When I first started to think about creating this site it occurred to me that part of the reason it’s so hard to connect with the “money experts” is that it’s hard to see where they have come from. Many online guru’s and financial planning masters talk about money like it’s no big deal, that it’s easy to master and look at me, I make X now and am super wealthy so you should be like me.
I want to be different, I want to be real. Money is hard, being wealthy is hard. Making the right decisions is hard and so I want to share my journey with you so that hopefully you as a reader can identify with my struggles. I want to show through my achievements and mistakes, that you too can build a wealthy life.
I made a decision going into 2017 to take control of my finances. I know I am by no means in a terrible position compared to others out there; and that many of you reading this have struggles that make mine pale in comparison and I honor you in your own journey and hope you can find value from mine.
My purpose here is not to try and stand above everyone else and say “Hey look at me!” My purpose is the say “hey, I too have struggled with debt and controlling my spending and I’d like you to follow me as I work to improve where I’m at and take control of my future”. I hope you find value in the journey and in some way allow me to influence your future!
The decision I made is to finally get rid of all my consumer debt, I will be debt free by the end of 2017!
First, let me define what I mean by consumer debt. I put debt into 2 categories, debt that is building your net worth, IE mortgage debt or investment debt; and debt that is robbing your future spending, IE loans and lines of credit. Many financial people will say that all debt is bad but this isn’t necessarily the case.
The best example I can give of this is when discussing real estate investing. The reason so much wealth can be created in real estate is because of leverage, for example, you buy a $100,000 condo and you put in $20,000 of your own money and then sell it a year later for $120,000; it looks like you made a 100% return. But that isn’t exactly true because 80% of the money used wasn’t yours! The rich know that the best money to use is other people’s money but this is a concept I will discuss in a future blog post. Debt can be useful, but for it to be useful, you must first master it and consumer debt is almost never useful!
So where am I. As of January 2017 my figures are below:
- Credit Line – $25079.92
- VISA – $3484.17
Truck Loan – $15997.88
Total Consumer Debt – $44561.97
I know, disgusting. Even if I made just the normal payments of 3% of the outstanding balance per month that means I have to spend $1336.86 of my hard earned money to pay for things I can’t even remember buying! I could think of much better ways to spend that $1336! It’s time I got that under control.
I have followed the first 2 steps I have outlined in my blog. I have figured out my monthly cash flow and my net worth. My employment income is variable and I’m sure I will have clients and co-workers read this so I won’t share that here but I have filled out my cash flow chart. Having a variable income can be both a good and bad thing because it allows me to pay off large parts of debt, but it can also mean some months I get further in the hole.
To achieve me goal of debt freedom I need to put $4000 per month approximately towards my debt. This is a huge number and it scares the s%&t out of me! But, now that I know the number, I can work towards it. The first thing I have to focus on is my employment. How many people go to work every day and don’t bring their best self? I know I’m guilty of it from time to time so it’s time to re-focus. I have a target set and I need to achieve it and for that, I have to bring my “A” game to work every day. Even if you do not have a variable income like I do, I promise you, going to work with a purpose will not only bring you better fulfillment, it will get noticed by those above you and over time it will drive your income higher!
With my income side in check, I need to now take a hard look at all my expenses. I’m going to track everything I spend for the next three months and see where I can cut costs. And by no means am I going to stop living, and enjoying a night out, however, my goal here is to make sure that there is value for the money I spend.
I hope me putting this out there will make you feel better and more confident to take a look at yourself and where you are. Over the next 12 months I’ll post updates of my progress and the tricks I’ve learned. My hope is that this will in some way serve you. Please comment below if there is anything I can address for your situation or any thoughts you might have for mine!