it's shoes or clothes or sporting events or vacations or just "other stuff". I'm sure there's even a lot of hobbies that end up being very pricey (scrapbooking, skiing, golfing, etc...). Whatever your thing is, it will hit you smack in the face once you start tracking where every penny goes. It's only after you understand what your specific problem is, that you can do something about it.

Stop The Bleeding - To truly start your journey towards debt freedom, you need to stop accumulating more debt. Everyone tells you about the "cutting up your credit card" idea. I think that's a given. Obviously, you shouldn't enter into any other kind of debt too. Remember, a mortgage and car loans are debts as well. But I would recommend going a step further and cutting up your debit cards too! This is very ironic for me because I remember in the early 2000's when debit cards started becoming the norm. I used to think that anyone who still paid with cash were just old-fashioned and didn't want to embrace new technology. I remember trying to convince my step-dad that debit cards were the way to go and now I don't want anything to do with them. You might ask why, I mean debit cards take money from your checking account so it's not debt. Although it's true that they are not directly debt, I will argue that they make it very convenient to obtain more debt. The most common way is that banks have started to push associating a line of credit to your debit card. That way, if for whatever reason you use your debit card and you don't have enough money in your account, they just charge the balance to your credit line. Boom, more debt. But that's the more obvious scenario is which debit cards promote debt. The more subtle reason and by far the most dangerous is their ability to facilitate over-budget spending. The best example of this is when you buy groceries. How many times have you bought a bunch of things and when they were all added up, it came up to more than you expected to pay (i.e. you went over your budget, whether it's a defined budget or some loose expectation as to what you were willing to spend). Well, with the handy/dandy debit card, you would just swipe it and suck it up. You would probably just think to yourself that you'll make sure to go under budget with some other purchase. Well, guess what, that scenario seems to happen over and over again. After awhile, you constantly go over budget. Thus, eventually you could potentially accumulate more debt or at the very least, become unable to pay down your debt balances. Bottom line, if you use cash for everything, this over-budget spending temptation doesn't exist. If you run out of cash in your pocket, you simply can't buy anything, period. It's an absolute and all temptations become impossible as you physically can't go through with the purchase transaction. Stick with cash and stop the bleeding!

Be A Debt Hater - OK, I know this post is getting pretty long but I'll make one last point and wrap it up for the night. This final "initial step" really kick starts the mental transformation portion of the debt free journey. In my opinion, the mindset shift associated with how you view debt is absolutely the most critical component to becoming debt free. I mean, you need to get pissed off at your debt. It should embarrass you to have any debt at all. It's this "sick to your stomach" hatred that is needed for you to attack your debt ASAP. You should treat it as a life or death kind of thing. Debt = Death! Debt = Slavery! Debt = Serial Killers! You need to truly view debt as horrible as those horrendous things because this is the type of mindset you'll need to continue down the path towards freedom. This is vital because if you don't feel this strongly about getting rid of your debt, it just won't go away! There's too many temptations and societal norms that will persuade you to stay in debt.

Well, I hope these "first steps" make sense. Like I said, the most important thing is to do "something" about your debt problem, ASAP. And by targeting these few things, I feel you'll be in a great position to get this journey started!