Archives For BREAK FREE

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.

 

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.

I’m an IT business manager. I know eCommerce and the online space. I’ve grown up in the consulting world and will always be a consultant. My wife and I have great careers and make good money. We live in a nice part of Dallas and don’t have to worry about unexpected bills or living paycheck to paycheck. We take fancy vacations and buy nice things for ourselves.

Now throw all of that away. Quit the jobs and jeopardize the future. Lose our main sources of income. Rent out the house and live in a small camper. Experience life among homeless people living in parks. Who are we now?

We spend the majority of our lives developing our profile. We start out of high school or college with choosing our profession and how we’ll make money. We work hard to become the best in the field, and we start to believe we are the person we’ve created.

My first career in consulting proved it paid off to build a strong profile. I never wanted to be a “SAP” guy (business software), but when I saw the bonuses and raises that were attached to the profile, I pursued it! It works out best for a consulting company to develop individuals with strong profiles because they can then bring them in to make the client happy and make more money. However, it’s not always best for the employee, because when that specialty is no longer popular, their value quickly declines.

Sometimes our profile is the creation of something we really wanted to become, but there are also big influencers from the outside. Your parents want you to be successful, your spouse wants you to be happy or rich (or both), companies want you to buy their fancy crap and society wants you to live up to its economic standards.

Whether we like or not, society and culture are two of the biggest influencers of our profiles. Why else do we all dress and act the same? I can’t decide if my next hairstyle will be the man bun or the one where you shave your head up to the sides and keep it long up top…. just like all the other hipsters! We may deviate slightly, but we’re pretty much all living the same. Our tour guide in Indonesia, named Putu, was astonished when we told him we moved away from our parents’ houses in the US and that we lived many hours away. In their culture, the families stay together, in the same compound, within feet of each other. That’s part of their profile.

But what happens when your profile changes? What happens when you decide you no longer want to look rich, but instead want to be rich? What happens when you purposely drive a car with over 200k miles on it, even though you could afford a shiny new one? Or on the other side of it, what happens when you get laid off and you can no longer find a job in your industry – instead having to go work part-time at Home Depot because that’s the only thing you can find?

We become so tangled up in our profiles that we can’t see a life beyond it. That’s why it’s so hard for lifetime “corporate employees” to become entrepreneurs. Corporate employees, myself included, are accustomed to earning paychecks by completing specific tasks and living within the bigger and seemingly safer ecosystem. It’s too scary to try to make money on our own without all of this support.

Profiles feel very empowering when we’re in the middle of them, but when we’re suddenly thrown out, we learn they can actually be quite debilitating. By saying we’re one thing, we’re admitting we’re not the other.

The one driving force of humanity that’s kept us around is our ability to adapt. When we’re thrown in new situations, we can survive and often thrive. We’re not the single profiles we’ve created, but instead a whole range of possible new profiles.

After a short stint in Texas, our next state to visit is one of our favorites, New Mexico. I became intrigued with the state after visiting the second biggest city, Santa Fe, the first time quite a while ago and experiencing the unique food, culture and architecture. The long history of Native Americans combined with the Mexican culture and Spanish influence has made it a melting pot full of awesomeness.

Making it even more interesting, there’s an incredible variety of geographical diversity. We started at one of the most unique sites in New Mexico and one of the best cave systems in the US, Carlsbad Caverns. I last visited when I was about five years old and don’t remember much more than the audio tour device that hung around my neck.

The cave has two entrances – the natural entrance with an 800+ foot, 1 mile decent into the cave and the unnatural entrance – an elevator! We timed it pretty well because the elevator was out of service so we only had one way in and one way out. It was pretty exhausting, but it did mean fewer people in the cave. After the descent, we toured the “big room” which is a 1.5 mile loop around the largest cavern and is full of nice formations.

The National Parks service offers tours inside the cave that are worth it. We paid $7/each to do the “lantern tour” which mimicked the experience of the early explorers entering the caverns for the first time with nothing more than a lantern. It included a great history and archaeological tour where we learned all about the formation of the caverns, all while carrying our little candle lanterns. At one point we blew out the lights and experienced total cave darkness. If you ever are in complete darkness, wave your hand in front of your face… if you can see an outline of your hand, it means you’re crazy (it actually means your mind expects to see your hand there, so it creates a shadowy image of it… I saw mine and it was crazy (or I’m crazy?)).

The park service also offers some deep cave exploring, but unfortunately they don’t start until March and they may not even start this year due to the new “freeze” in hiring for all federal departments.

After Carlsbad Caverns, we headed north to catch a few days in Santa Fe before the next winter storm rolled in. We had to check out the alien-themed city of Roswell along the way, although we skipped the “International UFO Museum” which is mostly reviewed as overrated.

We visited Santa Fe for a specific purpose, to see if we want to live there next. Jocelyn grew up visiting the city as it was one of her parents’ favorites and close to her home state of Colorado. We loved living in New Orleans with incredible food and unique culture, but unfortunately (unless you love fishing) there’s a lack of outdoor activities and definitely no mountains. Santa Fe ticks most of those boxes and has impressive mountains, but it’s colder and you never will get a hurrication (like snow days for you northerners).

We spent too much on restaurants to further investigate if we prefer green or red chili, we hiked around the national forests just outside of Santa Fe and we checked out some of the neighborhoods to see if we could afford to live there. It’s a popular city for people who have lots of money, but unfortunately there’s not a big economy to actually make a lot of money. They say the best way to make one million dollars in Santa Fe is to start with two million!

I also wanted to spend some time exploring some of the archaeological sites around New Mexico, so we headed over to the Pecos National Historic Site. It’s around 30 minutes east of Santa Fe and around 800 years ago it was one of the larger pueblos in the area. It was a meeting point between the Plains Indians and the Pueblo Indians due to it’s location, so the Pecos smartly set up their village to control it. It was a thriving pueblo even after the Spanish tried to “civilize them” in the 1500’s.

Did you know there’s an archaeological site in New Mexico with over 21,000 petroglyphs spread along a ridge?! Well, I sure didn’t and it just adds to the fascinating archaeological sites all along New Mexico. It’s called Three Rivers Petroglyphs and it’s free to visit. The petroglyphs are over 800-1,000 years old and while many of them are getting pretty worn by weather and unsavory tourists, there are still many stunning petroglyphs that tell the stories of times past. It has quickly jumped near the top of my favorite archaeological sites in the US.

We wanted to visit White Sands National Monument next, but the weather was pretty crappy and a cold front was coming in, so we skipped it. We headed farther south to look for an electric site to run our heater, only to find the next two state parks were full of snowbirds! They’re everywhere around here because it’s warm, and they stay because they can buy a $100 annual senior state park pass and then they only pay $4/night for an electric camp site! It’s kinda crazy because they stay at campsites that don’t even have anything around… just to find a warm and cheap escape.

We finally found an electric site at Pancho Villa State Park, which is just a few miles from the Mexican border. It’s the location Pancho Villa raided in the 1910’s and besides that, there’s not much to the small town. The highlight is to headed over to Polamos, Mexico to get some cheap margaritas and Mexican food – which of course, we did. You can also get cheap dental work and plastic surgery, but we decided against that for now.

We nearly skipped our last stop in New Mexico, Gila National Monument, because the difficulty of reaching it. At one point it was the most difficult National Monument to visit in the US due to the poor infrastructure and because it’s out in the middle of nowhere! We headed up the “easiest” way to get there which was recommended for campers in RV’s, but we had to turn around three miles from our destination because a water crossing over the road was too high!

We turned around and decided to stay in the city and drive to the monument the next day without the camper. However, after spending a few minutes at the city RV park, we changed our minds and didn’t want to pay $33/night to stay in a park full of shady characters. The last option was to take the route not recommended for cars over 20 feet because of steep grades and hairpin turns – for 45 miles and two hours! With some careful driving and a nerve-wracking two hours, we made it to our camp site.

We spent the next day exploring the national monument – which was worth the drive. We did the main loop where you get to see and walk through the cliff dwellings, then we completed a few other hikes through the park. It just adds to my archaeological intrigue with the southwest and reminds me of how full the United State really was before mass disease and genocide wiped out the Native Americans.

Okay, that was a sad way to end it… but don’t let that influence your decision on whether to visit New Mexico :). We’re passing through for now, but I’m sure we’ll be back in the future. On to Arizona.

Three Rivers Petroglyphs

Three Rivers Petroglyphs

Three Rivers Petroglyphs

Three Rivers Petroglyphs

Three Rivers Petroglyphs

Three Rivers Petroglyphs

We found this small piece of pottery in the village at Three Rivers Petroglyphs. It's amazing to think it's over 1,000 years old and you can still see the intricate details. We left it there, of course.

We found this small piece of pottery in the village at Three Rivers Petroglyphs. It’s amazing to think it’s over 1,000 years old and you can still see the intricate details. We left it there, of course.

On the left, a lantern tour through Carlsbad... on the right, young cave explorers (including me)!

On the left, a lantern tour through Carlsbad… on the right, young cave explorers (including me – the smallest on the left)!

Just outside of Santa Fe is Pecos National Historical Park. This is the actual church the Spanish commissioned the Indians to build.. so they could save them from savagery.

Just outside of Santa Fe is Pecos National Historical Park. This is the actual church the Spanish commissioned the Indians to build.. so they could save them from savagery.

Our little visitor in Roswell!

Our little visitor in Roswell!

These are some of the best preserved cliff dwellings in the regions, Gila Cliff Dwellings

These are some of the best preserved cliff dwellings in the regions, Gila Cliff Dwellings

First Lifestyle, Then Work?

February 18, 2017 — 4 Comments

Lifestyles are a major contributor to our happiness, but most often they’re designed around the remaining time we can squeeze from the rest of our life. It’s hard to live a lifestyle of pursuing the things you love if you’re working 80 hours a week.

What would happen if we redesigned our lives around a lifestyle we loved? For the first ten years of my post-college graduate life, my job determined my lifestyle. For the first seven years, I worked for Accenture and traveled Monday through Thursday for 90% of the year. I spent weekends back home in Dallas, but much of the time was used to catch up on the things I missed during the week – appointments, shopping, errands and any other time I could squeeze out to catch up with friends or my then girlfriend.

My weeks were filled with a lifestyle designed around my job. Even though I usually flew out on Monday morning, I’d dedicate time on Sunday evening to packing, ironing and finishing up whatever other errands popped up before heading out. Besides giving me the chance to work face to face with my client, the travel was also advantageous to my employer because it meant I was pretty much there to focus on work. There were no “outside” distractions we face at home like family, friends, clubs and organizations, volunteer activities, personal hobbies or errands. We were there to focus on work.

If I wanted to hang out with friends, it was only the people I was working with at the time. Sometimes that was good, but on other projects like when I traveled to Philadelphia for 1.5 years, I was the only consultant, so most evenings were spent alone. I didn’t mind too much because I was reading and writing a lot and the travel perks were pretty amazing, between hotel points, flight upgrades and extra cash from my per diem.

The job was still a really great opportunity where I learned a ton, met a lot of great people and made good money, but I was so over the travel. I left Accenture in 2011 and went to HP so I wouldn’t have to travel as much and could actually spend time with my wife. It worked out for a while and life was pretty balanced because I was working from home (which presents its own challenges), and I even got to take an unpaid leave in 2013 to travel the world for ten months!

After we came back to work in 2014, things really picked up. I was fortunate to get a promotion to Manager and the new project I joined back on was incredibly challenging and my wife also got a new job. Over the course of the next two years, HP separated, acquired multiple companies and went through a bevy of changes which required some intense work. In the end, I was managing a team of 60+ people globally and a website with hundreds of thousands of users. My day usually started with 100+ emails overnight from Asia and Europe, continued with 10 hours of conference calls during the day, and ended with conference calls with Asia sometimes until 10 or 11 at night. We also worked at least one weekend a month to deliver code to the new website and if the site ever went down at night or over the weekend, I also got to work! Needless to say, I was out of balance again.

I felt privileged to have such a good opportunity to deliver challenging work, make friends with so many people around the world and make some really good money, but it was taking a toll on my mental and physical health. My life was incredibly out of balance, and I wasn’t living the lifestyle I wanted, so we made the difficult decision to quit.

My wife and I have thought a lot about the lifestyle we love and are mostly in agreement (I doubt we’ll ever be in full agreement, but that’s fine). We landed somewhere around here:

  1. Ability to take long vacations domestically and internationally to explore the world
  2. Work similar schedules so we can enjoy each other’s company
  3. Include enough time to catch up with friends and family
  4. Pursue work we enjoy and can make money
  5. Pursue work that provides meaningful interactions and allow us to create or be a part of a community
  6. Earn enough money to do the things we want to do!

Anytime I think of a new career or job opportunity, I try to run it through that filter first. Previously when I thought about entrepreneurship opportunities, I only thought about how much money I could make off of it. Could it get me rich? I never pursued any of those opportunities because the idea would get old pretty fast, indicating I wouldn’t have been successful anyway.

I know many people will think I’m a total asshole for writing this because it’s such a “first world problem”. Most people will never get the opportunity to think about a “lifestyle first” approach due to just getting by paycheck to paycheck or sacrificing your life for the kids. However, there’s always something you can do to move that direction. For us, pursuing this lifestyle first approach motivated us to work really hard and save lots of money, so we can entertain it. I may end up going back to a corporate job that once again eliminates my lifestyle list above, but I’m sure as hell going to try hard not to!