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I Pay Off My Credit Card Balance in Full Each Month – But I Still Have a Balance

December 2, 2013 by Justin Weinger

One of the strangest things about becoming debt-free is using my credit card responsibly. I am still getting used to this new-to-me phenomenon. You guys have no idea how much enjoyment I get out of looking at the bottom of my credit card statement where it says “Total Fees Charged in 2013: $0.00, Total Interest Charged in 2013: $0.00” HUGE RUSH.

But wait. I’m still not totally comfortable because I think I still need a couple thousand bucks in my checking account so that once a month, I pay whatever the total balance of my credit card is in full. But at the moment, what I do is pay the statement balance each month, which ensures that I won’t be paying any interest, but there are costs that have been incurred on the card since the statement closing date. And since all of my expenses are now going on my card, and I am aggressively saving any extra money in my down payment fund, I hardly ever want to pay the entire card balance. I just want to pay enough so that I don’t incur any interest.

Here’s an example. Last month, my statement balance was $1,300. I had about 4 weeks to pay it off, during which time, I charged my regular expenses, including business expenses on my card. At one point, my balance was $3,600 because of outstanding business expense reimbursements. Once I had the $1,300, I paid my statement balance and then reimbursement checks flowed in to bring the balance down. But still the balance of another $400 or so remained until next month.

It makes me a little nervous. Why don’t I pay that $400 off right now? Well, it’s not due right now, and I can put any extra money I have towards saving and investing. It’s been over 7 months that I have been using my card AND paying it off in full. I wouldn’t say I’m out of the woods yet, and with wedding expenses, the temptation to just swipe it exists. I’ve made a few rules to keep me in line until I truly master financial discipline.

  1. Know exactly what my credit card balance is at all times.
  2. Continue to write down all spending in a notebook (keeps me in check)
  3. Have the funds to pay the statement balance each month, and, if possible, pay the entire outstanding balance each month.
  4. Do not use the credit card to finance impulsive purchases, including but not limited to: clothes, handbags, weekend trips, deciding to treat 10 people to dinner because I want to appear generous and munificent.

I definitely still don’t feel like I’ve got plenty of cash to pad any hard landings, but since paying off my debt, my net worth has experienced a 45% growth in less than four months. As that number grows, the percent increase won’t be quite as dramatic, but I am committed to positive growth every month for at least the next two years, when I intend to buy real estate with a comfortable 20% down payment.

Do you pay your credit card balance in full each month? Or just the statement balance?

Filed Under: Debt Update, Get Out of Debt

It’s Been Two Months Since I Paid Off My Debt!

October 21, 2013 by Justin Weinger

It’s been two months since I paid off my debt. I am saving 20% of my income in retirement and ESPP accounts before I even see my paycheck, and a little bit more with automatic savings. It feels pretty good, but not quite good enough, you know what I mean? My side income efforts have slowed down and I need to figure out how to get back into that. Setting goals since I started this blog has helped me tremendously, it’s almost uncanny that writing it down and focusing on it has helped me with so many things (paying off debt, finding a new job, moving to a new area to name a few). So I really need to figure out what my money goals for 2014 are. Goals related to money can be broken down into a few categories:

  • Stuff I want to buy (consumption)
  • Stuff I want to buy as assets (stocks, businesses, properties)
  • Things I want to do (experiences, travel, education)
  • Things I want to build (blogs, new businesses, do-good stuff)

Stuff I want to buy

In 2014, I need money to buy:

  • DSLR camera
  • A new laptop

Really not a lot of “stuff” on my list these days. I buy clothes when I need them and try to buy higher quality than I have been used to so it will last. My laptop is over 6 years old. It still runs well but a lot of video and apps have slowed down and it also heats up pretty fast. As in, my legs turn red if I put my laptop in my lap!

Stuff I want to buy as assets

Not counting the money I put aside from my paycheck, I want to increase my savings so that in 2015 we can put close to 20% down on a house. And that is a house with a yard, which, in South OC means at least $500K. Probably more. So that’s a lot of freaking money. In addition, I want to reopen my Etrade brokerage account, and invest in a handful of companies. However, it’s hard to start with just a few hundred bucks. I need to have a few thousand to make a first purchase of shares.

Things I want to do

Well, there’s a pretty big event happening in my life in 2014, so there are a lot of things in this category:

  • Have our wedding in June 2014
  • Go on a two-week honeymoon (location undecided) in June-July 2014.
  • Take a 10-day vacation in November or December 2014.

Things I want to build

I just want to build stuff. Make stuff. Lock me in a room with some kind of metaphorical puzzle to figure out and I am as happy as can be. So in 2014, I should be well on my way on these things:

  • Working on 2 other blogs I’ve been in the works with forever
  • Take on another consulting project
  • Get back into staff writing

There are other ideas in this category but I am getting a little overwhelmed so I am going to stop here for now.

Grand Total: ~$45,000

OK, so my money goals for 2014 include me setting aside $45,000 besides my living expenses and 20% savings. Or $3,750 per month or $121 per day. That seems like a LOT OF FREAKING MONEY and I am going to not freak out right now. I think I can do this. In fact, I can do more than this. Big goals keep us going right?

Are you planning for 2014 yet?

Filed Under: Debt Update, Get Out of Debt

It’s Over: Moving On From an Indebted Lifestyle (How I Paid Off $40,000 in Debt in Two Years)

August 2, 2013 by Justin Weinger

debt

Just like two minutes ago, I scheduled the last $410.50 payment towards my Discover balance. I have no more consumer debt. From May 2011 to just over two years later, I paid off a car ($6K), a grad school loan for a program I didn’t finish ($8K), Lasik surgery ($2.6K) and most of all, a ridiculous amount of credit card debt ($25K). I was in debt for most of my twenties, from about 2005 to four minutes ago :). At my worst, I had about $46,500 in debt, in June 2010.

At this moment, I don’t feel any euphoria as anticipated, but just a calmness and sense of relief. Phew, that’s over, now what the hell am I going to do next? But first I want to talk about why I wanted to get out of debt and why, even though it took over two years to do it, it was worth it and I am excited about living a life with no consumer debt, by which I mean interest-bearing loans for expenses and consumer goods. I had so much debt I felt stuck. I lived every month calculating and re-calculating the hopeless numbers. I had way too many bills. I stressed out Ryan and delayed our future plans because I didn’t want to get married in debt. It was so crappy and even though I never missed a payment and tried to pay extra on my bills, I was getting nowhere.

As I’ve said before, the blogs saved me. I started reading and couldn’t stop. I am lucky (or cursed) to have tunnel vision (some call it being “results-oriented”) and nothing was going to stop me from paying off all this debt and managing my money responsibly. I wrote down my goals, started blogging about it, and made progress each month towards paying off all my debt by 30.

Tenets of Basic Personal Finance

If you’re reading this, you’ve probably also read approximately 13,456 other personal finance posts and ALL have at some point addressed some ideas about what you should do when you’re in debt. Let me tackle those issues right now.

  • Emergency Fund: For most of this debt payoff journey, I had almost no emergency fund (less than $1,000). At one point, it got to be more than that, and I decided to use all of that money to pay off my car loan. I felt pretty comfortable that I was going to employed and could expect a regular paycheck, so I took the risk of having no backup funds and I was fine.
  • Pay the Smallest Balance or the Highest Interest: Duh, no brainer, pay the highest interest rate accounts first. I did this for all but my first account, the Lasik surgery. It was my smallest balance but had a big monthly payment, and would have had a balloon interest payment if not paid off in 24 months. So I took care of that lady first to avoid the interest, then began paying the rest of the high-interest accounts, from 10% credit cards to a 3.9% car loan.
  • Make More Money: I increased my income significantly over the past two years: changed jobs twice, grew an eBay business, and did consulting and other side projects whenever I had time. At first, it felt like finding new sources of income was impossible. Eventually, many new avenues opened up as I kept going, kept researching and kept trying different approaches.
  • Don’t Keep Up With the Joneses: I finally got this through my tiny little head! This was my main problem. I lived aspirationally because many, many people I know live aspirationally. This is Southern California, you lease an import whether you can afford it or not. But even though I always laughed at that idea of trying to impress other people with material possessions, in many ways I was trying to impress others with my lifestyle and cool shit I did. When I finally stopped doing that, my expenses fell in line and I was able to start paying off my debt. Not to say I don’t still do some cool shit.

You’ve Just Paid Off All Your Debt! What Are You Going to Do Next?

Disney World is too far and I’ve already been to Disneyland. So what am I going to do now? I don’t know, I’m excited, let’s talk about it!

  • I don’t have a net worth goal. It just doesn’t interest me and I don’t think it ever will. Achieving any number (besides zero debt so I could move on with my life) just won’t do anything for me. Yes, I want to make a lot of money. Yes, I know Napoleon Hill says I have to pick a number. But I just can’t bring myself to do it. My life is not a number, it already has a lot of numbers in it, and I’ll just keep upping the number so what’s point? For now, I have an annual income goal for each year, and I am going to make it a reach, just like paying off $40,000 in a little over two years was a reach.
  • I want to own real estate. But I realized something as I’ve been getting the daily MLS emails. I’m going to have to invest my money elsewhere. Owning real estate in Orange County is an expensive proposition and most places do not make sense as investments, unless you just have boatloads of cash and want to park it somewhere. So first things first, we’ll both be saving for a down payment for a place that we want to live in, not just a rund0wn place that could possibly be cash-flow positive as a rental. We still want it to be rundown so Ryan can renovate it, but in one of the OC beach cities, that will still be pretty pricey.
  • We won’t take on any debt for the wedding. After two long years of paying off debt, we’ll also be saving and hustling hard to have plenty of funds for the wedding. Open bar, dude.
  • I want to put my money where my mouth is. I’m going to look at investments now that I won’t be doing any real estate investing. I still run a decent eBay business, but have slowed down my consulting business since starting my new job. I’m fine with that. I don’t want to earn an hourly rate any more, even though it was a good one. I’m going to clean up my stock holdings, dust off my investment account and get back into researching local small businesses for sale. There’s always opportunity out there, it’s just a matter of being willing to do the work.
  • Get back to reading. I’m in the middle of Griftopia (Matt Taibbi is this generation’s HST but with more facts and less drugs) and in my new job, I’m surrounded by people who read a ton. I’ve got stacks of books waiting to be read and I still need to get around to The Intelligent Investor…
  • Live Free or Die. I never want to feel as shackled as I did by my debt. I have a job but it’s a job I’ve always wanted. I have so much to learn and so much to do and a huge market to tap. This stuff makes me happy. As long as I have the ability to do the things I want to do, live where I want to live and always be open to new discoveries in life, I’ll enjoy doing the work. If the work becomes meaningless, redundant or evil, I’m ready to walk away. And knowing I have no consumer debt and enough side business to cover my barebones monthly expenses makes it that much easier.

Advice for Paying Off Debt When It Seems Impossible

I didn’t come all this way to start saying weird things about debt or turning my nose up at people who have a ton of debt or who write about it and say, “Ewwww, debt/debt bloggers, they have cooties.” Nawwww. It’s better to come from a place of no judgement. It’s not easy, I still judge things everyday, but when people open up or tell you something about themselves, just listen. Don’t judge them, good or bad. Remember that we all have problems. Just because I’ve paid off my debt doesn’t mean 100 brand new issues, situations and ideas have not popped into my head to take over the space vacated by my debt worries.  Now I have to pay off my credit card in full every month. Now I need to pay the full car insurance premium so I don’t get hit with pesky $10 fees. Now I need to increase my 401(k) contributions to lower my taxable income. Now I need to finesse the details of a wedding, try not to hurt anyone’s feelings and make something fun, affordable, memorable and personal. Now I need to get better at keeping in touch and make some new friends in my new town. Now I need to study the next 18-24 months of economic policy to see when it will be best to lock in a mortgage rate. See what I mean? Lots of things going on, and that’s just the surface. It’s easy to turn these into worries, and I used to do that, but instead I just let them exist. I’ll think about them but I’m going to lose any sleep over them (yet).

I think you can pay off your debt. If you want to. If you’re willing to make some changes, spend some time thinking about money, what it means to you, and what your big goals are. This makes paying off debt easier. The other basics are:

  1. Cut your expenses (fees, cable, fast-casual meals with huge markups)
  2. Track your daily spending.
  3. Pay your highest interest debts first.
  4. Set monthly goals for your money.
  5. Give yourself room to make mistakes and learn from those mistakes. I slipped once or twice.
  6. Be excited for what comes next.
  7. Read as much as possible (this is my general life advice).

I still have a lot to write about, so American Debt Project will stick around. I thought I’d have some snazzy quotes for you all when I finally paid off all my debt, but I’ve been debt-free for almost two hours now which means I just need to get some sleep.

Have an awesome weekend and live big my friends!

 

Filed Under: Debt Update, Get Out of Debt, Self-Development

OK, and Now for Some Good News!

July 10, 2013 by Justin Weinger

I know I wrote a lackluster post last week explaining that I wasn’t quite debt-free yet. Lame! But I have a great excuse: I am very superstitious. I didn’t want to jinx all the things that were about to be happening so I just kept my mouth shut. But everything has started so now I am excited to share all the good news, which is, in one extremely long run-on sentence:

A couple months ago a recruiter contacted me about a job I had applied to a year ago and the same position was available at the company but in a different department and she wanted to know if I was interested and of course I was so in a pretty rapid series of phone interviews, written questions and in-person interviews followed by an extremely long (almost 6 weeks) wait, I got a sweeeeeet job offer from the company and I took it which meant that I could move to South Orange County and which meant my fiance and I could also move back in together and we moved on Saturday and my dogs are sleeping next to me as I write this and I am happier than a pig in mud right about now. 

I am happier than the pigs on these cupcakes.
I am happier than the pigs on these cupcakes.

I started my job on Monday and I am beyond excited. The company is in a very new market (that it is shaping) with huge potential and my job is my preferred mix of the technical and strategic business development. Even though I had just started a new job in December, this is a job that still works in the industries I have been in since moving to LA (construction and transportation) but is just way more exciting. There are deals to be made and I actually get to help make them.

It also means I no longer live or work in LA. What a place. I am always fascinated by place, and there is so much to see, do and discover in Los Angeles that I was never bored and I will always look fondly on my time there. I’ve been in the Irvine/Newport Beach area for like 3 days and I have culture shock: everything is so clean and nice, everyone looks scrubbed and polished to a t! I keep looking around for a corner liquor store or some streets covered in litter and graffiti and I can’t find it. I have so much to say about Los Angeles that it needs its own post. I’m happy to be in Orange County because it feels more livable but LA is way more alive, if that resonates with anyone.

Jane and I spent many an evening dragging our surfboards down Pacific to hit the dumpy waves of Venice breakwater.
Jane and I spent many an evening dragging our surfboards down Pacific to hit the dumpy waves of Venice breakwater.

Anyways, there are a bunch of little notes I have on this job, so quickly:

  • My old job had fully paid health insurance for me and Ryan, sadly, at the new job I have to pay out of pocket (~$70/bi-weekly) and can’t add him to the plan until he makes an honest woman out of me :).
  • Starting a new job again means absolutely no vacation until the honeymoon next summer :(. That’s going to be tough since I haven’t taken a vacation since last August when I went to Jersey. 
  • But I will try to get the Friday of FinCon off so I can head out there Thursday evening.
  •  Having a recruiter during the process was an awesome experience. I felt like I had someone who was really my champion throughout the process. 
  • I read this post from Ramit the night before my big day of interviews, which I found in a Google search of “how to prepare for a big interview” or something similar. Only one phrase jumped out at me: Overprepare like you cannot even imagine. That idea got stuck in my head and I really did overprepare for the interviews: I read two years’ worth of annual reports, as many Seeking Alpha articles as I could find, memorized the executive bios, and on the appearance side: I got a new suit, got my hair did, and took time to look professional. I spent over $300, but I knew I wanted the job and who knows? Maybe they would have judged my frizzy hair or suit from 2005 as “less than prepared”. Plus it’s a management position and looking the part is part of that. I didn’t want any factor that I could control to be the reason I didn’t get the job.
  • The area we moved to is where I would like to buy a place so now I can really get to know the area and verify this as a fact and not just another half-baked scheme in my head.

And I am down to $1,752 in debt and I had used the funds last week for the move, so now you know why I had to wait a few more weeks to pay it all off. Worth it! 

Filed Under: Debt Update, Self-Development

July 1 Reality Check-In…

June 30, 2013 by Justin Weinger

I promised myself and you guys NO MORE DEBT by July 1 like an overzealous presidential campaigner  (click for one of my favorite Chapelle Show clips of all time). And you know what? I swear, I had it. I have $2,940 left in my interest-free debt and it’s going to be gone in the next few weeks, but I’m using my funds on hand for something other than that. I PROMISE (no, really!) to tell you guys exactly what I used it for by next week. In the meantime, here’s my new debt-free target date:

Zero Debt by July 22!

This date is really realistic, so if I don’t meet it, you have my permission to publicly shun/shame me. Let the fun begin!

Filed Under: Debt Update, Get Out of Debt

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