Oops

I accidentally paid my CC bill twice. This is both good and bad. It's bad because I'm out some money that I had set aside for other bills. It's good because I now have a total CC balance of just $4,000. I guess I can live with it.

Premiums that turned out to be completely worth it

My $20 water bottle
It has transformed the way I drink. By being constantly around, it has helped me to reduce my intake of coke/soda to 0 during lunch. It is expensive and nice which makes me remember it. It is also practical in size which allows me go through entire meals without needing to drink something else. Would a cheaper Nalgene bottle have sufficed? Maybe. But I've had those in the past and they don't fit in my car's cup holder so it's debatable.

My $25,000 car
The additional features that raised the price of my car from $20,000 are what makes my drive to work that much more pleasant. It might be imagined but hey, that's the point! It's okay to care about the details sometimes. Also, the fact that it's so good at not breaking helps a lot with the overall cost of ownership.

My $200 sunglasses
I lost these earlier this summer and my $50 replacements although adequate, don't make me as happy. The $200 sunglasses were around through a lot and used on a daily basis for years. Compare that with the crappy $10/$20 sunglasses that I used to buy before that and which I used to lose after a day or 2, they were an absolute bargain.

Vacations
I remember a lot about all my vacations. I don't remember a lot about each of my $17 books or the $45 meals or even the $199 electronics that I used to buy regularly. Vacations produce memories. Memories are priceless. My original iPod although still physically cool, is being used nowadays as a paperweight. This is a far better fate than my old broken DVD player or Playstation. The absolute worst vacation I've even been on is still somewhat memorable and funny in retrospect. Lasting impact should not be underrated.

My iPhone
It has completely changed the way I live. I am as connected as I want to be, I have access to all of my photos and music which is useful in a variety of rather common situations, and on top of this, I have access to a variety of applications that make my day that much smoother.

I guess the point I'm trying to make is that there are things in life worth buying. What those things are depends largely on what you value. Good luck figuring that out responsibly! :)

Lifestyle Changes

Lifestyle Changes

Let's face it, your lifestyle largely dictates where your disposable income goes. If your overhead is high and your leftover (disposable) income is low, your lifestyle needs to reflect this in order to work. Here are some of the lifestyle changes that I have implemented. Note that this is more of a peek into how I do this and not a guideline for how you might do this.

1. I stopped going to amazon.com when I became bored.
2. I developed a repulsion to stores in general (Target, Costco, Best Buy).
3. I curbed my drink buying when I eat out.
4. More efficient route planning on car trips.
5. Cancelled cable TV.
6. Cash for food.

- Avoiding amazon.com took about 1 microgram of willpower.
- Developing a repulsion to stores was a slow journey and is now, an incredibly awesome skill to own. When I do go to these stores, I only pick up exactly that which I came for!
- I developed a taste for water and now, I don't buy soda or beer when I eat out. I do drink on social occasions when the setting calls for it but that's more a social choice.
- If I plan on going to different locations in 1 day, I think about my course and plan it. This has saved me quite a bit of time as you would expect.
- Don't miss Cable TV at all.
- $100/week cash budget keeps me from going overboard. It's a lot of money but it could be a lot worst if I didn't use this method.

The bottom line is, I found some holes and plugged them with minor hacks. They work because they're sustainable. That counts as a victory.

June 2009 Debt Report

Nice and steady. Next month, I plan on paying down another $900. In August, another $2,000.

I'll be sending that $900 toward the credit card company sometime next week.

Action Steps 1, 2, 3, 4 and 5

So, how do you go from crazy and wild college aged spending phenom to reforming optimist.

1. Awareness

Before I started down this path to my own little economic recovery, I wasn't aware that I was in my own little economic crisis. It's silly but if you're reading a personal finance blog, you probably know exactly what I'm talking about (unawareness) and furthermore, you probably understand that it's not really silly of me, but just silly because you now know better. After all, they don't teach you this stuff in school and depending on your parents, you might've been completely sheltered from the household finances.

Anyways, awareness came to me in several stages that can be briefly summed up in the following sentence. I visited an older friend's house and thought it was awesome and wanted to have a house just like his and several months later, discovered the personal finance blogosphere where I promptly learned how badly I was misbehaving.

2. Commitment

It's one thing to want something, it's another ball game altogether to actual make it happen. This is true of most things. In this case, after months of blogging and reading, I knew enough to get out of debt, but not enough to stay out of debt. I knew enough about what to do, but not enough to actually do it the right way. It takes resolve to make things happen correctly. For some people, this comes easily, for others, it can be a struggle.

3. Planning

Having a good plan is basically the easiest way to achieve your goals. This is especially true for something that is as black and white as personal finance. Step 1, reign in spending. Step 2, reduce expenses... It's not rocket science. It is however, important to be thorough. It's not enough to finally be on top of your monthly expenses. You have to also consider your annual expenses, unexpected expenses and past expenses which you are still paying for but don't really think about.

4. Execution

Do it. If you impulse spend, stop. If you go out too much, go out less. This can't be more straightforward once you have a plan. If it's flaky, your plan needs fine tuning.

5. Persistence

Stick to it until x time passes. Having milestones helps. Anyways, if you continue at it for some time, 2 things should happen. Your financial situation will improve to the point where you are finally happy about it. Your new pattern will also eventually stick. Only when you are in your groove for several months and dare I say it, years, can you say with any certainty that you are succeeding.

I think I am at step 5. I have gone through a lot of growing pains, I have modified my budget and spending algorithms so many times it's mind blowing. I have made consistent progress for a relatively respectable amount of time for me. I'm feeling very good about it and this kind of positive self-reflection is important.

There there is 1 fundamental shift in my philosophy about money, it is that I finally am treating it like the finite source that it is, with care and restraint.

Slow and Boring

Debt reduction is kind of boring when you think about it. I get paid on a monthly basis so a lot of the action happens once a month. It's awesome when it happens but it's also kind of a drag when you are on week 3 and nothing has changed.

I suppose the most painful week will be the last one before my debt is all done and over with. That week I suspect will be simultaneously annoying and thrilling. I can't wait. :)

Renewed goals

I am in my late 20s. I have been at this for the past several years making a wage >$50,000/year and although I am so sure of myself and feel relatively knowledgeable about money matters, I have yet to achieve what I would consider to be equilibrium.

Here is what I want to achieve in the next couple of years to help me get to this magical state.

2009
1) Pay off all consumer debt
2) Max out ROTH IRA for 2009

2010
1) Build up emergency fund to $15,000
2) Max out ROTH IRA for 2010
3) Open and contribute $5,000 into a SEP IRA

2011
1) Build up emergency fund to $30,000
2) Max out ROTH IRA for 2011
3) Open and contribute equivalent max of 401K to SEP IRA

These are what I consider to be realistic goals. They are realistic if a few things continue to be true.

a. I don't lose my job.
b. I continue to work as a contractor making a similar or better salary.
c. I do not incur any new debts.

There is nothing groundbreaking about this. But it's still somehow very exciting. Anyways, that's the story.