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