The Frugal Prof

Its Not about the Money. Its about taking charge

My Last Car Loan Payment- Life after debt

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Monthyl car payment

Financial Freedom

 

Exciting news:  no more monthly car payments! 

That’s right my car loan has been paid off. And its time to start enjoying life after debt.

It’s time to slay the dragon: my last monthly car payment is here!

Next month  I will have no monthly car payment.  No bill.  Nada.  I am Debt free. That sounds good.  I feel so much lighter.

 

Free travel

 

For most Consumers, a Monthly Car Payment is a huge expense. At about $750 a month, transportation ranks just after housing as the largest expense for the average American household, according to the Bureau of Labor Statistics.

For married couples with children, it makes up 17.3% of their monthly expenditures, while housing comprises 31.8%  The average car payment is a serious impediment to creating wealth.

In financial terms, there is a double loss involved in an auto loan:

We borrow money on a car loan (and pay interest) on an asset that is guaranteed to lose value. Auto loans are quick sand for the middle class.

Now that my car payments are gone, It’s time for me to crank up my savings.  It will feel great to have my money working for me instead of going towards a car loan.  One small step towards financial freedom.

 

 

 

Once I cut out some of the fluff from my budget, the math just began to work in my favor.  I began to feel like I was making serious progress in paying down debt, instead of fighting gravity.

But, it was a lot of work.

  • I canceled my storage locker,
  • changed my gym membership,
  • I negotiated discounts with the companies I wanted to keep.

In addition, I used Ebates and got cash back and used discount codes on my online shopping.  Finally, I got 15% off at Amazon through their Subscribe and Save Program.

I feel good and now its time to focus on investing.  Now, comes the part where I keep and invest more of my income.  Save much more, keep investing, and cut up some credit cards.

 

Relevant Articles:

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Value Investing

Debit Cards vs Credit Cards:

I now have two debit cards and I like using them.  There is a psychological game we play when using credit cards.   It’s like we get to delay the bill for a month.  It doesn’t feel like we’re spending money.  Yes, they have done psychological studies on this.  I’m going to see if I spend less with my debit cards over the next few months.  When I use them, I know the money will be gone immediately.  So, I think I should spend less.

 

Battling Wants vs. Needs:

I’m still battling the wants vs needs issue.  I bought some dumb stuff last year.   And I’m really accustomed to buying whatever I want, whenever I want.

Here’s an example: – I’m trying to get back in shape and I’ve been preparing more healthy meals.   So, I’ve been buying cooking equipment that I want.  I rationalize that I need these items like measuring spoons, flour, bowls, pans, a rice cooker, etc…  But, sometimes I buy things I need and they sit on the counter!  I have to admit that I still have not used the rice cooker.  UGH.

I’m thinking of rewarding myself with a very inexpensive drone (less than $40) to celebrate my last car payment.  What do you think?

Feel free to share your thoughts and comments on your debt free journey.

 

 

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Getting Results on the Path to Life after Debt

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Debt Success

Getting Results on the Path to Debt Free

 

The steps you need to take to become debt free are pretty simple:

 

1.  Get organized:   Its nearly impossible to stay in debt if you’re organized.

For most people this means opening the credit card statements that are in a box or drawer somewhere.   By getting organized, you will be able to Take Charge of your personal finances.  You wont need a personal loan or any debt consolidation.

Right now, I’m reviewing my year end credit card statements and I see so many charges that I’ve cut out.  And I feel great about all the money I am no longer wasting.  But part of me is calculating how many thousands of dollars that I lost simply by not paying attention. 

Read more about the dumb stuff I bought last year.

 

 

  • Disclosure: My aim is to recommend products that will truly benefit you.    I believe in transparency and want to disclose that I’ve included certain products and links to those products on this page that I will earn an affiliate commission for any purchases you make.

 

2.  Create a Budget:

It doesn’t have to be fancy.  On one side is all the income you have coming in.  And on the other side is ALL the expenses you have going out.  Every dime!  Which means you must open the credit card statements and really understand where your money has been going.  One of the advantages of this exercise is that it allows you to find your areas of wasteful spending.

 

Make sure you’re getting discounts and cash back:  I use Ebates and they give me cash back for nearly all of my purchases.  Ebates gets a commission from stores you shop at and they share the commission with you.  Average cash back is about 7%, which is great.  Right now, they are offering a Free $10 Gift Card when you join and spend $25.  More about Ebates Here.

 

 

 

3. Eliminate wasteful spending.

I was wasting nearly $100 per month on a storage locker.  It made me so angry that I eventually began this journey and started writing this personal finance blog.

“A Part of all you earn is yours to Keep.” – Richest Man in Babylon.

Realize when you go through your bills that every wasteful thing that you cut out is earned money.  Don’t dwell on the money that you’ve wasted in the past.  Focus on your debt free future.

I began to explore our current consumer culture and why we buy what we buy.  This helped me understand why I was spending so much money shopping.  More on our Consumer Culture.

 

Relevant Articles:

45 Ways to Increase your Income

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4. Negotiate Discounts:

For those services and memberships that you like but would like to pay less for, you need to contact the merchants and ask for a discount.  Yes, you can do it.  And yes they will give you discounts on your memberships:  Cell phone carrier, cable company, Satellite radio etc…

I have written a whole post about How to negotiate Discounts.

 

Value Investing

 

 

5.  Create an Emergency Fund: 

Unfortunately, life is full of unplanned emergencies.  That is why you need to set aside an emergency fund of at least $1,000 to start.  I’ve written an article on why an emergency fund is so important,  An Emergency fund is an umbrella for your life.

 

6. Increase your Income:  Everyone wants to increase their income.   When I got really motivated to pay down my debt, I wrote financial articles for a financial blog and created this blog.  You may want to find a side hustle or side income.  I’ve written a number of posts about the best ways to increase income.  45 Ways to Boost your Income is one example.

 

7. Stay Motivated:  I found reading the book, The Total Money Makeover by Dave Ramsey to be incredibly helpful.  Yes, it lays out the framework he used to be become debt free.  But, the big benefit of the book is it gets you fired up to get out of debt.  It is very motivational.  And that is really helpful on the debt free journey.   Read the Amazon reviews here.

 

The path to life after debt:

The only way to assess your current situation is to take the time to understand where your money is going.

I compiled a budget which allowed me to tell my money what to do instead of wondering where it all goes.

Read 7 Helpful Tips to Creating a Budget here.

It was time to be debt free. Here are some of the action steps I took:  My advice: Take Action!

  • I closed my storage locker.
  •  I switched to a less expensive  gym.
  • I negotiated a discount on my XM Satellite radio.
  • I made some extra money when I sold a bunch of my stuff on Ebay.
  • I reviewed my credit card purchases.
  • And I started taking control of my money

 

That was my debt reduction plan.  And you can do it too!  I cut back on every purchase I wasn’t getting maximum value from.  I cut out dumb spending.  And each month I was able to save and invest much more of my money.  It was time to take control of my finances.  That’s the process of how to become debt free.

 

 

Related articles you may enjoy:

How it all began.  What made me say enough.

44 Ways to Create Extra Income

Getting results on your debt free journey

 

Debt Success:  My bank account balance was growing steadily into April.  And then on April 15th, my bank account went flat.  All gone.  I had to pay my taxes and it was pretty discouraging.

But here’s the thing.  I wasn’t discouraged because I knew the process of becoming financially free was working.  My bank account showed little in the way of results.  Yet, I knew that the process was working and I would accumulate more money in my bank account over the next few months.

 

 




 

This will set me on the path to becoming debt free and retire early.  But, there is a lot of work to do.

My setback was caused by taxes.  But everyone has financial setbacks while cutting back and reducing debt:

Setbacks are part of life.  That’s why you need a buffer in your budget and an emergency fund.

Focus on the process to become debt free.  Once you’ve begun to make these changes, the process will create results.  You’ll begin to see results and will be able to visualize the day when you are debt free or able to retire early.

 

Free travel

 

But in the beginning, focus on the process of debt reduction.  That’s how you will get results.

And Keep Going!

 

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5 Tips to Avoid a Ripoff

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I think that you’ll agree with me that even financially smart people can make bad financial decisions.  What I am about to share is a bit embarrassing, but in this blog post I will give you the 5 signs that you’re about to get ripped off.

Here are the 5 signs of trouble that will prevent you from a ripoff.

 

rip off

5 Signs You’re about to get ripped off:

1. Procrastinate  until something becomes a mini crisis.

I didn’t want to get glasses.  Because eyeglasses are for old people and needing glasses would mean I am getting older.

So, I procrastinated doing the sensible thing.  I have some inexpensive cheap glasses, but have known for a few months I needed real prescription eyeglasses.  I waited until it was a mini crisis.

So, instead of researching glasses online or asking around, I scheduled a last minute appointment with a local optometrist and an eye exam.  I wanted to see a reputable doctor to check out my eyes.  And I was planning to buy glasses via Costco later on.

 

 

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2.  Don’t research before you head out.   It was a mini crisis, so I made an appointment for the same day.  The appointment went well and I wanted to support the Doctor by purchasing glasses from her boutique.  I knew nothing about the pricing.  I was a sitting duck because I hadn’t researched the online costs.

Value Investing

3. Listen to a sales person.   I’ve never worn glasses, so I was astonished at how much they charged for the frames.  And I kept asking the guy,

Are eyeglasses really this expensive?  Don’t you have anything less expensive?

When you go to the upscale boutique, you’re gonna pay more.  I was in a hurry and my goal was to check this off my list.  “Got glasses.”



 

4.  Go to an upscale boutique.  Disaster.  I was lazy and in a hurry.  So, I got sold 2 pairs of eyeglasses that could pay a month’s rent in most of the country.  They were much more expensive had I bought them online.  More stupid tax.  And lazy tax.

 

I always get cash back because I use Ebates and they give me cash back for nearly all of my purchases.  Ebates gets a commission from stores you shop at and they share the commission with you.  Average cash back is about 7%, which is great.  Right now, they are offering a Free $10 Gift Card when you join and spend $25.  More about Ebates Here.

 

Related Posts:

How I paid off $17K in Debt

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Do I Regret the $600 COncert Tickets?

 

5.  Stop thinking.  I’m not sure where my brain went during this fiasco.  It was at the end of a long day and I really wanted to cross “get glasses” off my list.  After heading home and feeling like I had purchased two versions of the Brooklyn Bridge of glasses, I started regretting this disaster Big Time.

 

Trying to Minimize the damage:

I went online and did some research, which I should have done before making the purchase.   I quickly called the boutique and told them I was willing to pay a little more than Costco, but not their ridiculous markup.  They said they would get back to me.

 

What happened?  I spoke to the manager and I basically said I appreciated the optometrist appointment, but couldn’t justify paying so much more than Costco.

She managed to find room in their pricing and reduced the bill by about 60%.  This was acceptable to me because I liked the frames I purchased and I didn’t want to go to Costco and spend 2 more hours shopping for new glasses.

Tips to Negotiating here.

I reduced the damage, but I still got ripped off because I ignored these 5 signs.

 

Conclusion:  I was really mad about this.  I texted my cousin to check how much he paid for his glasses at Costco. I should have done this before being in the situation to make a purchase.  I was dumb and in a hurry.

I made this happen.

  • I procrastinated.
  • Then, I was in such a  hurry that I did no research.
  •  I listened to a sales person.
  • I went to an upscale boutique when I didn’t need to.
  •  And I simply stopped thinking.

Luckily, my brain came back and I fixed this disaster.  But, I created the disaster.

Learn from my mistake.

 

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Do I Regret the $600 Adele Concert? 

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Since starting this blog about personal finance and becoming debt free, I’ve spent countless hours looking to reduce my spending.  So, you might be surprised that I spent so much on a concert.

Do I regret it?

adele concert

Adele in Concert

The backstory: I had a family reunion in New York.  Using credit card miles, my room was free (savings of nearly $500).

One of my best friends wanted to go see the Adele concert. And I wanted to see her too. But, we needed tickets and the concert was only a few days away.

We spent a lot of time on stubhub looking for reasonably priced tickets. There were none.

About three days before the concert, the insider hold tickets became available. These are usually reserved for industry insiders: pr people, record executives etc…

The tickets were expensive, but in a great location: front row for about half the concert!  (see for yourself in this video!)

 

Adele: Live in New York at Madison Square Garden

 

Budget: Choosing Where my money Goes

Getting out of debt and sticking to a budget can be hard.  Inevitably, one will be tempted with something you really want.

The benefit of doing a budget is you can know exactly how you’re spending your money.

Once I took control of my money, I was able to choose what was important to me. And most of the time, experiences are better investments than stuff.  (See my post on, Why we buy What we buy here.)

 

Free travel

 

Experiences vs. Stuff:

I made a lot of progress in cutting back on spending and living a frugal life.  However, when I had the chance to see Adele live in New York with one of my best friends- it was an experience I could not pass up. And it was totally worth it.

We wound up spending a lot on the tickets, but we had the best seats in the house.  This photo was taken by me.  We were basically front row for about half of the concert.  It was amazing!

adele in concert

With that said, I am not sure I would want to spend that much on concert tickets again any time soon. Here are some great tips to help you save on your next concert.

6 Tips for  spending Less on Concert Tickets:

1. Sit near the back

You won’t have the best view, but you’ll still hear the music. In general, a seat farther back at a concert costs less than sitting in the first row. Take a look at the price for nosebleed seats before you dish out more for the front section.

 

2.  Get cash back on your tickets.

I use Ebates and they do give cash back for concerts and tickets.  Ebates gets a commission from stores you shop at and they share the commission with you.  Average cash back is about 7%, which is great.  Right now, they are offering a $10 Gift Card when you join and spend $25.  More about Ebates Here.

3. Buy from a reseller

Check out resale tickets from verified secondary sellers and ticket resale brokers — which can be offered at a better price and with a guarantee, according to Gary Adler, executive director and counsel of the National Association of Ticket Brokers (NATB), a nonprofit trade association and a member of the Council of Better Business Bureau’s National Partner program.

 

4. Wait until the last minute

We got lucky with the Adele tickets because they became available a few days before the show.

While concert ticket prices are unpredictable, in some cases prices could drop as the performance approaches, says Chris Leyden, communications manager at SeatGeek.

 

5. Smaller Cities

Ticket prices can vary depending on the location of the concert — even for the same artist and the same tour, Leyden says. Compare prices at concert venues to find lower prices.

“Check out the nearby shows,” Leyden says. “You don’t have to take a massive trip where you fly from Miami to St. Louis. If you live in New York, you can do a quick weekend trip to Philly or a weekend trip to Boston.”

6. Sit solo

When searching resale options, you’ll generally see better deals on single tickets, says Jessica Erskine, a spokesperson for StubHub.

“Often someone might buy tickets in threes or fours and have one friend who can’t make it, and they’re trying to sell that one ticket,” Erskine says. “It’s so hard to find someone who’s willing to go to a show as a single guest that often you can find single-price tickets at lower prices.”

 

7. Concerts at the Fair

OK, maybe Adele still isn’t in your budget. If you’re not picky about who you want to see live, check the fair circuit. Some county fairs grant free admission to a concert along with paid entry to the fair, which usually costs less than a concert ticket.

This was an Amazing experience for me. Plus, I shared it with one of my favorite people in the world.

We posted pictures and video on social media of Adele singing Hello Live in front of us.  It was an Amazing Night! It was an incredible experience.

Am I telling you to spend $600 on concert tickets?  No.

I learned that an expensive experience can be much better than spending money mindlessly.

 

What I learned is that I want to spend my money consciously.  I want my spending to bring memories that last.  And that paying off debt makes me feel great.  So, unless there is something truly special to spend my hard-earned money on, I’m keeping my money invested so I can retire early.

Share your thoughts in the comments!

 

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