Friday, January 4, 2008

Debt free say wha?

So I'm reading this book, Debt Free by 30. No joke. I'd really like to believe that I can be free and clear of debt in a scant 8 years, but that is an awful long time from now.

How, you ask, does my level of indebtedness have anything to do with being a good human? Well, as I not-so-subtly alluded to before, if, as my Papa would say, I don't have 2 pennies to rub together, there's no way I can make good on all my grand promises and ambitions of good humanity. I can get so bogged down with fear that I'll never pay off my loans that I can't even take action to help myself, let alone anyone else.

(That was some sloppy sentence structure right there. Do me a favor and read it as if I were speaking to you and all those awkward word choices and comma placements will just seem like the charming idiosyncrasies of our conversation.)

You should know that I'm not a personal finance expert by any means. Take nothing I say as sound advice, except for the part when I say that you should ask someone else. I put bar tabs on my credit card in college. Drunken calzone binges, too. I shackled myself to a 6.75% fixed student loan interest rate to save $150 off my monthly payment but added thousands over the long run. I'm dumb as hell.

I'm about 1/3 through Debt Free by 30. Right now I'm lurching through a section on investing that I'm not prepared to handle yet. But the first section, that was really helpful. Would you believe that in all my "Just put these car bombs on my tab!" financial experience, I never really thought about looking at what I spend my money on? Shocking.

This book gives a thorough list of all possible expenses, including fixed bills like rent and cell phone to flexible spending like groceries, going out, and cable. All I had to do was open up my checking and credit statements for the past 3 months and add up what went where. I used the calculator on my phone for the hard stuff.

Now here's why I'm so evangelical about it: because of all this financial evaluation, I found a way to save over $300/month without significantly changing my lifestyle. That means no extra roommate, no getting rid of my cell, no passing up an invitation to go out. With an extra $300, I can eliminate the credit card debt in like a second, make a bigger dent in the student loans, and support causes I care about. I do love winning, especially if that means that Bank of America loses.

Maybe this won't help you. Probably because you're not a dumbass like me and you already keep pretty good track of your spending. In that case, do a blog search of "personal finance" and good luck to you with the results. There are some pretty smart people out there who aren't making nearly enough money on AdSense.

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Geoff said...

Don't feel bad. I don't think you're the only one who doesn't keep track of their money.

Hops said...

Thanks Geoff! That's great to hear. I'm starting to feel like I'm putting the cart before the horse with all this money talk while I'm still on the job hunt. Whatevs!

Michael T said...

I felt like you were talking directly to me with your parenthetic digression on sentence structure! Then I felt like you were talking directly about me with your description of bar tabs on credit cards! (Reference rounding the tab out to $100 even when the drinks only came to $60...) I have a great solution--come teach English in Korea! My plan is Debt-Free By 23. But I don't expect that to work for everyone, since I'm only starting with 10 thou of debt. (That's me sticking my tongue out at you, verbally.) Don't worry, your bf can come too--wait, you both got college degrees, right? Then yeah, come on over.

BTW, I just deleted this comment and reposted it because of a spelling mistake. My bad.

Rommel said...

I must borrow this magical book of potions... I mean solutions.

Hops said...

Michael, I hope everyone gets the feeling that I'm talking directly to them. Re: Korea, I think I missed the boat (plane, opportunity, etc.) on that one. How many years would we have to stay there to pay off 50k?

Rommel, I've got a UPS package with your name on it.

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Allan Morais said...

To become debt free is what I really want to achieve before I reach the age of 40. It’s something that’s hard to make, but I believe that it’s possible. :) Curb spending is the key! I’ll just have to budget my funds well and spend it in the most sensible way. said...

I have to agree with Geoff. You can't help but lose track sometimes. Even some experts failed to manage their finances too. I think the lesson here is that you should change your lifestyle when you're in debt. If you have the chance, don't waste it. It's never to late to pull yourself back up. Well, it's been five years. I hope that you've applied what you have learned from the book.