An Experiment...

With the new year upon us, and with us now one month into our debt payoff plan, the time has come to free up some extra dollars to throw towards the mortgage. To that end, we're going to undertake a 40-day experiment. We invite any of you who are so inclined to come along for the ride.

What is the experiment, you ask? Here you can see our pantry -- I dare say ours is not much different-looking than yours: all manner of boxed, bagged, and canned goods you've bought up to keep for a rainy day, then neglected to eat. Our freezer looks much the same way -- frozen dinners, chicken, cheese, and whatnot, all just sitting there waiting for us. Despite having all that sitting there just waiting for us, we still go to the grocery store once a week and plunk down $50, $70, $100 dollars for new food.

So here's the experiment -- starting on the 1st of January, and lasting through until February 10 (the end of our credit card statement), we will eat almost exclusively out of our pantry and freezer. We do plan on buying a very few things at the grocery each week:

• Bread -- One loaf a week for our lunches, no more than $1.
• Yogurt -- Four mornings a week, my wife eats a yogurt while I drive her to school -- nothing else sits well with her that early in the morning, so no scrimping there.  No more than $3 or $4 a week.
• Fresh vegetables -- Mostly green pepper, about $1.69 a week.
• Fruit -- for in our lunches; again, no more than $3 or $4 for the week.
• Milk -- we have no cow, so we'll shell out the $1.50 or $2.00 per week.

So, our hope is to get by with no more than $10 per week at the grocery.  Everything else we eat will come from either our pantry or freezer.  No restaurant meals, no other groceries.  A total of $50 on groceries for the length of the experiment, no more.  Not only should this free up some extra money for debt reduction, but it will clean out our pantry, prevent much of our canned and frozen goods from spoiling, and just generally be fun.  More than that, so much of frugality and financial solvency is attitude -- making due with what you have instead of constantly buying new.  What better way to help us get in that mindset than by making due with the food we already have on hand instead of constantly buying new?

Anyone else out there want to come along on the journey?  Post so in the comments section, and welcome!

Blessings

Sorry for the long time between posts -- it's just that crazy time of year.

It's also that time of year when we are all encouraged to think about all the blessings in our lives.  I think the song from White Christmas says it best:

If you're worried and you can't sleep/
Just count your blessings instead of thinking about all the junk you could buy that will bring you neither emotional nor spiritual fulfillment/
And you'll fall asleep counting your blessings.

Okay, so maybe the actual song was more poetic, but I think my version is more applicable to our world today, or at least to the topic of high-speed debt reduction.

So often we are focused outside ourselves -- what is out there that we can buy which will make us happier, more fulfilled?  We go buy something, and all too soon any good feelings from the purchase are gone, lost until we buy the next Good Thing.

Problem is, we will always feel that sense of loss and dissatisfaction until we learn to be grateful for the blessings we already have in our lives.  When we do, the most amazing thing happens -- not only do any new purchases we make fulfill us, but we feel less of a need to buy them in the first place, as what we already have is enough for our happiness.

As you look at your Christmas gifts, appreciate what you were given, instead of focusing on what you didn't receive.  As you make your way into the world to take advantage of those after-Christmas sales or to use those gift cards you received, think of what you already have in your life, and whether those new potential purchases will really make your life better or not.  Be grateful for what you have, because what you don't have will never fill the emptiness in your life.

Financial Independence - The Larger Issues

The quest for financial independence is not really about money. It has much more to do with the quest for meaning in life. When I was still in school, my image of financially independent people had more to do with what my mom would watch on Lifestyles of the Rich and Famous or maybe someone like Ebenezer Scrooge hoarding his coins like squirrels.

Truly financially independent people are just that – independent. If that’s the life you want, the first thing you have to do is put money in its proper place. It is a tool that represents your life force. It takes time to make, save, and spend money. As we all know, (but don’t like to think about) our time on earth is finite. How we spend our time and money represents what we truly find important in life. If you have a wonderful job that fills you with energy, love, and meaning, by all means keep working until they won’t let you stay any longer.

Although I love my job, I know there is a lot more life to be had. Is the happiness I would receive from spending $30 at the movie theater on tickets, popcorn, and soda worth the time it took me to make that $30? More importantly, how much did I lose by not investing that same $30 into debt reduction or retirement savings?

Next time you go to spend money on a “want” and not a “need,” ask yourself how much happiness will this really bring you. Is it worth it? We spent a hefty amount of money last summer taking a trip to Kauai, Hawaii. Was it worth it? Absolutely! It was worth double what we paid in the happiness it brought us. I’m not sure I could say the same for the futon I’m sitting on right now.

Comment below on purchases that were “worth it” and ones that left you with buyer’s remorse.

Embracing Extravagance

In a recent post, I talked about embracing inconvenience -- doing things yourself, which might take you a minute or two more time, yet save you many dollars in the long run. Now, just to prove I'm not some Luddite or Spartan, let me talk for a bit about extravagance.

There are many in the frugal camp who view extravagance as the polar opposite to their way of life, and for the most part, I agree with them. But just what is an extravagance? There are two ways of looking at extravagance: either spending money on a want instead of a need, or spending money on a need, but not in the most cost-effective manner. At its core, an extravagance falls into one of these two definitions.

So, using our definitions of extravagance, are all extravagances bad? No, not at all. What my wife and I do, however, is when we do splurge on something, we make it something very meaningful or special, and we squeeze every ounce of enjoyment and happiness from it we can. We started the move toward this after a restaurant meal on one of our first Valentine's days as a married couple. We went out to Cheesecake Factory with several hundred of our closest strangers. It was one of the worst restaurant experiences of our lives. Noisy, busy, bad service -- all because we tried to do this at the same time as everyone else.

The last time we went to Cheesecake Factory, we went for a late lunch, around 3:00 in the afternoon. There were maybe a dozen tables occupied in the whole place, and the service was excellent. The food tasted just as good as it had on that Valentine's day -- maybe better because the chef wasn't trying to prepare forty or fifty other dishes at the same time. We were able to talk without shouting, take our time to enjoy our meal, and really cherish being with each other. A much better experience, for the same cost as our previous encounter. (The fact we bought most of the meal on a gift card we'd received for Christmas didn't hurt, either.) Could we have eaten at home for much less? Absolutely. Do I still remember sitting at the table with my wife and having a wonderful afternoon together? Yes.

You see, being frugal isn't all about sacrifice and scrimping. It's about being wise and aware of your purchases, about paying attention to where your money comes from and where it goes. My wife and I still have some very special moments -- our trip to Kaua'i this summer comes to mind -- but because we spent smart and paid attention to what we spent, we had some amazing experiences without seeing an amazingly-large number on our credit card bill.

What are some "extravagances" you have spent money on ... and was the money you spent worth it, or are you still suffering buyer's remorse? Share your comments below.

The Joy of Five Digits

First, apologies to our readers for the sporadic nature of our posts the past few weeks. My wife and I are both musicians, and this is our insane time of the year. Fortunately, our concert start winding down this weekend, so regular posts should be easier from then on out.

Second, Our mortgage just dropped below the $100,000 mark (not much -- a grand total of almost a buck). There is something very psychologically satisfying about seeing only five numbers to the left of the decimal instead of six. We really aren't all that much better off than we were yesterday or last weekend or two weeks ago, but that part of my brain that gets really happy from simple things like cookies and good coffee really has a strong reaction to seeing a 9 followed by 4 other numbers and then a decimal. No more hundred-thousands digit. Endorphins are flooding through my body even as I type this.

Any time you have a big goal -- financial or otherwise -- it helps to look for these small triumphs and victories. It's these things that help us mark time when the days and weeks all run together, when we're never quite sure if we'll make our goal or not. It's these little things which help us to keep going when we're not sure if it's really all worth it.

To help us stay psychologically on track, we have actually drawn an outline of our house, and as we pay off the mortgage, we "buy" square feet of our home. I'll actually scan in and share this in a later post, but so far, we've paid off our family room, several closets, and our deck out back. These little triumphs ("Hey, honey! We now own our bathroom!") make it less like one big goal, and more like a string of little, very achievable goals.

What do you do to keep your morale up and keep your goals on track? Share in our comments section below. We'd love to have some other tricks to use!

The Selfish Side to Frugality

It can be satisfying sometimes to look upon the frugal life you’ve created for yourself with the sigh of a martyr. After all, look at all that you give up in life by living frugally. That seems to be the intuitive way to look at frugality, but it’s not truly the reality. Here are some of the side benefits I didn’t see coming when I started my adult life as a part-time teaching marrying a composer.

Knowledge – While explaining the chemical properties of vinegar to a friend, she exclaimed “How on earth do you know that?” My response? “I’m cheap.” When you go out of your way to find lower-cost alternatives to buying convenience items at the store, you take it upon yourself to know more about the way things work. Through research and experimentation, I’ve discovered ways to run my household better, because I don’t just go out and purchase a product whenever I have a problem.

Skills – I once read that it takes less time to learn how to make muffins from scratch than it takes to go to the store to buy a mix. Not only is it usually cheaper to learn how to do something for yourself, it gives you a sort of independence you can’t get if you simply pick up the phone and call for a repairman every time something goes wrong. I was raised on Hamburger Helpers, boxed cake mixes, and fast food. It wasn’t until we first got married and I realized I couldn’t afford such luxuries that I really learned how to cook. I wouldn’t trade that skill for anything. One of our proudest moments this summer was when my husband and I successfully replaced the flush valve on our toilet (on the first try!)

Freedom – When all is said and done, a frugal, debt-free life is a life of freedom. When you push yourself to do as much as possible with as little as possible, you find out what you are truly capable of.

What unexpected benefits have you received by being frugal? Share in the comment section below. We love it when you comment!

Embracing Inconvenience

Our society is spoiled on convenience.  Long gone are the days when people had to grow all their own food, raise all their own livestock, harvest and kill and cook and store everything for themselves or face the risks of starvation and death.  We're even past the days where farmers would trade crops, getting rid of their surplus in exchange for their neighbor's.

No, now we have grocery stores, with every conceivable food under the sun in abundance to make the poorest person in the poorest third world country weep.  We no longer trade our own goods, but rather our hard-earned money, for these boundless blessings. 

Yet at times, even that isn't good enough.  There are a great many of us who can't be bothered with actually buying the raw materials for a meal and then spending our precious time preparing the recipe.  No, we swing by any one of countless restaurants and have someone else serve us our food, often in three minutes or less.  We don't bother to make our own cup of coffee at home before we leave; no, we swing by the local fast food restaurant, doughnut purveyor, or fancy café and buy the water someone else passed through a handful of roasted and ground coffee beans.

But this convenience comes at a cost, and often it's a terrible one.  Let's look at coffee (a subject near and dear to my heart).  The same ideas hold true for food, but I only need to demonstrate the matter once.

I have a coffee pot at home.  (I also have a cappuccino machine, but that's a subject for another post.)  This is not a high-end pot; cost me maybe $50.  I make about a pot a day, usually from a large blue plastic tub o' Maxwell House (hey, it's first thing in the morning, and my taste buds can't tell the difference at that hour).  A tub o' Maxwell House runs me maybe $7, and lasts me around a month.

Let's assume that any week day, I have a choice -- make my pot of coffee at home, or go get a single cup at Starbucks.  I'll even look at brewed coffee -- David Bach can have his latte factor.  Two dollars for a cup of coffee, times, say, twenty-three week days, gives us $46 for the month.  Compared to my $50 machine and $7 tub o' Maxwell House, I lose out.

Okay, make it two months.  Add another $46 for the Starbucks (and I'm not picking on Starbucks here -- substitute Krispy Kreme or Dunkin' Donuts or McDonald's or any place else you choose).  That's $92 for 2 months worth of coffee out, versus $64 (one machine for $50 and two tubs o' Maxwell House for a collective $14) at home.  The math comes up good on the side of the brew-at-home even sooner if you realize we're comparing one daily 16-ounce cup at Starbucks versus a whole pot of 60 or so ounces at home.

So what's the point here?  You're not paying $2 for a cup of coffee -- you're paying $2 for the convenience of not having to make your coffee yourself.  Coffee is nothing more than hot water passed through ground beans -- certainly not a $2 beverage in its own right.  You're paying someone to use their time and effort to make it for you.  The same logic applies to fast food burgers, prepackaged dinners in the supermarket, and even alcoholic drinks at your local bar.

Does that mean I'm against all eating out, against all convenience?  No, absolutely not, but when my wife and I partake, it's as a special treat, or to get something we can't get elsewhere.  There are some value and dollar menus out there which genuinely offer food for less than we could make it at home.  There are sit-down restaurant dishes which taste far better than anything my wife or I can throw together.  But we partake of this sort of thing as the exception, rather than the rule.

We have become so collectively lazy as a society that putting a filter, coffee grounds, and water in a coffee pot and pressing "start" isn't worth the money we save over buying it out.  We value convenience so much that we're paying through the nose for it ... and not realizing there's a better and more cost-effective way. 

The next time you're out, ask yourself if you're paying for quality goods and ingredients, or if you're paying for the convenience.  You could save more than you might imagine if you start embracing inconvenience as a way of life.

Anyone else have any things you do which are inconvenient but which save you a lot of money?  Please, share them in the comments section!

A Grocery Philosophy

There are several approaches we can take when it comes to purchasing groceries. Of course, there is no one right way to do it, but there certainly are several very wrong ways to do it. Here are some strategies that have worked for us.

Don’t impulse buy. Shopping while hungry and without a list is a recipe for disaster when it comes to your pocket book.

Do make a list and stick to it. Not only will your list help you buy only what you need, but it will help you avoid extra trips to the store for things you forgot the first time.

Don’t rely on coupons to save money. Even with double coupons, you often spend more by purchasing name brands than if you bought the generic. There are rare times where an item is on sale, you have a coupon, the store doubles it, and you actually save money on the deal. In general, however, it’s not a cost effective way to spend your time.

Do purchase generics. The quality on these products for the most part is excellent. Sometimes, they are even made by their name brand counterparts sitting right next to them on the counter for a much higher price.

Don’t go to seven different stores to get what you need, just because of the sales they have going at the time. More stores mean more gas, more time, and more opportunities for unnecessary impulse purchases.

Do scan the weekly ads to choose one or two stores that have the best prices on what you really need to purchase this week. If there is a really excellent deal, be sure to stock up as long as you have room to store it, and you know you’ll use it.

Don’t assume buying in bulk saves you money. Always check the unit price to see if you are really saving anything. Also, make sure you’ll use a large amount of whatever you are buying. You’re not saving anything if you throw most of the product away.

Do remember that how much you save at the store is irrelevant. All that really matters is how much you spend.

Have any other good grocery tips? Comment away!

The Beverage Comparison

We don’t buy soda. We just don’t. It’s carbonated sugar that costs way too much. Instead, we brew iced tea year round. Here’s the comparison:

Let’s say you purchase 3 2-liters of your favorite soda for your family at $1.50 each every week. That’s $234 dollars a year. No big deal, right? Let’s compare it to tea to see what that really costs you.

We spend about $1.50 for a box of 100 tea bags. We use 4 bags in a large iced tea jug that is about 192 oz. (approximately the equivalent of 3 2-liter bottles). So, we spend 6¢ for every $1.00 spent on soda by having our sugar-free, cancer fighting, refreshing, and energizing drink. Here’s what happens if you invest the savings on just that switch.

If we assume you can make very conservative interest on your investments at 5% and you pay 15% on your taxes, not even taking into account the cost of inflation for the price of the soda, you could be sitting on close to $10,000 at the end of 30 years. Granted, that’s a long time, but time does make very small amounts of money very large.

Now let’s look at nutrition. Our jugs of iced tea have no calories and the health benefits found in black tea (such as anti-oxidants that help prevent cancer and heart disease). A 2-liter bottle of soda has around 820 calories. Over the course of a year, that adds up to 127,920 calories or the equivalent of over 36 pounds! That’s just in one year.

So you see, being financially healthy can be good on the waistline as well as the wallet.

What other physically and financially healthy switches can we make? Let us know in the comment section below.

When Good Automatic Payments Go Bad

First things first -- new loan amounts in the box at the right.  We knocked another $245.20 off the loans, which isn't a great amount, but every little bit helps.  Also, at my sister's request, there will soon be, in addition to the red "amount remaining" numbers, a green "amount paid" number, just to keep track of where we've come from.

Now, here's today's problem:

Over the past week and a half, I've sent in 4 payments against our mortgage principal, totaling just over $1,100.  All of them were put "in suspense", which sounds like something they'd do on a sci-fi show when they can't save someone's life with the technology on hand.  It sure didn't sound to me like something they should be doing to my extra mortgage payments, especially not that many of them for that much money.

So, what's the problem?  The problem was I was taking good financial advice and following it blindly, without remembering that I need to be using my own head, too.  I'm a big fan of David Bach, and especially his book The Automatic Millionaire (I soon hope to have a "recommended reading" list at right, as well).  He says the way to get wealth for most people is to automate as many facets of your financial life as you can -- this includes direct depositing into savings, automatically paying bills and utilities, everything.

Like a good financial disciple, I set up all my payments automatically (except for our water bill, which is different every month and charges for automatic deduction).  I've done things that way for years and it's always worked well.

Until this week.  When I saw my first principal payment go into suspense, I thought, Hmm, that's odd, but as it was only $100, I let it lie.  When the next one for $109 did the same thing, I started to get an idea of the problem: our regular payment is deducted on the 5th of the month (or later if the 5th isn't a business day), and until they had that payment, they were going to hang or to our money "in suspense".

Well, the suspense was killing me, so after seeing our regular payment post with everything going where it should, and my other payments still just hanging around, I called the mortgage company.  I spoke to a very nice young lady whose name, sadly, I don't remember -- one of the nicest encounters with a customer service rep at a financial company I've had.  She put through the paperwork (or electronic equivalent) to get those monies out of suspense, which they won't be until Friday (small grr...). 

I then asked when they would have been applied to principal had I not called, and she told me that they would have all  been "swept up" and put toward principal "in a couple of weeks" (much bigger grr...)  A couple of weeks?  When they calculate the interest on the daily average, those couple of weeks add up to several bucks.  If I'd wanted them applied in a couple of weeks, I would have sent them in a couple of weeks.

So, it occurred to me that I should take my financial destiny in my hands, and with all due respect to Mr. Bach, I canceled our automatic drafts.  No more hovering in limbo about when they're going to take out my payments -- I'll know exactly when they are because I'll be the one sending them, and because of that, I won't have any more of my hard earned dollars in their hands, living on life support.

Anyone out there have any Sound Financial Advice they've bucked in favor of their own good ideas?  Share them in the comments section below!

Money Saving Appliances

It’s always nice to have some help when it comes to saving money. Here are some appliances that have helped us along the way.

Chest Freezer – After the freezer we inherited from Jason’s grandmother died, we made the investment in the less convenient but more energy-efficient chest style freezer that we store in our garage. Every time a good sale comes on chicken, beef, frozen dinners, ice cream, pretzels, pizza rolls, etc., we can purchase a large amount to be stored in the freezer. When cheese goes on sale (a dollar for an 8-ounce bag), we buy several dozen bags and bricks and store them, and it works beautifully. We’ll also make way too much chili and freeze most of it for an easy winter supper. Not only does this allow us to take greater advantage of sales at the store, but it is so fun and convenient to go “shopping” on a weekend for things to defrost for the week. It saves trips to the store, which saves on time, gas, and those inevitable impulse purchases that follow almost any trip.

Toaster Oven – When you just need enough food for two, it’s much more efficient to heat up a small toaster oven than the full sized oven. We will make a full batch of cookie dough, shape it into 1-inch balls, and freeze them. Then, we’ll bake just 4-6 in the toaster oven whenever we have a sweet tooth to satisfy. It gives us fresh-baked taste anytime we’re in the mood for it, it keeps us from overindulging, and we save money by making one batch of cookies last for weeks. The toasting feature can also jazz up a boring cheap sandwich, make easy garlic bread, and create a first-rate nacho plate.

Espresso Machine – It doesn’t take very many lattes to recoup the cost of a high-quality espresso machine over the cost of buying your caffeine fix from your favorite local barista. Plus, it can be used for hot ciders, hot cocoa, steamers, etc. The possibilities are endless and tons of fun.

Although these appliances are money savers, they definitely fall into the “wants” rather than the “needs” category. That means you can really take your time to find a great deal, use a coupon, and try to haggle your way down to the lowest price you can. To be honest, two of the three appliances listed above were birthday presents for us from Jason’s family, so you can even see if Santa is willing to help you save money.

What do you have around the house that saves you money? Please let us know in the comment section below.

Playing Around

It's Sunday evening, and as I so often do, I'm sitting here on my laptop, playing with my spreadsheets.

I know, most people play video games, or watch TV, or do any number of other things, so why would I be sitting here playing with spreadsheets?

These aren't just any spreadsheets.  These are my Financial Spreadsheets.  No Quicken or Microsoft Money here -- just give me Excel, a bunch of formulas, and turn me loose.  I've got a spreadsheet for our checking account online, for our local checking account, for our savings accounts, for our remaining mortgage, for our remaining student loans -- you name it, I probably have a spreadsheet for it.

My spreadsheet does just what a program like Quicken will do -- I can look and see where our money came from and where it went, but my spreadsheet goes further.  I have my spreadsheets filled out with income and expenses through the end of 2012.  I know reasonably well when our paychecks will arrive, and I have those in the spreadsheet.  I know when our bills are due, and they're there, too.  I have all the sheets for all the accounts cross-referenced, so when I take an extra $25 or $50 from our checking account and throw it toward the mortgage, it not only deducts the amount from checking, it changes the mortgage sheet and tells me what effect that will have on what we owe.

To play it safe, I underestimate our income and overestimate our bills.  Both my wife and I usually get annual raises.  To give these spreadsheets a feel of "worst case scenario", I don't put in those raises.  I get paid hourly, so I also assume that during no pay period will I work a full ten days.  As for expenses, I look at our worst months on our bills, and that tends to be what I put down for the amount due every month.  That way, on those months which are slightly worse than the others, we're not caught with our financial pants down.

I'm an Excel junkie -- I admit it.  I probably spend three or four hours a week just looking at these spreadsheets, playing.  "I wonder how it would effect our debt if we could cut out a hundred dollars a month from our credit card bill?" (We put all our purchases on our credit card and pay them off in full every month -- no balances there at 18%, thank heavens.)  I have only to go through and change the amounts, and I can see exactly what it will do.  "What if I took on another two piano students every week?"  I can add those amounts in easily enough and see, to a reasonable degree of accuracy, what it will do.

The upshot of all of this is that I'm aware -- almost pathologically so -- of where our money comes from, where our money goes, and what our money is likely to do in both the near and far future.  These sheets help me see the big picture.  They also let me manipulate our finances without actually risking those hard earned dollars -- just like a general moving little green men across a tabletop map of a battlefield, I can see what happens if the money I make teaching piano lessons declares war on our mortgage.

Is this the most convenient way to keep track of our money?  No, probably not, but it works for me, and it gives me a feeling of power, since I know what our money is doing.  Will this work for everyone?  No, probably not, but just considering it as an option for taking control of your financial future might cause you to come up with a method you might not have thought of otherwise.

So, dear readers, let us know -- how do you keep track of your money?

A Clean Sweep

While you're busy cleaning up your finances, it might be a good opportunity to look at how you clean your house. A stroll down the cleaning supply aisle of your local grocery store will reveal a plethora of cleaning options. You can make your floors smell like pine, your clothes smell like lavender, your coffee table smell like lemons, and your windows smell like... well, what does Windex smell like, exactly?

The trouble is, that's not what clean smells like. Clean smells like water, which is to say, odorless. We've been tricked into believing that heavily perfumed and colored chemicals represent what we need for a clean house. The truth is, clean means getting rid of the dirt and killing harmful germs. Here's how I do it.

Vinegar - Vinegar is my best friend when it comes to cleaning. It sanitizes. It deodorizes. It even repels insects and other pests. It's super cheap. Don't buy the fancy apple cider vinegar. Buy the giant jug 'o white vinegar you can get for about $.89. I have a spray bottle of one-part vinegar and two-parts water that I use to clean almost every surface in my house. It works wonders on windows and mirrors (especially when I combine it with a squeegee). Because vinegar breaks down residues from hard water, it helps eliminate those crusty deposits that can appear around your sinks.

Bleach - When it comes to potty germs, I just don't feel vinegar can kill the germs fast enough. I spray diluted bleach water into my toilets, let them sit while I clean my sinks, and then scrub and flush.

Detergent - I have to admit, I still use detergents to clean my clothes and dishes. I’m hoping to get away from laundry detergent soon. Here is a nice website with different recipes for homemade laundry detergents.

The point is, you can spend a lot less on cleaning supplies, have a cleaner house, and be kinder to the environment. Also, I feel I make less trips to the store, because I don't need as many different products to keep the house clean. There are more great ideas in Extraordinary Uses for Ordinary Things of ways to use simple items to take care of your home without going to the store to buy a specialty item.

How do you save while keeping a happy home? Let's see those comments!

Focus

December, in the life of a musician, is a hectic time.  My wife and I looked at our schedules, and the next day we have which is completely free is in just over two weeks.  Most days in between we're double and triple booked, and on those days, we're rushing from one thing to the next to the next.  We have an evening here or there with nothing, but those are by far the exception rather than the rule.

My wife also added up how many different pieces of music we'll be playing over the next month, and I think she figured it's somewhere over sixty.  I'm not bothering to count because the total would just depress me.

Now, what does this have to do with paying off debt?  It's times like this -- when there are many evenings when we're home just long enough to feed the cats, do chores, and get to sleep -- when it's easy to forget why we're doing everything we're doing.  We lose focus.  We only look the next step ahead, the next event, the next commute, the next song.  It's very easy to lose sight of the big picture.

It's times like this when it's so important to have goals.  If my wife and I didn't have our goal of paying off our debt in the next forty months, it would be so easy for us to just stop get some fast food, or grab an extra coffee or two at Starbucks.  It would be easy to skip checking the grocery ads in favor of just going and grabbing whatever we felt like -- and, since we'd be going in to the grocery tired, it's more than a little likely that all sorts of extraneous purchases would find their way into the cart and into our home, adding both to our credit card bill and our waistlines.  Just keeping that beacon in our sights -- being debt free before we're 35 -- helps us avoid some of those temptations.  Oh, sure, we're human and we give in now and then -- we did stop at Starbucks tonight, I admit it -- but we give in less often than we would without that star to guide us.

If you want to be debt free, you have to make it a goal.  Just thinking "it'd be nice if it happens" is not enough.  Make the decision to become debt free (if that's your wish) and give yourself a time line -- a goal without a time line is nothing more than a dream -- and you'll be able to keep that focus even when times get tough, when you get tired, when you're weary, when you're worn out.  Keeping that goal in sight becomes a source of comfort, something you can count on in times of trouble.  And as you keep your eyes on that goal, as you draw nearer to it, it will become far easier to ignore those voices trying to get you to stray from the path. 

Just focus on what you really want, and watch your dreams become realities.

Gift Wrap Waste

I can count on one hand the number of times I have bought gift wrap in the nine and half years I’ve been married. It goes against the fiber of my very being to spend money on something that has so little use. That doesn’t mean I don’t gift wrap my presents. I spend a respectable amount of time making gifts look their best. I just try to use what I already have around the house. Here are a few ideas:

Regift wrap – I’m certainly not the first person to take gift bags and gift wrap from my own presents and reuse it. It gives a little more life to something that would otherwise go in a landfill, and I don’t know anyone who is offended by it.

Recycle – Look around your house to see what could replace your gift wrap. Newspaper (kids love getting gifts wrapped in the comic section), computer paper, and even those annoying ads that seem to multiply during the holiday season can work very well. I am supremely fortunate to be a musician married to a composer, so most of my gifts come donned in manuscript paper that would have otherwise been trashed or recycled.

Potato chip bags – Foil snack bags come in all sorts of sizes, and there are almost no uses for them – except as gift bags! Wash a used bag, turn it inside out, and trim the top. Fill with goodies. I sometimes trim an extra layer off the top of the bag and use it as the ribbon to tie it up. In fact, you can keep cutting strips to make ribbon for other presents. The foil can also be cut into strips to fill a gift bag and make it snazzier.

Reusable bags – Almost every retail store is selling their own brand of inexpensive tote bags that can be used over and over. Why not use it as a gift bag? My favorite hardware store has green bags with white writing. I used a little red ribbon to tie it up, and I have a huge gift bag that cost under a buck (actually, they were free after rebate), and I have a practical, clever, easy, and environmentally friendly gift wrap. What more could you ask?

Gift in a gift – Planning on giving a gift that could wrap something else? Perhaps an inexpensive fleece blanket or a hand knit scarf? Roll or gather your gift inside another gift, tie with an attractive bow, and you are ready to go! J

Reuse greeting cards – What do you do with greeting cards after the season is over? You probably store them somewhere for sentimental reasons and never look at them again, or you trash them. This year, I cut out attractive shapes from my cards to tape to my presents instead of bows. If you’re really clever (and organized), you could even top someone’s present with the Christmas card they sent you the previous year. Family Fun magazine has this great idea for making gift card holders out of greeting cards.

Bring out your artistic side – Plain paper and boxes can be made beautiful by painting, stamping, stickers, or cut-outs. It can be a fun family activity.

You might wonder why anyone would do so much to avoid buying gift wrap. Surely, the amount you spend on gift wrap a year isn’t enough to retire on. However, it is a mindset that can spill over into other areas of your life. Try looking at anything you purchase to see if there is a way around it. Ask yourself, do I really want to spend my time and money on this?

In what other areas of our lives could we spend less? Share your ideas in the comments below.

Energy

Okay, first things first -- just had another $94 dollar payment post against the principal of the mortgage.  A drop in the bucket, but enough drops add up to a flood.  (There's a great article at getrichslowly.org about Debt Snowflakes which illustrates the point.)

Also, I've heard from some of you readers who aren't sure whether or not you should comment on this blog.  Please -- comment!  We don't have all the answers, but maybe you do!  Please, if you feel called to do so, leave a comment, offer an opinion, share a tip or a trick or a success!  

Now, energy.  Everything is energy.  Everything.  Get right down to a molecular level, and not only is your computer screen using up and spitting out vast amounts of energy, but the very plastics and polymers of the monitor itself are teeming with energy.  Every cell in your body is, at heart, nothing but a physical manifestation of energy.  More importantly, so are your thoughts.

Every thought you have, every idea which pops into your head, every urge, every craving, is nothing but energy, an electrical impulse flitting from one part of your brain to the next.  Think about that.  Every time you think of something, there is actual energy behind that thought.  And while the energy which comes out of the outlets in your wall causes a light bulb to light or a computer to turn on, the thoughts in your head interact with and directly influence the world around you.

My wife and I are fairly normal people.  We aren't extraordinarily special, or extraordinarily gifted.  One thing we are, more so than many other people, is positive.  Ever since we got married back in 2000, we have always thought that we had a very good life, primarily because, no matter what else, we had each other.  After a few years of marriage, we began to notice that good things seemed to follow us.  As much as I don't believe that we live a charmed life, it has seemed that charmed events seem to have come to us on a regular basis.  I don't believe that we were just lucky -- as one of our friends is fond of saying, luck comes to those who prepare -- I really believe that our positive outlook on our lives and our happiness with what we had, even when we didn't have very much, is what has caused all these good things to come into our life.

As you go about your day, watch your thoughts: do you think that things are generally good and likely to go your way, or do you dread all the bad things which, since they've happened to other people, are probably going to happen to you, too?  I'm not talking about a blind Pollyanna-like optimism, that nothing can ever go wrong and only good things are ever going to happen in your life -- please don't think that.  What I am talking about is appreciating and looking for the good in everything in your life, being grateful about what you have, and trusting that, even in the midst of a bad time or a crisis, those things that really matter are still going to be okay.

Focus that energy to be grateful for what you have, and you may just see some good things happening to you like a bolt out of the blue.

Time

Time is one of those elusive concepts -- hard to pin down what exactly it is, but we all know what it does, and we wish we had more of it.  Ask a physicist, and he'll tell you that time is just the movement of our three-dimensional space along a fourth axis.  Ask a track and field athlete, and he'll tell you that time is something he wants to use as little of in getting from point A to point B.

For most of us, time is what we spend (some might say "waste") every day with our jobs -- time to get ready in the morning, time to eat breakfast, time to commute to work, time actually at work doing that for which we get paid, time for lunch, time to drive home, time to destress after the day's activities, time to go to bed so we can get up and do it all again.  As much as we might wish for things to be different, we all stay on this same treadmill, never thinking there might be something better.

The plan goes something like this -- work 40 hours a week (or more, depending on the job) for about 48 weeks a year for 40 or more years, save up as much money as you can while buying everything you can get your hands on and hopefully squirreling a bit away for retirement, keep going until you're too old and used up to do much of anything, and then stop working and hope you've got enough saved up so you don't end up destitute and on the street before you finally shuffle off this mortal coil.  It's what so many people for the past few generations have done that we just accept it as The Way Things Are Supposed to Be, never realizing that there are other ways out there to live a life.

$25,000.  In just over three years, when my wife and I are debt-free, that -- as near as my spreadsheets are able to tell me -- is what we will need each year to live.  My wife by then will make nearly twice that.  My various jobs would more than cover that.  By then, it's also likely we'll have children.  What if, instead of the two of us working our fingers to the bone for 40 or more hours a week, we could each work 15, 20 hours a week, and spend the rest of the time we would have been at a job with our children, or working on hobbies which mean a lot to us, or volunteering to help those who need it?  Instead of a collective 80 hours at jobs, we might spend a collective 40 hours at paid employment, and spend the other 40 making our lives and the world a better place.  

See, to us, paying off the debt isn't just about getting that Magic Number to zero -- it's about taking control of our lives, making it so we can live our lives like we want to.  It's about owing nobody but ourselves.  It's about being masters of our time.

Take a second to think about that...

The Key to Happiness, the Root of All Evil, or Something Else Entirely

Money. We love it. We hate it. We do almost anything to get it. Friendships and marriages have been made and broken over it. There is nothing more important to your happiness and well-being than making as much money as possible, right?

Of course not. Money is very simple. It is a tool to help us get what we need and what we want. It's amazing how much we blame on money that really isn't money's fault. I've never met a farmer who blamed a bad harvest on a shovel or tractor. Money is just one of many tools to use to get the life we want.

My husband and I are going to spend a lot of time in the blog discussing money. Our goal to be debt free in the next 40 months means we need to be wise about how we spend our money. However, our plan is not to try to make more money. If we do, that's great, but most ways we know of making more income involve taking more time away from the things we really love. Instead, we're going to spend as little as possible while trying to make our money work for us as much as possible.

Jason will spend most of his time talking about investments, spreadsheets, and other things I normally don't have to deal with. It isn't that I'm incapable of it, it's just Jason loves it and is much better at it than I am. I will focus my writing on ways to save your money. It doesn't matter what your financial goals are. If you spend frivolously, you're putting your money in areas that aren't that important to you. Whatever you give attention to will grow, and spending money on something is a terrific way to giving something (or someone) attention.

Over the coming weeks and months, I will write short articles describing ways we've accomplished as much as we have on as little as we've made. I hope it helps.

If you feel called to comment, please suggest topics you'd like to learn more about. I'll do as much research as I can, pull from my own experiences, and try to put together something new and insightful for you.

Risk

It's the start of the Advent season today, and the minister at church gave us a list of topics for the coming week on which he asked us to write devotionals.  Well, looking at the list of the topics for the coming week, it occurred to me just how much relevance these topics have to what my wife and I are trying to do to our debt, namely crush it out of existence and wipe its memory from the face of the Earth.

The topic for today was risk (as opposed to Risk, which is a board game).  It occurred to me, looking at this topic, that in trying to wipe out a ton of debt in a very short amount of time, there is more than a little risk involved.

The biggest element of risk to me seems to be that, in putting extra money toward debt, should something unforeseen happen, that money can't be reclaimed, at least not without a home equity loan or line of credit (which of course just deepens the debt and is, therefore, antithetical to what we're trying to do).  In lieu of bolstering our Rainy Day savings (about $2,400 right now), we're throwing every available cent toward these debts.  As of the first of the year, we're even suspending our IRA contributions for a couple of years.  Our IRAs right now total a little over $40,000, so we're not in a bad place retirement wise, but we could be putting a collective $10,000 extra toward that amount every year were we not retasking it to pay down the debt.  On top of all that, there's also the risk that one of us could lose a job, decreasing our income by a substantial amount.

So what do we do about risk?  We plan, we prepare, and we screw our courage to the sticking place.  Yes, the Rainy Day savings we have is small, but should the unforeseen happen, it is enough to tide us over, especially considering that all it takes is the click of a mouse button to stop sending extra money toward our mortgage and put it instead toward whatever emergency may have befallen us.

Yes, every financial pundit would call us insane for suspending our IRA contributions, but the amount we already have will continue to grow, and IRAs are good for "traditional retirement", the sort of retirement which goes hand-in-hand with the thought process that you'll be paying on your mortgage until you die, or close to it.  Once we pay off our debt, my wife and I plan on working toward an early retirement -- not at 55 or even 50, but earlier, and hopefully much.  Something like that is much easier to accomplish if you reduce your yearly expenditures by several thousand dollars because you no longer have debt.

As for the possibility of losing a job, much like a good investment portfolio, our employment is diversified, with the two of us working about five different jobs between the two of us, and from several different employers.  Should one of us lose one job, we still have several others to help fill the void.  Is it possible we'll lose two or three jobs between us?  Of course it is, just as it's possible a wayward asteroid no one has yet caught on their telescopes will plummet through the atmosphere and annihilate our home and us with it.

Risk is all about degrees and tolerance.  Everything is risky to some degree.  Driving a car to work is risky.  Putting money in the stock market is risky.  Falling in love is risky.  Yet people do these things and things far, far riskier every day.  What is important is going in with your eyes open, fully knowing what might happen, and accepting of those possible consequences.

What's life without a little risk?

The Journey of a Hundred Thousand Dollars Begins with a Single Step...

$101,622.18.  That's how much my wife and I still owe on our mortgage.

$22,465.21.  That's how much we owe on our student loans.

$124,087.39.  That's how much debt we have, and that's exactly how much debt we're planning to pay off in the next forty months, by April of the year 2013.

We have been paying on these loans for a long time ... or at least what to us feels like a long time.  The student loan we've been paying on since 2000, when we got married.  The mortgage we've had since June 2004.  To a lot of people, this may not seem like a long time, but for us, it's been long.  Too long.

Why?  We've come to the realization that every month we are in debt to someone else is another month of our life which isn't ours.  Every dollar we owe to someone else is another minute, another hour, another day we have to work just to pay back to them what we owe.  Debt isn't the way to the life of luxury, it's a prison.

And my wife and I are planning to escape.

What makes us think we can do this?  When we got our home in 2004, we didn't have the money for a 20% down payment, so we did what a lot of folks (well, the smarter folks in situations like ours, at least) were doing -- we got a primary mortgage for 80% of the purchase price of the home, a second mortgage for 15%, then  made a 5% down payment.  Over the years, we'd occasionally throw a little extra at the second mortgage, but no amount of great importance.

Starting in mid December of 2008, we decided we'd had enough.  By that time, we'd reduced the loan to around $11,500, and by October of 2009, we had paid it off in full.  We also had bought a car in December of 2008, and financed just over $5,000 on it.  We paid a little bit on it in January, enough to defer payments for several months, then paid it off just a few weeks after the second mortgage.

We've paid off loans in the past and in short amounts of time.  We've done it before; we know we can do it again.

For some, this might seem impossible.  For others, the amounts we're talking about might be spare change.

Here's where my wife and I stand:

My wife is a teacher, making just over $40,000 a year.  I am ... well, I'm what I call a "miscellaneous".  I have several jobs (elementary school librarian, church music director, private piano teacher, composer), and this year I should make about $40,000 a year collectively from them.  Just over $80,000 a year (before taxes), and in 40 months, we're talking about not only paying for our various needs and wants, but also paying off almost $125,000 in debt?

Yes.  Yes we are.

And my wife and I are going to bring you along on the journey with us.  We're going to tell you what we're doing, how we're doing it, and what we could or should be doing differently.  We're going to share our triumphs with you, and hope you don't laugh too hard when we fall flat on our faces.

Most importantly, we hope to show you that living debt free is the way go, that those who think it can't be done are wrong, and that those who tell us it's stupid to pay off a mortgage early are inadvertently keeping us in a proverbial "debtors prison" from which so many of us think it's impossible to escape.

Well, dear reader, it is possible, it can be done, and we are going to do it