Apologies, Snowflaking, and Updates

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Yes, it’s been more than two months since my last post. I’m a bad blogger! But I see that people are still subscribed, and I get a lot of visits here these days, so I will try my best to add content from time to time. To balance the long wait in-between posts, I will ensure that every post is full of good information, and delve a bit less into my personal problems.  I’m not a full-time blogger, so I apologize that I cannot post every day, but if you’re looking for good information from those type of people, I have a lot of good links on my blogroll! I still hope to contribute good information to the community, though, and am thankful I have people that still email me and care about my progress to becoming debt free!

You may notice there is a new page at the top called “Snowflakes“. I have found several ways to make small amounts of money online with little effort. Combined, it puts about an extra $20 per month or so into my debt removal process. It’s not a lot, but for a few hours of time per month, it definitely helps the cause! None of these opportunities are scammy or evil, because I choose only things that I enjoy doing and have already received a check from, before I post it to that page. Right now there are 5 opportunities that can net you some extra snowflakes for your debt snowball, and hopefully more as I discover them. I will also do a whole review post on these at some point, and any new ones I post. If you have a hot tip, please let me know, I’ll sign up, check it out, and if it’s legit, post it here. Note that this doesn’t include conventional things like blogging, starting businesses, selling stuff, performing actual side jobs, etc., but rather it is things you only spend a little time on and can do solely online. I hope it’s valuable to some of you!

Now, some actual updates on my situation. My financial aid for summer is STILL not going through, so I am forced to keep the debt snowball rolling the old-fashioned way. I’m almost at my halfway point of being debt free, and am on track to get rid of all my credit card debt sometime between May and December of 2009. Right now I have a ring to buy for a special someone, a potential wedding next year, and a ton of money going towards finishing school, so my repayment abilities are very limited. My girlfriend lives 2 hours away, so my fuel budget is skyrocketing since I spend most weekends there. Plus, now that school has started, I’m back into some bad habits, including buying vending machine items, fast food, restaurants, etc. Once I get some time I’m going to hit up Costco and develop some solutions for eating all day when life is really busy, and my budget should come back under some control. Things are looking up, though, and it’s still a long way forward, but I’m confident things will go well!

Would You Refinance Your Debt at 7% Interest?

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I believe I have the golden opportunity, here. For once, my financial aid finally went through for school, and while I wasn’t approved for “free money” like grants or need-based scholarships, I was approved for federal stafford loans. Not only does this mean I can go back to school in summer, but it also means I will have an extra $3000-8000 to work with, if I so choose. Here’s the deal; most of that is in unsubsidized stafford loans. This means the loans sit there, gaining interest, until I enter repayment. This means a higher initial principal, but I don’t have to worry about high interest rates. However, when you compare that to credit cards, astronomical rates, and generally feeling like a ruined man, I think there is only one path forward.

I’m going to pay off my credit card debt with student loans.

Here’s my train of thought. I pay $300 per month in credit card minimums, normally about $500-600 per month as I can. At this rate, it might only take me a year to finish paying everything off, assuming I can find ways to add to that snowball. So over a year, I’m not really paying a ton in interest rates if I continue this method, but I’m still paying about an extra $1k in interest over that period. And as I learned when I lost my job, nothing is permanent. At any moment something could sweep by and ruin my whole plan. If that happens, I don’t want to be stuck with high interest rates. Enter the student loan. If I still put $500 or more per month toward that loan, it will take me between 11-13 months to pay off the debt, only a few less than my current method. However, the money I pay each month goes largely to principal, and if something happens to wreck my plan (losing a job), I’m not even in repayment yet! Not only will I be able to pay off this loan, but it should free me up to be able to pay off more than this student loan by the time I graduate. Meaning I graduate owing less in student loans than I already do right now.

I think it’s the smart move to make. If my future was certain, I’d just continue my current plan and get it paid off. However, I know with my job comes a direct pay increase once I get my degree, so I can count on making more money when I actually enter repayment. If something does go wrong, it’s effectively like hitting a pause button; I’m no worse off for it. With regular credit cards, they are not too keen on giving you free money. The best case scenario is that I pay off my debt even earlier, and the worst case scenario is that I freeze my debt where it currently is.

Some side benefits are peace of mind, likely a giant leap in credit score, the knowledge that if something happens to my situation I’ll be ok, and the ability to start putting money towards solid investments greater than 7% return (peer to peer lending comes to mind). I can’t think of any downside to this plan. Granted, I technically can’t use student loans to cover debt repayment, but I can use them for food and rent, and then rebudget that money to pay off the credit cards. The net result is that by August, I will have no debt at an interest rate above 6.8%! You can’t touch that type of refinancing with a ten-foot sub-prime pole!

Can anyone foresee any problems with this arrangement?

FAQ (or, Searches That Found This Blog)

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I’ve maintained a variety of websites, but this blog has turned up some fairly unique Google searches compared to the other sites! I don’t know if other finance bloggers have the same results, but I’ve had some hilarious searches. So, in an effort to make those people feel at home here, I’ll attempt to give some good information on those topics, as I’m sure you didn’t find it here the first time. Some of these are intended to be a bit funny, but hopefully provide some decent content for these situations as well!

  1. does it make sense to pay off car payment? – Many of these searches are entire questions. Of course, the answer to this one is, yes, it makes sense to pay off your car payment. You do not want to get it repossessed! I know, funny, but the better question would be rather to make multiple payments or not. There are two takes on this. Dave Ramsay believes in the psychological impact of debt, and would have you make as many payments as possible to pay it off sooner. However, mathematically if your interest rate is less than 7%, it might make more sense to invest your extra money. There are benefits to both methods. Personally, I prefer to just get it paid off as soon as possible, then start saving up to pay cash on my next car.
  2. getting rid of debt through prayers – Whew, I wish it were this easy! Now, while I believe in the omnipotence of God, I also believe in the stupidity of humans. If we managed to get ourselves into debt, I think it’s our responsibility to get back out of it. That’s not to say it doesn’t take a lot of prayer to get the strength to do it, just that if everyone prays to win the lottery, then whose prayer does God answer? There are no quick fixes, you just have to get up and do it every day.
  3. is it beneficial to make half car payment every two weeks – Likely not. Basically, it’s confusing and you’re likely to miss a half payment. Plus, most auto loans are behind the times, and offer very little in terms of online payments and account management. The easiest way is to make one payment per month with as much as you can pay. The interest rates of typical car loans in a 15-day period is usually not as debilitating as those on credit cards, and to me, the hassle of it all is not worth the 5-10 bucks per year you’ll save. Your mileage may vary, though.
  4. using your brain to trick people – I got a lot of interesting searches after the article on NLP. While there are ways to use NLP for less altruistic means, most of which are quite fun, this is unfortunately not primarily an NLP website. However, basic NLP can be useful for training your mind to accept positive thoughts about your goals and to get rid of negativity that could be inhibiting you from success. As far as tricking other people, though, I can’t help you there. 🙂
  5. a shortcut to debt free life – Sorry, but there are no shortcuts to a debt free life. I know I have a series called “shortcuts”, but those are just part of a larger picture. There are a lot of small things you can do that have major impact on your finances, but in the end, it comes down to hard work and dedication, like everything in life.
  6. 15k loan no credit check – Good luck with that, and let me know if such a lender exists!
  7. taboo 2 – Um, this is hardly that sort of website. You’ll have to get those sorts of movies elsewhere. 🙂

Ok, so that concludes the first edition of FAQ. Keep those awesome google searches coming in, and I’ll do my best to answer your questions!

Carnival of Debt Reduction #127

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Yesterday, Paid Twice posted the latest edition of the Carnival of Debt Reduction, and my article about my upcoming vacation made it! Also mentioned was the launch of the “Snowflake Revolution“, a place where snowflaking bloggers combine efforts to, er, create a giant snowball? Seriously though, while I won’t be a part of the Snowflake Revolution (my only good tips to add to the debt snowball is to make more money and spend less of it), I look forward to a centralized place where people can find tips on how to add a few dollars to their debt snowball. For those unfamiliar with snowballing and snowflaking, the premise is that the snowball is the amount of money you pay towards debt each month, which gathers mass as you begin to eliminate each debt. Snowflaking is obviously the art of adding small amounts to that money each month. And as we know, a few dollars per month can add up to hundreds in savings, over a long run. Viva la revolucion!

Among the articles, all of which were great, there were a few I felt stood out. We all know I’m a fan of the psychology behind why we get ourselves in these situations, and Life Lessons of a Military Wife wrote a great article about how to reject those pesky payday loan offers and get started on the road to good financial health. I have many friends I wish could have had this advice when things were looking bad.

One of my favorites was Millionaire Money Habits talking about the real cost of using credit cards. This is one of the first exercises I did to show me how terrible those pieces of plastic are. Even though I was buying stuff on sale, I imagine that $40 bargain blender has cost me several hundred dollars by now. I’m still paying off a great deal of a laptop that broke over two years ago. I’m still paying money towards an excellent deal on a premium car stereo system for a car I no longer own! When you add it up, credit cards fall way short of anything resembling common sense. Basically, if you can’t afford something up-front (except for maybe cars and houses), you simply can’t afford to buy it. Credit cards aren’t the magical golden ticket to keeping up with the Joneses.

There are several other articles I could mention, but these two stood out based on recent conversations I’ve had. Go check out the carnival! In these times of economic uncertainty and with houses foreclosing right and left, it is clear that there is at least one community of bloggers who are getting a grip on their finances the old-fashioned way–with determination.

The Failure of Neglect (or, Vacationing on a Budget)

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One of the misconceptions I’ve had in this journey to becoming debt free is that I had to tighten my belt and not do the things I’ve wanted. To an extent, it is a wise idea for sure; I carefully budget for movies, eating out, and going out with friends. Having a set limit means I can’t just go out all the time and spend, and I’ve resorted to many not-so-fun nights at home. I think that while my debt is so massive, this is actually a healthy thing.

However, I’ve also neglected doing big, extravagant things in the name of saving money, such as relaxing vacations, or random adventures. I’ve had neither vacation nor adventure in the past two years, really. While that is a good idea finance-wise, it’s a horrible plan for a person’s psychology. The fact is that as Americans, we are far too busy, overworked, and underpaid to neglect setting apart time to take care of ourselves, to rejuvenate and get perspective. I’m a guy in my mid-twenties; I am supposed to be going on adventures and exploring right now. Since I haven’t, my vigor has atrophied. I feel blah and mediocre, and my conclusion is that I must take a vacation.

However, how is one to take a vacation where there is no money? Furthermore, how does one not feel so guilty about spending money on a vacation when there is plenty of debt to be repaid?

The answer to the latter is simple; I don’t feel guilty because if I keep neglecting myself, I’ll burn out at work, I’ll burn out in life, and there will be no energy left to keep up with everything life throws at me. I’ll try to fill life up with things again, which will sink me back into debt even more. The principle of interest works both ways; while sacrificing money in debt payments results in more payments down the road, sacrificing a vacation right now might result in a complete catastrophe.

The answer to the first is not as simple. Vacations are, simply put, expensive. While relaxing in the bahamas for two weeks would be awesome, I can’t afford several thousand dollars either! After using all the logic God gave me, I concluded that a trip to Washington D.C. was the perfect vacation. I’ll share some of my tips here, so someone hopefully benefits.

  1. Think About Proximity – A good vacation spot has to be far enough away to keep you from getting sucked back in to life, but close enough to keep travel costs down. D.C. is less than $200 airfare from Atlanta, which is great! Another thing keeping travel costs down is that it’s easy to walk once there, or take public transit. Either way, a perfect place location-wise.
  2. Find Cheap Lodging – I have a friend that just moved to the D.C. suburbs. Furthermore, he’s been wanting me to come up for a long weekend quite awhile now. Lodging costs will be zero. While it may be more difficult for a family to do this, there is also no harm in asking. I remember a time when I was a kid, we went to visit family and my parents stayed in one family member’s house while we kids stayed in our favorite aunt’s house. We both got a break from each other, and a family of four had free lodging. Win-Win.
  3. Consolidate Dining Costs – Most people ruin their food budget by eating out all the time. Since I’m staying with a friend, we can cook several nights. This means we can use our money to eat very nice meals strategically. What’s better, 5 decent meals out, or 2 really nice meals out and eating at home the rest of the time? Breakfasts are cheap this way, and I may even get stuff to pack quick lunches a few days, keeping total food costs around $100.
  4. Consider the Attractions – D.C. is a hotbed for things to do for free. Almost all the museums are free or cheap, and there are a plethora of them. I know two of my interests are politics and the arts, and D.C. is a great place for both. The only thing I’ll be really spending money on is if I see a show at the Kennedy Center, which I probably will. You can’t beat a city with enough free things to keep you busy for a full month if you wanted.
  5. Share Your Trip – Talk to people about your trip! They may suggest places to go or things to do. Or, like my roommate, they may know someone who can get you an exclusive tour of something. In this case, it is possible I can get a White House tour through this contact (rather than the 3-4 month waiting period through Congressional offices). Others may advise you on things to ignore, and some may even want to make it into a road trip! I found 3 friends who may want to go with me (and possibly do different things while there), but this keeps down travel costs, and those friends may tell other people who can help us out with the trip too!
  6. Time it Perfectly – In my case, I wanted it to be soon, but still have plenty of time to save up for it. I chose mid-April for many reasons. First, summer has not yet begun, and summer is peak season. Spring breaks should be pretty much over by that point. The weather is still somewhat cool at that time. It overlaps two paycheck periods, so I can work straight until I leave, and then work straight when I come back, meaning I don’t sacrifice any time off work even though it’s a whole week (and in my case, time off means I don’t get paid). Plus, it centers around the weekend, which means that my friend can take two days off and still hang with me pretty much the entire time. It’s two months away, which is plenty of time to save for it, yet two months is not a long time to wait for a vacation. All said, it is the perfect time to take the trip!
  7. Know Your Limits – The total cost for my trip is around $600, even assuming I go over in some categories. That is NOT a lot of money, and I can easily save that in three paychecks. Furthermore, I will receive a fifth paycheck while there, which means that if something bad happens and I need extra money, it won’t hurt me so much. Plus, the structure of the trip means that each paycheck can go toward something different. I’ll purchase the airline tickets this paycheck, other tickets and car reservation on the next, and then save for food on the last. The fourth will go toward “extras” on the trip, like possibly a new lens for my camera.
  8. Know Thyself – I know my personal physical limits, and planned days around light walking accordingly. There’s nothing worse than a vacation when you come home tired each day, so while I want to do a lot of things, I consolidate it in a way to where I’m not ever exerting myself. Plus, I’ll not be afraid to simply just not do something if I’m not feeling it. While I want to observe a Supreme Court session while there, maybe the better option is to just take their quick tour. Also, I just finished saving up for a nice camera (a Canon Rebel XTi), and D.C. is the perfect place to shoot the type of photography I like. While some people would choose different things to do there, I know my likes and dislikes and choose accordingly. That said, don’t fall into the “prepackaged tour” trap. Spend time planning out your vacation. Trust me, the planning alone is already making me feel energetic and ready to take on life. Don’t sacrifice that for a bit of convenience, especially when it means you might not fully enjoy everything on your trip.

So, all in all an exciting trip I have planned. A full week, no sacrifice with work time, cost is less than $600, everything is perfectly tuned to my interests, and a few friends might even join me (but not join me on EVERY thing). That sounds like a perfect trip to me. Plus, with properly saving the money beforehand, I won’t be regretting it 4 months down the road when I’m still paying on it. Putting vacations on plastic is a sure way to keep yourself home forever, and it will feel good to come back from it and STILL have less debt than when I left, thanks to the magic of automatic payments.

So the lesson here is to not neglect yourself when on the journey to financial freedom. Don’t feel bad about taking a vacation, just plan it so well that nothing is wrong about it. Then save the money (and extra money) ahead of time, and you are all set. It doesn’t have to be the Bahamas to have a great time and relaxing trip, but with a few basic tips like these you can maximize your Vacation ROI and make it even better than a plain old island adventure.

Shortcut #3: Automate Your Bills

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Out of all the things I did to regain as much as my paycheck as possible, likely the biggest benefit was putting my finances on auto-pilot. I had been late on almost every credit card payment, and when I added up those $10-50 fees for being late the past 3 years, it amounted to enough money to pay off all my current credit card debt right now; thousands of dollars worth. Basically, if I had simply made payments on time, I would be out of debt right now. As it stands right now, I’m still a year away from that. All due to laziness.

This is the simplest of all shortcuts, because it’s somewhat obvious. However, I didn’t consider it until I started to get my life in order, and it may be something others are overlooking as well. Basically, you start using automatic bill payments to simplify your life. Car payment? Automatically debited. Credit card payments? I have it setup to where all I have to do is click a button once per month. Insurance? Deducted automatically.

If you, like me, have problems accruing late fees, I would urge you to add them up and see how much money you’ve lost due to procrastination. It will shock you into setting up automatic payments. Online Billpay is easy to set up, whether through your bank or through the companies themselves. However, I would recommend you never give your actual account information to a 3rd-party company, and set up all your payments through your bank instead. When a credit card company has your information, it’s more difficult to protest false charges since you won’t notice them in time, and the payment is already made. Use your own discretion with who gets your information.

Once set up, it only takes a few mouse clicks once per month to get everything sent off. No more late fees, and you will find that you have extra money to add to the debt snowball you’re hopefully building. We live in an automated world, and small things like these can save lots of time and effort writing checks, at little time investment.

Additionally, I should mention that because of my procrastination, some of my %APR rates had skyrocketed to the 30% range. By agreeing to use their automatic payment service to ensure no more late payments would be made, two of my credit cards were able to offer me rate reductions to around 22%, a major decrease that will help me get out of debt much sooner. I win in two ways: no more late fees, and lower interest paid in general. And two of my other accounts say that after 6 months of on-time payments, I will be eligible for rate reductions with them too. Either way, for the amount of effort invested into putting your payments under an automatic payment system, the benefit is outstanding.

Shortcut #2: Swallow Your Pride

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Shortcuts are an ongoing series where I summarize quick ways to make maximum impact on your finances.

Think about the people around you in life, those who are close to you and not so close. How much do you know about their financial life? Do you know how much they earn per year? How much debt they have? How you can best support them in whatever financial goals they have? Chances are, you don’t know. Even some married couples don’t know about each others finances!

This apparent taboo of talking about money is widely talked about. Personally, I think it’s a hold-over from centuries ago when it was considered polite to squander your money on elaborate decorations and items, but impolite to discuss how much money you inherited in order to be able to buy such nice things. In modern society, perspective is gradually shifting towards the opposite; in the near future, showing off your money through purchases may be taboo, but talking about your checkbook may be considered a matter of relationship with others.

I’m going to go on the record and say that it is almost impossible to truly get hold of finances without being open and honest about where you stand. Without telling people your true condition, where is your accountability in getting into a better condition? How will they need to know what they need to do to help you out of it? For some, maybe start with telling one close friend, and ask them to check you if you are about to make a poor spending decision. For some, it may be starting a blog so that everyone knows your condition. Keeping things in the dark makes them rot. In the same way, either extreme you take will expose your situation to the light. From there, change can begin.

Plus, it will keep self-help gurus from going crazy:

Dear Self-Help-Guru:
I currently go to lunch with a co-worker who wants to spend more on lunch than me. I’m in a ton of debt, and I’m afraid that going to all these nice restaurants will put me even further in debt! How can I tell my co-worker politely that I have to start brown-bagging it?
Sincerely, Broke-In-Chicago

This is a made-up example, but I’m sure you’ve seen similar things on “Ask Miss Manners”. Usually those “P.C. gurus” give some response that they should lie and say they could save lunch time by eating in the office, or other such nonsense. Here’s how it should be answered:

Dear Broke-In-Chicago,
Shame on you! In a vain attempt to look like you have it together more than others, you’ve now sabotaged your financial health even more. You should have told your co-worker years ago the reason that going out for lunch was not good for you. Contrary to common belief, most people are in debt, and they will not only understand your reasons, but they may offer up their own state of debt, and that maybe it would be wise for both of you to bring your lunches and eat together. The only way for someone to know where you stand is to come straight out and tell them, so either swallow your pride, or be prepared to further damage your finances.
Sincerely, Self-Help-Guru

Unfortunately, things are so politically correct I don’t expect to see this happening in the near future. However, each of us can start the process by telling someone else. When I began, I started this blog, and I also told my best friend and my roommate. Guess what? They were in the same boat I was! Now, they are helping me get out of debt and I’m helping them. We share knowledge, keep each other accountable, and we all win. Yes, they know what I make each year and how I spend it, but why should I care if two people close to me know that? If you’re really concerned with telling people, then it must be really bad, and therefore you should tell them anyway.

There’s simply no reason for falling under an archaic system that leads to the systematic destruction of our finances. Maintaining a tiny bit of pride costs us the ability to do the amazing things we want to do in life, the ability to pass that gift on to our descendants, and a bunch of stress and health. Why not spend a few minutes, swallow your pride, and let someone that cares about you know where you stand. Maybe they will be the one that can help you out of it.

Shortcut #1: Trick Your Brain

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I am an efficient person, an engineer by nature. I’m also lazy. I love shortcuts, but only when they work. So I’d like to dedicate this post, and future posts like it, to a series I’m calling “Shortcuts”. Put simply, they are tiny activities that take little time yet produce great results. I hope they may be of use to the other lazy people out there that want to get hold of their finances!

The human brain is a complex organ, and there is still a lot of mystery surrounding it. One field of study I have been interested in lately is Neuro-Linguistic Programming, abbreviated NLP. To avoid all the science jargon (which I do suggest researching if you’re interested), it is basically a method (some may call it a form of hypnosis) in which we can suggest behaviors, both to ourselves and others. If you’ve ever seen a mentalist perform, or a mind reader, chances are they are using NLP principles to accomplish their task. However, it also holds some striking benefits when used as a form of psychotherapy. Put simply, you can spend just a few minutes each day to completely change the way your brain thinks about money (and more!).

I know for myself, in my journey to become debt free, I have found many presuppositions towards money and how I feel about it. While my conscious mind knows differently, the unconscious part of my mind that is responsible for binge-spending and making late payments was going strong and keeping me on a path to stay in debt forever. I imagine most people that wake up one day and realize they’ve gone too down that path have similar issues. NLP is one method of changing that attitude.

I won’t go into why it works, but I will give the basics. You can apply this to any area of life, too. Are you trying to lose weight but can’t keep from eating poorly? Do you have self-worth issues when it comes to the opposite sex? NLP is one technique you can use to change that. Basically, there are three areas we can use to program (plant ideas inside) our brains. There is kinesthetic, visual, and auditory, meaning “touch”, “sight”, and “sound”, respectively. If you can create a pattern that keys into multiple areas, then it creates a stronger bond. For example, you may look in the mirror and say something out loud to yourself. Yes, basic NLP is pretty much just the tried-and-true “talk to the mirror” advice!

How many times have you said, “I will never get out of debt” to yourself? Likely a lot, even if you only said it in your mind. The thing you did not realize, is that was basic NLP; you were programming your brain to think you will never be capable of getting out of debt, and surprise, now you aren’t! What you will have to do is reverse that. Just like anything in life, it takes as much effort to reverse something as it does to get there in the first place. Every day, or even multiple times per day, use the mirror method. Tell yourself not that you “will” get out of debt, but that you are out of debt. The problem with using future tense is that your brain will always think this action comes later. Use the present tense, because this is the attitude you want to have right now. If your issue is weight loss, then say “I am skinny”. When using verbs, make them active.

The mirror method ties in both the visual and auditory senses to program the brain. You can also use the kinesthetic by writing statements down on paper. The movement of your hand keeps the notion that you are out of debt firmly in your brain. However, you may have to use multiple statements. Try to identify the things keeping you in debt, and make up suggestions for each of those. Try to make a list of 5-10 suggestions you want to program your brain with. Find the root issues of your money problems, and tell your brain the opposite.

An example list might be:

  1. I make wise spending choices and am a thrifty person
  2. I regularly consult my budget before making a purchase
  3. I pay all my bills early and in full
  4. I do not need expensive things to make me happy in life
  5. I no longer make purchases on credit cards

Of course, this is just an example, and for this to work you should make your own list dealing with your own problems. Hopefully you catch the idea here. NLP really is as simple as that, in its basic form. And while it might sound silly (and somewhat non-revolutionary) to talk to yourself in the mirror, you might be surprised at the effect it has on your outlook on money. They say to be a millionaire you have to spend like a millionaire, but it’s impossible to do that without first thinking like a millionaire. NLP is one method to get your thoughts in the right direction. A proper thought pattern will overflow into your natural habits. Keep in mind that initially, you have to overturn years of bad programming, and you may likely think negative thoughts even now. This is why it’s important to do this every day or more. Get it into your brain. When your brain starts thinking properly, make it start thinking in other ways. Start telling it about how you will invest, or think of business ideas, etc. The possibilities are endless, and yet the investment is literally only one minute per day or less. Even if it doesn’t work for you at all (for whatever reason), it got you thinking about why you behave the way you do, which is still beneficial.

Main Excuse: “I don’t have/want/use a mirror!” Well, there is another way, and since it ties into the emotional, many people think it’s actually better than just a visual. Simply say them out loud like before, only while you say each one, visualize your life with that principle. For example, if you say “I pay all my bills early”, then visualize yourself writing a check and sending it in, or clicking an online billpay. What this effectively does is to tie a particular action to your words, which may give it more weight. Better yet, do both methods if you can!

Super-Shortcut: As an aside, you can also use more advanced NLP tricks to enhance your money abilities. Try tying in the the kinesthetic directly to your mirror exercise. For example, when you say “I spend money wisely”, try touching a particular part of your body in a certain way. Maybe you brush behind your earlobe. Something you can feel easily. After awhile of doing this, when you are in Best Buy checking out the latest HDTVs, perform that same touch. Your mind should actually reject poor spending! This is called anchoring, and is particularly effective in making yourself (and others) behave a certain way when a particular stimulus is present.

Back in Action

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Ok, so I’ve not been the best blogger the past several months. I will attempt to rectify that! Obviously, my last several posts detailed how I lost my job, was busy at school, doing just ok with finances. I’m sorry for being away, but I simply had no time to either blog or read other posts from the community, between school and my new job. In addition, the one week I could not work between jobs was enough to set me back three weeks with some of my payments, which was a bit disappointing.

However, I recovered and am back in action. I was not able to get financial aid for this semester at school, which is a long story, but it leaves me with at least a tiny bit of free time I should be able to use here. But I suppose I should offer an update, so we know where this year begins.

For the past 3-4 months, I have made at least the minimum credit card payments, on time. This month, for the first time in years, I received a paycheck which I have still not cashed, and don’t need to! I have at least a few hundred dollars buffer zone in my account, and have not overdrafted. My credit score is now no longer in the red zone on myfico.com. While I still have a long way to go, this is major progress to my financial goals.

At the beginning of this year, I listed several goals, each of which will not be easy and will take the whole year. Two of them are eliminating the majority (60% or more) of my credit card debt, and losing 100 pounds. Each will take a lot of work, for the whole year. At first, I thought I could get rid of all my credit card debt by the end of this year, but when I actually mapped out how much I will actually spend (compared to what I “wishful thinking” would have spent), I will not be able to feasibly do that this year. Now, a secondary goal is to do something extra that will make money come in. I hope to release a piece of software at some point that will reap some dividends, and assuming that goes well I may be able to get rid of all debt by December. However, that can’t be my plan.

I feel good about this year. For the first time, I have a good launchpad to start from, and a good plan of how to meet those goals in time. However, I will have some bad circumstances to deal with as well. First, I had a student loan make it all the way to collections without my knowing (long story for a future post, but being a full time student it was supposed to defer, but didn’t). Second, by not being in school I’m effectively opening up all my other student loans for payments. I can probably defer this again though, since I’ll be back in the summer. The worst that can happen with collections is to have my paycheck docked up to 25% each month, which I have a contingency for (work full time hours instead of part time). Hopefully it won’t come to that, however.

So, here’s looking ahead to 2008 and all the crazy stories I’m sure it will bring. I still have a lot of work to do, but I’m excited about the plans I have in place and can’t wait to make a huge chunk in my debt this year!

Thrown Into the Deep End

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The past month has taught me some difficult lessons. In the same way working through college made me grow up faster than classmates who had the parental free ride, losing my job 2 months after starting to get my finances in order has taught me a lot, very quickly. In short, I did find another job that seems to be the perfect opportunity, but I will wind up losing a full paycheck because of the transition. This is my first week working full-time in 3 weeks.

First, I learned that even if I think I have things figured out, but don’t account for major shifts from the very onset, I’m doomed for failure before having tried. I started getting my finances in order in June. In August, I lost my job. Two months could have been enough time to get at least a basic strategy ready just in case something happened. Granted, I thought things were stable, but I still should have had at least one exit strategy.

Second, I’ve learned that it’s possible to be extremely frugal given the correct circumstances. I can say no to going out with friends, I can refuse to drive extra miles, and I can even eat off $100 for two weeks (when I normally spend $100 per week or more). I’ve cancelled every little subscription I had, and tried my best to find every spare dollar I had. If the money is simply not there, I cannot do that stuff. Translating this into my path out of debt, my goal will be to make debt payments first, and live off of what’s left. This means I’m forced to be frugal, where thus far I’ve tried to be frugal on the front-end. It’s hard to be frugal when the money is sitting there waiting to be spent, but much easier when you don’t know when the next check comes in.

Third, I’ve learned that some creditors are sympathetic. Within reason, of course. A few credit cards allowed me to not make payments this month, and resume next month. They are still charging me interest this month, but will not charge me for two months later, will impose no late fees, and will not report me to the credit bureaus. While it doesn’t completely save me from the lack of funds, it will be an immense help, and one less thing I have to worry about right now. It took a lot of time and talking to get it done, but a few hours work to save me peace of mind during this transition was well worth it.

Fourth, I’ve learned the real cost of not having my finances in check already. In June, I wanted to do it for peace of mind and looking to the future and marriage/family. I assumed the job was stable, that I would always have an influx of money, etc. By sabotaging my own future self financially, I made this thing much more difficult than it should have been. After all, I’m only missing one paycheck, not even a full month, much less half a year like some people do. I’m extremely happy I was able to quickly find another job, but if missing two weeks worth of pay messes me up this month, I’m in a very bad condition. If I was not motivated before to get out from under this debt, I sure enough am now.

My new job will be paying me a few hundred more per month than I am making now, but will not be paying my school expenses. After thinking long and hard about it, while school is important, I really need to build up some financial muscles. After this semester, I may put school on hold temporarily if I cannot find financial aid to help me out. At this point, I may even take out additional student loans to cover the cost, and use my extra money to get out of debt even faster. With a few hundred extra per month, and living more frugally, I should easily (or rather, difficult-ly) meet my target of next December. Even more, I should have a decent emergency fund by then. While it may put my education in somewhat of a bind or cause me to gather more debt in student loans, I’d much rather trade my credit card debt for student loan debt! And with the increase in salary, once my debt is paid off that gives me that much extra money to either invest or put towards those student loans, which is nice. Once I have my degree, that’s an immediate $10-15k bump in my value as an employee apparently (though personally I feel the caliber of my work is not affected by a piece of paper), and I’m all set.

And while it’s fun to think about the future, it’s taking everything I have to make it through September. I’ll probably be posting very rarely until money starts coming in, but know I’m getting some good life experience that will give me much better perspective on my posts. I hope I learn some more lessons worth sharing, but until then…