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:

45 Ways to Increase your Income

9 Best Ways to Save $7K This Year

11 Legitimate Survey Sites for 2018

 




 

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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Frugal Living Tips: Oprah’s magazine is not one of my favorite things

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Frugal living tips:  O magazine is not one of my favorite things.

 

debt reitre invest

Financial Freedom

I don’t tell people how to live or spend their money.  I have chosen to scale back, do a budget analysis, and find frugal living tips in order to retire early.

In the process of making theses changes, I have become much more aware of our consumer culture.  More on consumer culture.

That is why I was so disappointed when I picked up Oprah’s magazine.  And let me say, I am a fan of her positive attitude.  I like her show, Super Soul Sundays as well as Oprah’s Masterclass.  But, her magazine is not going to make my list of favorite things.

 

 

Related Articles:

How I used Ebay for quick cash

The Best Personal finance Books

How I paid off $17K this year

 

O magazine:  I’ve enjoyed reading the magazine in the past and have gotten interesting book ideas and read some interesting articles. However, since I’ve started on this debt reduction journey, I’ve become much more aware of consumerism in the culture.  And honestly, Oprah’s Magazine was a bit disappointing on that front.

 

Consumer culture:

What struck me is how much the magazine glorified spending.  But I’m talking about the content of the magazine.  The content of the magazine was all about spending as a way to self-improvement.  And that’s not a message I subscribe to.  I believe your best life is life after debt.

 

 

Products as content: One page in the magazine reviewed makeup and had 63 products on it.  Yes, I counted. Again, this is not an ad I’m describing.  This is a page in a magazine that people pay for.  You’re paying Oprah to promote her favorite things to you.  And the articles written by guest authors weren’t actually articles.  They were “my favorite things” type of descriptions of their favorite products, including this $45 Vanilla Cake.

 

I just stopped reading the magazine.  I’m not a big cake person.  But, $45 seems like a ridiculous amount to spend on a vanilla cake.  I’m not talking about a wedding cake or birthday cake for your kids.  I don’t know who the target market for this magazine is, but the last thing Americans need is $45 vanilla cake.  Seriously.

 

Spending as the answer to all of our problems: 

Oprah is a mainstream personality and I was more than disappointed by her tone deafness.  Americans have $2T worth of debt. (see above)  Many people struggle with student debt and credit card debt.   And many (like the good people who read this blog) are working  to pay down debt and lead happier lives by being more thoughtful in their spending.

 

Debt free is my favorite thing:

This notion that once I can afford Oprah’s favorite things, my life be better.  My life is better.  I paid off $17K in debt this year and paid off my car.  There’s nothing better than that.  Debt free is my favorite thing right now.

 

What do you think?  Please share your comments.

 

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It’s Not About the Money.  It’s About Taking Charge and Becoming Debt Free

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How to be debt Free

Its about taking charge of my money

It’s Not About the Money.  It’s about taking charge and becoming Debt Free.

Here are the steps I used to Become Debt Free:

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 unopened in a box or drawer somewhere.

You can no longer hide in denial about the credit card debt or student debt that has accumulated.  By getting organized, you will be able to Take Charge of your personal finances.  You wont need a personal loan or any debt relief.

Right now, I’m reviewing my year end credit card statements from last year and I see so many charges that I have been able to cut out.  And I feel great about all the money I am saving.   Read more about the dumb stuff I bought last year.

 

 

 

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.

 

Relevant Articles:

The Best Personal Finance Books

Survey Sites That Actually Pay

It’s not about the Money.  It’s about Taking Charge.

 

3. Pay Down Debt:

The debt snowball method is a great  debt reduction strategy where you pay off debts in order of smallest to largest, gaining momentum as each balance is paid off. When the smallest debt is paid in full, you roll the money you were paying on that debt into the next smallest balance.

It looks something like this:
Step 1: List your debts from smallest to largest.
Step 2: Make minimum payments on all your debts except the smallest.
Step 3: Pay as much as possible on your smallest debt.
Step 4: Repeat until each debt is paid in full.

 

4. Eliminate wasteful spending

The most obvious wasteful spending for me was a storage locker I was paying nearly $100 a month for.  It made me so angry that I eventually began this journey and started writing this personal finance blog.

Use the old maxim, A Penny Saved is a Penny Earned.” and realize when you go through your bills that every wasteful thing that you have spent money on in the past that you don’t really enjoy, is earned money.

Don’t dwell on the money that you have wasted in the past.  Focus on your debt free future.  I was paying for auto renew memberships that I didn’t even remember.  Never again.

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 Consumer Culture here.

 

5. 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.

 

6.  Create an Emergency Fund: 

It’s easy to fall into debt when unplanned emergencies happen.  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 have written an article on why and emergency fund is so important,  An Emergency fund is an umbrella for your life.

 

7. Increase your Income: 

For most people it’s time to increase your income.  When I got really motivated to pay down my debt, I wrote financial articles for a financial blog and created this blog.  Want to start a blog?  Read 7 Rules for a Profitable Blog here.

Side Hustles:

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.

11 Best Sources of Side Income for 2018

Cash surveys

 

8. 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.   More about the Total Money Makeover here.

 

Ray Krok Success Quote

 

9.  Keep Making Progress:

I was amazed at how much money gets through the cracks.  In reviewing my credit card bills, I realized I was paying for all of these items that gave me no value.

  • multiple anti-virus recurring charges,
  • membership to a sporting goods VIP club I didn’t remember,
  • delivery charges every month
  • an expensive storage unit
  • bank fees

These are all credit card charges that gave me no value, but I was paying for.  And I was paying because I was too busy to pay attention.

But, this stops today.  I’m taking control of my money.

When I canceled the VIP club the woman said, “Oh we’re sorry we charged you for our VIP club when you haven’t made a purchase in 3 years.”  Yeah Right.

Here’s the truth:

“Were sorry to see you go because we make so much money off people too busy to pay attention to their credit card bills.”

 

 

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

 

Conclusion:

Today I realize it’s not about the money.  It’s about the control.  It’s about knowing that every dollar I make is mine.  No waste. No exceptions.  Nothing lost.

“A part of all I earn is mine to keep.” – The Richest Man in Babylon

Every dollar belongs to me and if I spend it, it’s on something that really adds value to my life.  And that principle is important whether you make $50,000 a year or $500,000 a year.

So, I’ll keep going.

I’m taking control of my money.

 

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Designer clothes and living in debt

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debt reitre invest

Financial Freedom

 

Lets talk about designer clothes and living in debt. 

Right now, I’m focused on debt reduction, investing, and retiring early. But that does not mean that I know nothing about luxury clothes, online shopping, and consumerism. 

Unfortunately, I know a lot.  Ive spent a lot on designer clothes and I am paying the price today.

Ralph Lauren is not my friend.  I’ve spent so much money on designer clothes over the years that I don’t even want to think about it.

But I need to think about it to figure out why I spent money the way I did and whether or not I’m going to miss it if I stop.

For me the question came down to this:

What’s really important? Becoming debt free or designer clothes?

Even though I own a lot of Ralph Lauren clothes, I rarely purchased it them at retail stores. I usually bought them at Outlet Stores.  Luxury at a discount.  What could be better?

And I spent a fair amount buying designer clothing online as well.  But, Who hasn’t?

Related post:  Why You Don’t need Lululemon to work out here.

 

 

Luckily, I discovered Ebates a few years ago. 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’re offering a Free $10 Gift Card when you join and spend $25.  More about Ebates Here.

 

Related Articles:

Use Ebay to Create Fast Cash

Why you dont need Lululemon to work out

Achieve Financial Freedom with these Books

 

Financial regret:  There is nothing I can do about the money I spent on designer clothes.  You live and learn.  Perhaps you can learn from my mistakes.

Right now I choose to focus my energy on debt reduction, investing, and retiring.

  • I was able to create a plan to pay off $17K in debt last year.  More on that here.
  • And that led to me paying off my car.  More on that here.

I can’t go back in time.  But, I can take control of my finances from this point forward.

 

 

Am I never going to buy another luxury item? No.  But, in order for me to shop at an online luxury retailer these days, I need to love it and it has to be worth the inflated price.

 

I’m sick of living in debt.  My job is to make myself wealthy.  Not make Ralph Lauren wealthy.

How Long Have You Been Waiting to Say, We are Debt Free?

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we are debt free

Financial Freedom

In this post, I share the embarrassing amount of time I have wasted contemplating becoming debt free.  And I show you the steps I took to create a life beyond debt.  I am sure we can all agree that when debt is not a priority, it can simply accumulate and eventually it becomes a problem that needs to be addressed.

It is far better to attack your credit card debt or consumer debt now and soon you’ll be able to say, “We’re Debt Free.”

It just occurred to me that I’ve been putting off creating a budget and getting my finances organized for more than a decade.  Yes, a decade. You can imagine if I was able to tackle these issues earlier, I would have saved thousands and thousands of dollars.

What was I thinking?  Basically, I’ll deal with it later.  And later never came.  Read about my journey in How It All Began.

 

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

we are debt free

 

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 unopened in a box or drawer somewhere.  You can no longer hide in denial about the credit card debt or student debt that has accumulated.  By getting organized, you will be able to Take Charge of your personal finances.  You wont need a personal loan or any debt relief.

Right now, I’m reviewing my year end credit card statements from last year and  I see so many charges that I’ve been able to cut out.  And I feel great about all the money I am not wasting.  But part of me is calculating how many thousands of dollars of money that just spilled out of my life simply by not paying attention.  Read more about the dumb stuff I bought last year.

 

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.

 

Relevant Articles:

44 Ways to Create Extra Income

Getting Results: How I Paid Off $17K

The Best Personal Finance Books

 

3. Eliminate wasteful spending.

The most obvious wasteful spending for me was a storage locker I was paying nearly $100 a month for.  It made me so angry that I eventually began this journey and started writing this personal finance blog.

Tips on how to start your own blog here.

“A Penny Saved is a Penny Earned.” – cut out every expense that is wasteful and you have earned money.  It’s really that simple.    Don’t dwell on the money that you have wasted in the past.  Focus on your debt free future.  I was paying for auto renew memberships that I didn’t even remember.  Never again.

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

 

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.

 

5.  Create an Emergency Fund: 

It’s easy to fall into debt when unplanned emergencies happen.  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 have written an article on why and emergency fund is so important,  An Emergency fund is an umbrella for your life.

 

Cash surveys

 

6. Increase your Income:  Depending on how much leverage you want to achieve or how much credit card debt and student loans you have, it may be time to increase your 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 have written a number of posts about the best ways to increase income.  45 Ways to Boost your Income is one example.

 

 

When did I realize things were bad?  I created a rule- do not open a credit card bill on Fridays.  Why? Because my credit card bills Always put me in a bad mood.  Maybe you can relate to this.  Was that a warning sign?  Yes.  Should I have taken it more seriously?  You bet.

But, I’m doing it now.  I’m making progress.  It feels really good to be debt free.  I wish I did it sooner.

 

In this post, I have outlined the steps necessary to begin the journey towards becoming debt free.  Get organized, create a budget, reduce frivolous spending, create an emergency fund, and increase your income.  As with all things, getting out of debt will take some time.  But, with these action steps, you will be on the way to one day being able to say, “We are Debt Free.”

 

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How It All began- Life After Debt

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What made me begin this debt-free Journey?

In one of my favorite books on personal finance, there is a quote that reads, “A part of all you earn is yours to keep.”  It is true.  It is wise.  But it only applies if you have a budget and decide to keep a part of what you earn.

Otherwise, all that you earn goes to consumer purchases, credit card debt, student loans, and new restaurants.   At some point, it becomes necessary to take back control of your money.  In this post and in this blog, there are lessons that I learned the hard way.  Learn from my mistakes and advice.

 

*Affiliate Disclosure: This post contains affiliate links.  Business partners may compensate me for inclusion on this blog, but I strive to only partner with quality businesses and the reader pays nothing.

 

Life after Debt:  How it all began

 

I had had Enough

It wasn’t a huge bill.  It was $162.  The storage place I had been using decided that I wasn’t paying Enough.  It wasn’t a big deal when I started renting my storage unit.  It was less than $100.  I believe it was $97.

And here I was staring at a letter from them explaining that $162 for a storage locker seemed fair to them now.

$162 for a storage locker?  Now, mind you I had never even visited my “stuff” at this place.  It just sat there.  And every month on my credit card bill I paid $97 because that’s the way things are.  What else could I do?  And this wasn’t nice stuff or expensive stuff.  It was yearbooks, photos, baseball cards.  The stuff you accumulate in a life of accumulating stuff.  I tried to negotiate, but they explained that they were more expensive than other storage places because they have air conditioning for my stuff.  My stuff got the first class treatment.  I felt even worse.

I admit I kinda snapped.

Not immediately.  But in November around Thanksgiving after listening to one too many Dave Ramsey podcasts, I just said no more.

No negotiating.  Not a lower rate.  Zero.  Zilch.  NADA.  I WAS DONE.

I wasn’t paying another dime to these folks.  It was lazy and stupid and wasteful.  My baseball card collection at best was worth $2,000.  So, a year in this place cost me $1,944.  No Way.  No more.  I took a bunch of garbage bags and cut everything down in half and threw it out.  And took 6 boxes home with me that night.  The next morning I cleaned out the last 6 boxes and ended my contract.

Savings: $1,944

Frugal tip:  when you show up with bags and take boxes home, they will negotiate.  More tips and strategies on negotiating discounts.

For me, it was way too late.  I was done.

 

 

It was amazing.  I felt so great.  My expenses were in my control.  Every penny that goes out on my credit card bill was under my control.  I wasn’t paying another dime unless it was something that was actually adding value to my life.  I started cutting back and creating a budget.

 

Related Posts:

How I paid off $17K in Debt

How to Create Fast Cash with Ebay

Do I Regret the $600 Concert Tickets?

 

I have a few extra boxes in my home from cleaning out the storage locker and will try to reduce and sell off these items on Ebay. Tips on how to create fast cash on Ebay here.

I’m on a bit of a minimalist kick right now anyway, so having fewer items in my life is fine for now.  Less clutter.  More space.  More financial freedom.

That’s what got me started. And from there I paid off $17K in debt in one year.

How did I do it?

 

So, here we go.  Thank you for being part of this journey

 

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