‘The Year Of No’ monthly report: March

While much of the United States is caught up with college basketball fever this month, we’ve had our own version of March Madness.

This month has been a very busy one. I have worked a lot, and Amy has been busy tending to the kids more than usual. However, we did take time for a little fun on March 17.

Yes, that was St. Patrick’s Day, but it was also her birthday. We budgeted for some gifts for her, and we went out to eat on the cheap thanks to some free gift cards to a local restaurants received from from friends.

March 2018

In March, we paid down $3,392.59, bringing down our remaining loan balance to $10,467.32. I am very excited that we are almost down to having a four-digit figure on our loan. How exciting! I’m a little peeved it didn’t happen this month. We are so close, but we will simply stay the course and keep plugging away.

Perhaps more importantly, when we reach anywhere in the $8,000 range, that’s when things start getting interesting. That figure is what I call “The Beginning of the End,” which will bring us to just 25 percent left.

I’m thankful that we don’t have anymore birthdays or big events for awhile. I hope that April stays an anticipated snoozer as far as expenses go. Thanks to a wonderful Christmas gift of season passes to our local amusement park, we have cheap entertainment for the family when it opens April 21. All we have to pay for out of pocket is the parking fee, bottled water we always bring with us, and snacks we leave in our vehicle.

Stay the course, keep focused, keep grinding. The light at the end of the tunnel is right around the corner.

What Toys ‘R’ Us can teach us about ourselves

Not only was I a Toys ‘R’ Us kid, but I was also a Toys ‘R’ Us adult.

My first semester in college I decided to find a job. I was living at home and commuting to school, but needed something to pay for gas and match my parents for the tuition cost. There was a job board in the registrar’s office, so I made my way down there to see what was available. As you might have guessed, this was just before the web had really taken off; I had to go look in person.

It was October, and that job board was posting for a seasonal job at Toys ‘R’ Us. It sounded fun, and I figured that if I had to work, it might as well be fun. I got hired, and although it was a seasonal job they extended an offer to me to stay beyond and become a regular part-time employee. I was thrilled.

Working at Toys ‘R’ Us was a lot of fun. I enjoyed the many different types of customers that came in the store, and I enjoyed even moreso the people I worked with. Even though the action figure aisle was a horrible mess at the end of business every day, I enjoyed cleaning that up, too. Well, except the Power Rangers, because I don’t like Power Rangers. I worked there for 2.5 years, took a little time off, then came back for another 2.5 years. I think I worked almost every position in the store and had a blast.

So you can probably guess that I was saddened to hear the news: after 70 years in business, Toys ‘R’ Us will close or sell all U.S. stores. Since the announcement, there has been a lot of discussion about what did in the retailer. But the story I found most compelling was that it wasn’t Amazon, it wasn’t online shopping, and it wasn’t poor branding: the biggest problem was debt.

The company’s biggest problem: It was saddled with billions of dollars in debt. That debt stopped it from making the necessary investment in stores. And that meant an unpleasant shopping experience that doomed the chain. – Amazon didn’t kill Toys ‘R’ Us. Here’s what did, CNN Money

As an adult with kids, I have made a few trips to the beloved toy store looking for a certain something for the kids. We’ve bought bikes there, giant stuffed animals, Lego sets, and other items. I certainly noticed the derelict appearance of the store up the road from us. It wasn’t bad — it needed some fresh paint an some updated technology — but it was certainly noticeable.

Therein lies the lesson: like Toys ‘R’ Us, if you have debt, it could lead to putting off necessary investing in yourself in order to keep making the minimum payments. What could Toys ‘R’ Us had done if it didn’t have billions of dollars in debt? Maybe it could have created an unrivaled digital shopping experience. The ad jingle, “I don’t want to grow up/I’m a Toys ‘R’ Us kid” is ingrained in a lot of minds, but perhaps they could have expanded their marketing efforts so that no one would dare think of going anywhere else for toys (or baby items, for that matter). I mean, really: with names like Toys ‘R’ Us and Babies ‘R’ Us, the only way you can mess that up is if you are too burdened to do any better.

Just like us individuals with debt, we have so many opportunities at our disposal it’s hard to mess it up. Sure, you have to do the work. But there are better opportunities all around you if you know how to look, and if you aren’t shackled with (usually self-inflicted) overwhelming odds. Like Toys ‘R’ Us, if we aren’t looking for the opportunities, and if we’re carrying too much debt, a changing tide can crush us.

Three years ago, I switched from a “stable” job in a sector I had been in for almost a decade. I had worked in government for nine years, and then an opportunity came to work in the private sector at a company I greatly admired. There was a catch: all the things I got used to working in government would not immediately be available to me at my new job. I had to start out as a contractor. That meant I had no paid time off, no vacation days, and no sick hours. It didn’t have retirement benefits or health insurance. I had to go find health insurance for my family of five on my own. It wasn’t a salaried paycheck: I got paid for the hours I worked, period. If I didn’t work 40 hours, then I didn’t get paid for 40 hours.

It ended up being one of the best professional decisions I have made to date.

I remember thinking at the time that it was similar to my beginning at Toys ‘R’ Us. I wasn’t guaranteed a more permanent position, but I was given the opportunity to prove myself. Just like at Toys ‘R’ Us, I ended up with the better gig 1.5 years later, coupled with a better salary, benefits, awesome health insurance, paid time off, and great people to work with.

And as it turns out, I have a lot of fun at my work, too.

So my lessons from Toys ‘R’ Us are twofold: don’t get saddled down with debt, because it will keep you from investing in yourself. And, when an opportunity comes, learn how to look for it and take a chance.

I’m saddened by the loss of Toys ‘R’ Us. May we all never grow up, not too much, anyway.

The Working Dead

Lately I’ve been thinking about the different strategies there are to getting out of debt.

When it comes to our family, we had two viable options:

  1. Cut a lot of additional expenses and slowly cruise to debt freedom.
  2. Keep expenses at a stable level, but add an additional income stream to accelerate The Cause.

I have a tendency to go a little extreme. More accurately, I look for the maximum possible outcome for a given timeframe. So, we went with a third option:

3. Cut a lot of additional expenses and add an additional income stream to aggressively accelerate The Cause.

Since mid-January, I’ve been working my day job full-time in addition to a second, part-time side hustle. After work I come home, see the family, eat dinner, help put the kids to bed, then get on the computer and work on the side gig (I do web development for my regular job and my side income) for three to four more hours. I do this three or four nights a week, and sometimes I put in some of the extra work on Saturday.

I may have underestimated how exhausting the third option would be.

Don’t get me wrong: I am truly thankful to have an additional income stream coming in. The work is in my wheelhouse, and it’s really helping to pay down our debt at a faster rate. I don’t have a good estimate how much faster just yet. The work is a fixed contract and will dry up in May or June most likely, but I’m happy to have it for now.

Additional income can be more effective than cutting costs. We were able to find more than $230 monthly by cutting expenses, but it’s not hard to find much more than that with extra work. For example, my state has a minimum wage of $7.85 per hour. Working 15 hours per week brings in $471 per month, more than double what we cut monthly. Fortunately, the breakdown of my side work is more than minimum wage, and coupled with the cuts we are already making is proving to be very effective.

But the additional work has made me feel like a bit of a stranger in my home. My wife, Amy, has mentioned that she has felt lonely lately because I’ve been so busy. Even though I’m in the house, I’m home but not there. We are making it work for now, but it’s certainly not a pace I could keep up for a long period of time. It’s clear to me now that I would likely leave any job that required me to work this heavily for too long a time period.

The process has been somewhat enlightening. Although I am thankful and blessed it’s not the case, there are plenty of Americans working multiple jobs to make ends meet. I can’t imagine how exhausting it would be to work all the time only to pay basic living expenses. In our case, I’m simply nuts. For others, it’s a necessity.

I am working to find some semblance of balance. The thing that keeps me going is we’re really close to what I call The Beginning of the End. Once we reach 25 percent of the debt left, then that is The Beginning of the End. We are not there yet, but we are close. Another thing that keeps me going is that I know this isn’t forever. It isn’t for the rest of the year. Just a few more months, and we’ll be set. The timeline resets; we return to zero.

The other day, Amy was talking about The Year of No and her friend made a comment indicating she was also doing the same type of thing this year. Amy replied, “I can’t take much credit, it’s mostly Eric. He busts his butt to get things paid off, I’m just really along for the ride.” I need to take this time to clarify this for the whole world: Amy is essential to our goal of getting out of debt. As previously mentioned, working multiple jobs to make ends meet is terrible. But with kids in the mix, it becomes total insanity. Amy helps take care of our three rugrats, so I can spend the time I need to work on this extra hustle. It’s but for a short while, and then things will return to our usual normal.

Once I can truly see the light at the end of the tunnel, once we get to The Beginning of the End, I will feel better. But today, right now, I am tired.

I just need an overwhelming amount of love. And a nap. Mostly a nap. – Townes Van Zandt

How much should I cut while getting out of debt?

Recently a reader wrote me to ask my thoughts on how deep one should cut when getting out of debt.

I’d love to hear your thoughts on charitable contributions and media services (Netflix, Hulu, Spotify, etc) while paying off debt. It’s a constant debate in our household. While these are easy-to-cut costs, they are also pretty low amounts in our monthly budget, so trying to figure out what’s worthwhile to cut versus not cut.

We have certainly had those debates in our household during this process, especially since starting The Year of No.

Subscription services

Before starting The Year of No, I was signed up for a few subscription services that I really liked, which included:

  • Five Four Club (now Menlo Club) a monthly clothing subscription: $60/month
  • My local gym: $42.69/month
  • Apple Music (family membership), for streaming music: $14.99/month
  • iCloud (one for me, one for my wife) for backup of phone data: $2.99/month X 2
  • YMCA Kids Night Out (not a subscription, but a monthly expense), used as our “sitter” for monthly date nights: $60/month
  • Ipsy, (for the wife, not me), a monthly makeup subscription: $10/month
  • Netflix, movie subscription service:  $10.99/month
  • Sling, TV/movie subscription service: $24.99/month
  • Backblaze, a computer data backup service: $5/month

Note: With Ipsy and the gym membership, those were paid for by reducing the weekly stipend I and my wife receive. For example, I typically take $30/week for my weekly stipend, so I reduced my weekly stipend by $10 each week to pay for my gym membership.

Total monthly subscription amount: $234.64.

At the beginning of 2018, we took a look at what we were subscribed to and decided to cut some things. Our goal was to hit a certain amount of money per month going to debt so we could be done no later than October of this year, and that meant that some things had to go.

We cut Five Four Club/Menlo Club, my gym, YMCA Kids Night Out, and Sling. My wife eventually ended up cutting Ipsy as well, bringing the total we saved each month by cutting some subscription services to $197.68. That’s right: almost $200 per month saved by becoming boring adjusting our lifestyle.

In addition, when we cut out the YMCA Kids Night out, we cut our date night money with it ($100) and additional eating out money ($50), brining the total monthly money saved to $384.64. There are probably some others in there, but it’s easy to see that by cutting out lifestyle down to bare bones, we have freed up a lot of money to put on debt each month.

The things we didn’t cut were weighed heavily, but deemed to essential to our lifestyle to cut, at least for now. In an extreme, worst-case scenario everything outside of the Four Walls — food, basic clothing, transportation and shelter (which includes utilities) — would be on the table. We’re not anywhere near a worst-case scenario, but The Year of No is teaching us just how far we can go to reduce our additional expenses, if needed.

Charitable giving

This one is trickier. Some people don’t give at all. Some people give a lot, and for different reasons. Many religions have giving built into their cultures. I have a friend who used to give regularly to his local animal shelter. I certainly know many who give freely to people in need outside of any organized religion or non-profit organization. I also know many who give their time and money to organizations working to help others in need, find a cure for cancer, and a multitude of other causes.

Learning how to give is very important to the development of your character. I often encourage people to visit globalrichlist.com to see how well off they are doing compared to the rest of the world. If you are reading this, then you are likely at least in the world’s top five percent in terms of wealth on earth.

I would love to say that giving is one of the most unselfish things I do, but that would be incorrect. I find giving to be incredibly selfish. Giving makes me feel fantastic, and I love to encourage others who aren’t giving to find some way they can make a difference in the world with both time and money: contribute, and see what happens.

Since we’re talking money here, I think it’s important to think about where you’re giving your money. If you have been giving regularly to an organization, it has come to rely on you as a steady donor. If you take your funding away, that organization has to find a way to make up the difference. That could mean additional fundraising, it could mean laying off staff, or it might mean that someone doesn’t get a benefit because your gift isn’t there anymore.

So my ultimate answer to “Should I cut my giving when getting out of debt” is: it depends. It depends a lot on what you’re giving to, how much, and what the implications of cutting off your giving might be. It’s possible you might need to scale back if you’re giving a really large amount each month, but generally I think you could keep your giving in place if you cut enough from your non essentials as we did. That’s what makes the decision about if you should give so interesting: it’s truly a heart decision instead of being only a numbers decision.

How you spend your money now will determine how quickly you get out of debt. But it also will speed up the amount if time until you can start giving more, which is one of my personal goals. I look forward to freeing up more money to give to people and causes that are dear to me.

I am selfish, after all.

‘The Year Of No’ monthly report: February

The theme for February was full steam ahead.

It’s tax season, and even though we no longer own a house that we can deduct interest from, having three kids and student loan debt interest is still a tax saver. I have tried cutting the money I get back from the government each year by raising my deductions, but we still get money back. I suppose the money we give to the local grocery stores make up for the amount we receive.

February 2018

We are staying the course. We have held the line on expenses, and I started a side gig doing some freelance website work. I haven’t gotten paid but a tiny amount from that this year, and nothing in February. But March will be a different story.

The weather was nice enough for me to grab a walk with a beloved co-worker, and during our walk he made me realize something: we are only six months away from being out of debt. I moved up my projected worst case scenario from Oct. 1 to Sept. 1, and in my head I was thinking it was nine months away. My friend corrected me (since it’s almost March) and said, “Hey, that’s just six months away.”

That gave me chills.

The final rundown for February 2018 looks like this: we paid down $4,913.03, starting March with $13,812.35 left to go.

March likely won’t be as fruitful, but seeing the Progress Chart dip down has really got me me thinking about how close we are to having four figures of debt instead of five.

Shock and awe, shock and awe.