Archives For April 2017

As I’m writing this, I’m looking through the window of our vintage Airstream trailer and onto the beautiful black sandy beaches of the Lost Coast in Northern California. The foggy mountains provide an incredible backdrop as the waves continually pound the coast. I keep thinking we never could’ve done all of this if not for the sacrifices and hard work over the last ten years. This is how I went from $50,000 in debt, to us having enough money to do this. I’ll share these steps with you, so you can do the same.

Here are the six basic steps:

  1. Complete a current assessment
  2. Track your spending
  3. Create a spending plan
  4. Monitor plan and adjust as necessary
  5. Save some money
  6. Attack your debt

1. Complete a current assessment

The first thing you need to do is complete a current assessment, which is nothing more than a quick balance sheet to see where you stand with your assets and liabilities. To do this, gather all financial documents relating to debt (mortgage statements, credit card, student loan, personal loans, etc.) which should include amount owed, interest rates, and minimum payments. Take a look at my example current assessment and begin filling it in with your information.

1.  Fill out the liabilities section of your current assessment with all debts including short term and long term (mortgage)
2.  Fill out the assets section.  List out the money in bank accounts, stock accounts, and retirement accounts

Update the spreadsheet to include all of your short term assets and liabilities for now, so you can see where you stand. After you do this, you can also read how to track your net worth and fill out the long term section as well.

2.  Track your spending

Can you tell me how much you spent on groceries last week? How much did you spend on going out to eat or little luxuries like Starbucks? If you’re anything like me, this step will be incredibly enlightening because you’ll be surprised to see where the dollars are going.

There are a few different ways to track your spending. When I went through this step, I downloaded credit cards statements from the previous two years, categorized each item in a spreadsheet and totaled them up. This gave me a good idea of what was happening with my money, and it wasn’t pretty.

The scary part was that in 2005 which was the first year I went back and calculated my spending, I was making $45,000 a year, which equals $2,561 per month. However,I was spending $2,588 per month which meant I was in the hole by $17 every month… but actually it was much larger than that when accounting for all of the taxes, insurance, etc taken out of my check! I was obviously financing a lot of my living with debt.

There are a few ways to track your spending:

1. Old School: write down every expense on a notebook and carry it around with you each day. You can then add these up manually or into a spreadsheet. Keep each item under a general “category” and try to limit to 6-8 categories total. 

2. Automate: use a site like mint.com which links all of your credit cards and will create a nice history for you

Most credit card websites will also have information categorized, but it’s a little harder as you can’t get them all in once place. Here’s an easy spreadsheet to use a tracker, you can print it off or use it in Excel/Google Sheets Spending Tracker.

If you’re serious about getting your financial act together, don’t skip this step. Most people will think they have a good handle on their spending, but after this step they’ll realize they’re spending like a drunk on Bourbon Street*.

3.  Create a spending plan (Budget)

Now, you must tell your money where to go (like you might already want to tell me where to go). You have to control where your money is spent and this happens through a budget, and not one of those “I’ll do it in my head” budgets.

The key is to keep it simple and not try to have a 100 line item budget, that’s doomed to fail. Take your biggest categories of spending that can fluctuate (clothes, groceries, going out to eat, etc) and create a goal for the amount you want to spend each month. Use your previous month totals from step 2 as a guide to set your total monthly amounts. Here are some sweet examples of budgets:

If you’re really serious about doing this, here’s a pro tip: cash budget, baby. This is the most effective way to stick to your spending plan because there’s nothing that makes your spending more real than pulling out a $100 bill every time you got to Wal-mart or go out to eat. You’ll experience the psychological impact as you see Benjamin leaving your pocket and paying for Chili’s two for two with too many margaritas, and it will start to change how you spend your money.

Check out the full details here on how to use the cash budget, but we literally went to the bank each month, pulled out $1,200 in cash, stuffed four envelopes, and then spent from them. If you weren’t watching your spending closely before, I can almost guarantee by doing this, you’ll quickly find an extra 20% of your dollars back in your wallet. These were our envelopes:

  1. Entertainment ($400)
  2. Food ($600)
  3. Clothes ($100)
  4. Lucy/pet spending ($100)

As you can see, it doesn’t include all of our expenses because some are too convenient (who wants to pay for gas with cash) and others aren’t as easy to constrain (utilities). This was also a few years old and our numbers have changed since then… based on our latest monthly spending report while traveling, we’re over $800/month for food.

4.  Monitor plan and adjust as necessary

Now that you’ve created your spending plan, you need to track against it as the month goes on. As I mentioned in step #3, you may be surprised about how much you are spending on certain areas, so see what happens now that you’re tracking it. Feel free to move your numbers up or down in certain areas as the months progress. Use the same tracking methods mentioned in step 2.

Now, for one of the most important parts… don’t give up! If you do, you’ll be in the same position that you were in before. Use the knowledge you have gained from analyzing your spending and spending plan and keep the momentum going. This needs to be a change in the way you live, not a temporary diet in your spending.

5.  Save some money

At this point, you should have a good idea of where your money is going and how much you have to save. You’ll inevitably have some crazy thing happen right as you start making progress, so you’ll want to quickly build up an emergency fund so you don’t have to use your credit cards. Let’s see… some of my fun ones over the years have included a towed car, minor wreck, sick dog, ruptured achillles tendon and lots of fun house repairs.

Let’s start with two main savings tips:

A.  Create an emergency fund

The minimum amount you need to save is $1,000 to cover unexpected expense like the ones I mentioned above. If you already have this money in savings or you’ve now saved it, it’s time to move on to the big savings fund. You need to build up your emergency fund to 3-6 months of expenses so you can cover major issues like the loss of a job or a major injury. You should keep this money in liquid assets like savings accounts where you can quickly access the money. Now that you know your complete budget from step three, you should know the amount you need to save.

There are two main obstacles for most people on this step. The first, is you’d rather pay off debt. I agree that’s important, so you can always do both simultaneously, but I’d try for at least three months of spending saved before you go full on debt. The other obstacle is for nerds like me who’d rather invest it. This money is your security blanket or your “tell your boss off” fund. Keep it in a place where a major market correction won’t hurt it…. because your boss could become unbearable at any minute!

B.  Pay yourself first

Another important part of building your savings is to pay yourself first. It’s tempting to “save what you have at the end of the month”, but more times than not, you’ll find not a lot of money at the end of the month. If instead, you put money into savings before the month starts, you’ll be amazed at how you get by without it.

Setup an automatic withdrawal through your bank and time it so it happens a few days after you get your paycheck. Just like you’re hopefully doing with your retirement accounts, the money will get pulled before you even had your spendy little Donald Trump hands on it.

6.  Attack your debt

Debt is one of our biggest obstacles to freedom, and there’s a lot of people who profit off of you being in debt. It’s time to cut that, time to kill all of your debt so you’re working for you and not for GM auto financing. I hate debt – especially short term debt. The only debt I plan to ever have in my life is a mortgage debt, but I’d like to even get that knocked out soon. My distaste for debt came from back when graduated college and within a year of working, I was already $50k in debt and had a stupid car loan** which I’ve since vowed to never have again.

Now that you’ve followed the previous five steps, you know where your money is going, how much you have to spend, you’ve saved up some emergency funds and now it’s time to kill the debt.

There are many plans that give you the steps to pay off your debts but my favorite is Dave Ramsey’s Total Money Makeover, and it’s the plan I used to pay off my debt. He has a method called the “debt snowball” where you list all of your debts from smallest to largest on a piece of paper. You can even right this on a poster board you attach to your refrigerator so you know every day what you’re fighting.

Start with the smallest debt on the top of the list and pay only your minimums on the rest of the of the debts. Attack that smallest debt with the rest of your money until it’s paid off. Mark it off the list and do a happy dance. Now, it’s time to attack debt number two – this time using the extra money you were paying off the first debt with — thus, creating the snowball! This really does work and there’s a lot of psychological benefits for doing it this way versus going after the highest interest accounts first. Check out this great template from Kyle to track your debt snowball.

This is how you start to take control of your life, so you can call the shots. You need to have complete control of your money, and you need to be on the same page with your spouse if you’re married. If both of you aren’t bought in on this plan, there’s a high likelihood that it won’t work.

Next, we’ll talk about working smart to maximize your income and also get into investing. If you’ve made it this far, you must be serious about taking control of your money! Seriously, I think I was going for a record long post!!

 

*Incidentally, I had that problem on Bourbon street once and only realized the next few days how much I spent as the credit card charges kept coming

**One of my controversial and popular posts is the 20% rule for buying a car, if you have about three days, you should read through the comments as they’re quite entertaining.

 

From the beginning, March was lining up to expensive as we traveled California and experienced its high-priced gas, food and camping, but we were prepared to deal with it as we explored the amazing state with the most National Parks (9). Then what do you know, I just finished our expense report, and it’s the cheapest we’ve had while fully on the road! Not only that, but the sites are some of the best we’ve visited. Let’s get into it.

Total March Cost: $2,977
Total days in the camper: 31
Total days out of camper: 0
Cost per day: $96
States Visited: California
Total Miles: 3,140

Summary

March was all about California, and for once, it wasn’t about the unexpected expenses that shot up our previous monthly totals. Our per day spending of only $96 was the second lowest month since January, but the lowest month while fully on the road. We’ve experienced four national parks so far, along with some other California dreamin’ locations. Overall, we’re really happy with our costs and hope to continue the momentum through Oregon and Washington!

Spending Details

The Good

We started our California journey the first week of March in Joshua Tree National Park. It’s one of those places I’ve heard about, but usually only from TV shows or movies where people go to eat mushrooms and “find” themselves. I can see why. It’s pretty trippy coming from the Los Angeles landscape of concrete and metal to one of the desert, with Joshua trees throwing their limbs in crazy directions and large boulders thrown around in piles like a giant little kid left them. It wasn’t as astonishing for us since we’d spent the previous two months in the desert and seen some similar sites, but it was still cool. Our favorite part was probably our neighbors who we ended up sharing our separate sites with. They had two kids, four and six who loved Lucy and loved playing. It was fun hanging out and sharing stories over s’mores.

After Joshua Tree, it was on to Death Valley National Park. It was only $1/day more than Joshua Tree, but still very cheap at only $16/day. Death Valley was like nothing I previously imagined – which my simple imagination had pictured only two small mountains with a sandy valley running through the middle.. and some rusted, broke down cars. Instead, the vastness of the landscape was hard to even take in as everything seemed larger than life. The weather was beautiful with highs in the 60’s-70’s, so we didn’t get the full desolate desert feeling the park presents in the summer.

We did get some major winds though, with dust blowing through the air and gusts over 70 mph refinishing our windshield. It happened while we were driving out to “Racetrack”, which is one of those places I always thought would be neat to see, but never knew where it was. Turns out, it’s in Death Valley! It’s a nasty 27 mile one way drive over sharp rocks that sometimes pile together to make it feel like a gravel road. It took over 2 hours, but the damage to the 4Runner will last much longer, mostly because the wind gust that showered the windshield with rocks that left many tiny pits! The Racetrack was really neat, with rocks seemingly sliding across the desert floors over years, leaving a small path behind them. Scientists figured out why a couple of years ago, but it’s more fun to imagine they are pet rocks who have been set free, as my brother hilariously commented.

We also met some cool people in Death Valley; maybe the person I want to be when I grow up! Steve owns a 1957 Airstream which he meticulously renovated over three years while providing hospice care for his wife who had early onset dementia and has now passed on. Okay, that parts really sad, but you needed to hear it to fully appreciate Steve. His new partner, Julia,  was a nurse her entire life before her husband passed, and she also helped with end of life patients and said she thought it was an absolute privilege to provide the final company and care for someone as they passed. So yes, they’re both saints. Steve and his previous wife also lived on a sailboat traveling the world for seven years, and before that, he was a pilot. He’s like Sir Richard Branson, but not as rich monetarily.

Steve and Julia told us about their favorite spot in California which we had to visit, Alabama Hills, just outside of Lone Pine. We decided to visit and it just happened they were there at the same time, so they made us enchiladas (Steve hand makes his own tortillas and bread, as you’d expect). Alabama Hills ranks as one of our favorite free camping site as it sits at the base of Mt. Whitney, the tallest mountain in the continental US, and provides a stunning vista. If you’ve ever watched a western movie made before the 1970’s, it was probably filmed here as the location has doubled for sets in Texas, Nevada, Wyoming and even India and Pakistan! It’s beautiful and one we’ll always remember thanks to Steve and Julia.

After Alabama Hills, it was on to more National Parks, Sequoia and King’s Canyon. They’re right next to each other, so it’s appropriate to talk about them together. We weren’t as lucky with the weather as we were in Death Valley because it’s pretty early in the season and much of the parks are still covered in snow. In fact, most of King’s Canyon is closed until the end of April because of mud slides and ice on the road. We still experienced some beautiful hikes and got to see the thickest tree in the world (General Grant) and the largest tree by volume in the world (General Sherman). I love trees so it was amazing to walk through the Sequoia groves and think about how they’ve see the world change the last millenniums.

After the parks, we headed to the coast to get some warmer temperatures and beach time… but I’ve gone on long enough, so I’ll cover that below.

We kept our spending low thanks to lower mileage, longer stays and we controlled food expenses really well. Like I mentioned earlier, it was nice to finally have a month where we didn’t have an unexpected large expense.

The Bad

As we headed across California to the coast, we got excited to finally get some beach time and warmer weather, rather than the lower 60’s for highs and lower 40’s for lows we’ve experienced most of the trip. We packed a lot of summer clothes but hadn’t really used any yet!

We started in a small county park outside of Los Olivos, which was apparently the town “Sideways” was filmed. It was a rugged drive up into the mountains, but gave us some nice scenic views with wildflowers. However, it also gave us our first exposure to Calitrash, as I non-political correctly call them. We were woken up a 4:30am by a young man screaming at the girl who he was with, while she switched between yelling back and trying to get him to calm down. He continued until about 5:30am when she left, and then proceeded to yell at a national forest worker trying to collect payment the next morning. Luckily, he left later that day but we were still on edge the next night.

We hiked around the area and enjoyed the views of the central valley. The next few days I realized I took a little something home with me (in addition to the tick that bit me on the neck and left a nasty mark during the day)… poison oak. It was probably from a combination of Lucy running through it along with me brushing into it, but I probably compounded the issue while pulling numerous ticks off of Lucy as we we were hiking. I got it on my arms, legs and feet and it lasted over the next week. Yuck.

After the mountains, we stopped in Los Olivos for a delicious tri trip sandwich, before heading to Hobson Country Park on the beach which gave us quick access to Santa Barbara. As we pulled in, we identified more Calitrash and tried to get a spot away from them. They were three surfer dudes who were bleached out by the sun and burned out by the drugs. We were still too close as they kept us awake all night burning their piles of construction wood they probably stole from a wood shop… pieces of plywood, 2×4’s, etc. Luckily, they left… and then we got a new neighbor… a young couple whose quietness in the evening gave way to drinking all night, playing music and then getting sick outside their tent (in our view) the next morning. It was pretty amazing.

It wasn’t all bad though, as we enjoyed Santa Barbara, Ojai, San Simion and some other sites up the coast. We toured the Hearst Castle which was pretty amazing, but we weren’t able to go much farther up Highway 1 because of major washouts, including a bridge that had to be torn down. We’ll save that for next time.

The Ugly

Maybe I should factor in some additional expenses into the March report, as we suffered a heartbreaking accident. We try to keep our driving under four hours per day because it gets pretty exhausting pulling the camper. As we left the coast, we had the option to split the drive to Yosemite into two days, or drive hard and do it in one. The light at the end of the tunnel (Yosemite) shined so brightly that we went for it.

It was a lot of driving through some tough conditions as the area has experienced some major landslides, but we made it through. It wasn’t until the next morning that we realized at what price… I woke up and went outside to discover a major gash down the side of our precious Penny Lane. We’ll probably have to get the whole panel replaced along with some work on the door, but luckily it’s still functional. I guess some damage can be expected when driving a camper 30k+ miles in one year in some major rugged terrain, but I sure hoped it wasn’t.

Just so I don’t leave this report with so much negativity, I did want to share some wins. We pulled into Yosemite without any reservations (not advised) and scored a spot for six nights! The reservation system opens up five months in advance with most spots reserved out within a few minutes, so we got incredibly lucky to get our spot. The weather was also beautiful… but I’ll save that for next time. Let’s see if we can keep the spending low, keep finding amazingly beautiful sites and also limit any further damage to Penny Lane!

Hiking through Sequoia National Park where you can see the big trees everywhere. The picture of Jocelyn on the top isn’t even a named tree!


We were treated to some fantastic sunsets in Death Valley. The bottom left picture is “Racetrack” where rocks slide across the desert floor. Bottom right is the Saltwater Basin in Death Valley, but gives you a view of the vastness of the area.


To the coast! The top picture is from one of our favorite beach campgrounds, Jalama Beach. The bottom right is from Hobson County beach, where we met most of our Calitrash.


Various shots from King Canyon National Park – that’s Jocelyn in a tree! The bottom right picture shows how much snow still remained in Sequoia National Park… piled up very dangerously on this bridge.


The Alabama Hills on the eastern side of the Sierras and one of our favorite campgrounds! It’s BLM land so it’s free, and the sites are unbelievable.


Joshua Tree National Park, with some of Jocelyn’s finer pictures. Bottom right you can see me standing with one of our neighbors, four year old Lucy (and our dog, Lucy!).


More incredible pics from Death Valley. We didn’t see full super blooms as we always seemed to be a few weeks ahead of them, but we still saw some beautiful flowers.

The Untangling

April 5, 2017 — 2 Comments

We are the profiles we’ve created for ourselves with the help of outside influencers, but what happens when we either voluntarily or forcefully remove our profiles and no longer are the person who we thought we had become? How do we untangle everything that came previously and created our profile?

I’ve been actively exploring this question since I left my fancy corporate job last May. The first few weeks felt like nothing more than a vacation, with the feeling that email piles and conference calls would soon start up again. It actually took a few months to get untangled from the regimented work schedule where the rhythms of one work week often mirrored the next. Post-job, I no longer had a schedule or work plan dictating where I needed to be and what I needed to be doing. It was up to me.

It was easy to keep my mind occupied at this time because we were trying to finish the Airstream renovation and prepare our house for sale and/or lease. I thought about work now and again, but it was quickly fading into the past. My mind had pretty successfully become untangled from the knot that had formed over the two previous years.

The next untangling came when I had to figure out what I am now. I’m no longer a consultant, no longer corporate management, and I’m no longer in the high tech world. From some perspectives, I lost the identity I spent the last ten years creating.

Recently, I updated my Linked In profile to say “Explorer”. I was a little nervous doing so because it was such a far leap from what was there before. However, the title felt suitable because that’s exactly what we’re doing. We’re exploring life on the open road as we take our Airstream across the US and Canada. We’re exploring different ways of living as we meet new people and hear their stories. We’re exploring our future and what we want to do with our lives.

I think untangling is a healthy process and biologically we have a deep need to do it. It happens automatically at night when we burn off the memories of the day which we sometimes remember as dreams. We also assist our natural untangling more purposely through meditation, yoga, running and other activities. Some religions or ways of life like Buddhism teach untangling as a very important exercise for our minds.

When I was in college, I was a co-director for Camp Cowboy, which was a freshman orientation camp to help students get ready for college life. My co-director and friend, Doug, had the idea to have each of the freshman write down what they were, or their “profile”, in high school. He then instructed them to throw it in the fire because they were leaving high school and the profiles/stereotypes that came with it (good or bad) and starting anew. Maybe it should be as simple as that.

Maybe in addition to an Explorer, I’m now an entrepreneur. As I learned in consulting, sometimes you just have to fake it until you make it.