Milestones

July was an incredible month. Let's recap:

1. We moved into our new house.
2. We went on vacation with dear friends, beating the heat and hanging out on various lakes for 2 solid weeks.
3. We paid off Kim's credit card.
4. I started losing weight again.

1: Now, it might be odd that someone looking to get out of debt may be buying a house, but let's check out the bare facts:
Wherever you are (unless you're rich, retired, or living with your parents), you've got to pay to live there. I was paying rent--$790--which included all utilities, basic cable and internet. And all that money was leaving. No equity was built. Now, I pay $590 for the house and, so far, 100-ish for the utilities. I'm still waiting on the first cable bill and the water/sewer/trash/recycling bill. Either way, it's either the same price or cheaper.

How can I do this? I moved to a small city, where housing prices are a fraction of the cost of a comparable neighborhood in a major metropolitan area.

2: The vacation is self-explanatory, but I'll drop some details: We went to a lake in Upstate Vermont, rented a house and split it with two other couples. If you pay for hotels when you travel, you are missing out. For a full week, it cost each couple $530. How much would that have been for hotel rooms? And we had our own kitchen, beach, and BBQ, so we saved money on food and travel, too.

3: Kim's credit card was the low-hanging fruit of the debt-snowball tree. It was only about $2400, and my August 1 bonus covered it with lots to spare. The next-lowest debt is my own credit card, some $8000. That ain't nothin' to sniff at. I'm hoping that will be paid off by this time next year. Then comes the car and the big debt ($9100 and $13500, respectively), and we're clear of consumer debt.

Of course, there's still student loans, some $100,000 worth, and the $71500 worth of mortgage. But we've engaged the debt snowball, and it will only roll large and faster as we go along.

4: Now, I'm not a huge guy, but a certain svelteness has always eluded me. Plus, I've been influenced by the movie Fat Head and the book Good Calories, Bad Calories, about the science behind the Fat/Carbohydrate debate, and how fats are actually good for me. As a result, I've started a high-fat, no-carb diet, with the exception of Saturdays, during which I eat whatever I want. I've lost 4 pounds in 2 weeks, with my goal being to lose 20 pounds, ending up at 160.

This diet that I'm on is far from gospel, and many people poo-poo the science behind it, mocking the "Atkins Diet" and whatnot. I'm not going to preach to you, but I eat exactly what I want (except sweets, bread, and pasta), in as much quantity that I want, and I work out no more than I did previously (1-3 hours per week, plus household building projects on the weekends), and I'm losing weight.

I'm conducting an experiment on myself. If you view the results as compelling, well, perhaps you should experiment more yourself. Science is fun.

Thanks for reading.

The First Bid

Around the corner from Kim's work was a side split-level home across the street from a nice sized park. It was in a good area of town, walking distance (10-15 minutes) from the local hipster district, and only $30,000.

We put in a bid.

Fortunately (as it turns out), we were outbid. It was going auction-style, so certain criteria had to be met, and the highest bid is usually the criteria. The house was bank-owned (former foreclosure) and needed a ton of work. But what a bargain!

We came very close to bidding on another bank-owned property, but managed to find our "dream home" in the meantime.

What was important about this house was that it made us think, it made us check boxes, and it really woke us up to the fact that, despite our inclinations to avoid further debt (see: the title of this blog), we were ready to buy a house.

Update on the Debt

Since this blog exists, at least a little, to get our debt managed, and maybe help others with similar situations out by living the experiment, it's time to get an update.

Our situation is pretty slick, because we can basically start at the beginning of the year, since we had finally moved into the new place, gotten the new jobs, and settled into what, for us, is just about normal life.

Our total debt load as of January 2011, came in at just a hair over $120,000. I'll write it out so it looks scarier: One Hundred Twenty THOUSAND Dollars.

It broke down like this:

Debt Title                   Amount Owed             Minimum Per Month

Student Loan #2         $59,500.90                  $275

Line of Credit              $14,221.11                  $278

Student Loan #3         $12,677.14                  $50

Student Loan #1         $12,071.19                  $78

Car Loan                    $9,977.27                    $220

Credit Card #1            $7,662.57                    $188

Credit Card #2            $2,415.78                    $60

Student Loan #4         $1976.54                     $50

Macy's Card               $256.18                       $26

Following the principles of the Debt Snowball, and beginning with  the lowest total balance. With our tax refund at about 2600 buck, we paid off some car stuff and still had money left over for Student Loan #4. The following month, we had more car stuff, a trip, and were still able to get the Macy's card taken care of.

This is big! This is two expenses totaling 76 bucks each month that we've gotten rid of.

So now it (sort of) looks like this:

Debt Title                   Amount Owed             Minimum Per Month

Student Loan #2         $59,500.90                  $275

Line of Credit              $14,221.11                  $278

Student Loan #3         $12,677.14                  $50

Student Loan #1         $12,071.19                  $78

Car Loan                    $9,977.27                    $220

Credit Card #1            $7,662.57                    $188

Credit Card #2            $2,415.78                    $60

With two-three months interest and payments accumulating, the total amount owed is a little different, but the minimums are the same.

It will take probably 3 months to pay off the next lowest debt, Credit Card #2. I'll give you an update when we've accomplished that.

Three months, by the way, to save up for an pay an amount that is a whopping 4% of the largest debt, to say nothing of what's between them. We have a long, long way to go, and I'm not getting any younger.

Ten Years. Minimum.

Our debt happened in the good, old fashioned, American way: We earned it. Here are some of the myths we took part in:

• College is worth the money
• Private schools are better than public school
• YOU HAVE TO HAVE [whatever]
• You absolutely MUST have the biggest goddamned wedding that you can pay for. Not afford, mind you, but pay for
• Being poor is the best way to be creative
• Hanging out in bars is fun
• Workaday life is slavery, not working is freedom

I think, in time, I'll tackle each one of these with a blog post. I'll call the series Money Myths, or something else just as hokey. Well, maybe I just won't call it anything, and just label it Personal Finance.

The point is, we bought in, and we paid up, but with other people's money. Here's some things we can't do, because the long money is too tight:

• Start a family. I know, I know, plenty of people have had families with much less money and much more debt, but our goal is to get solid before we have kids
• Buy a house. Debt to income ration = too damned high! [insert meme here]
• Work as a teacher. This one is mine, not Kim's. I'm not taking a 50% pay cut at a time when the benefits that make teaching even remotely attractive are being cut across the country
• Buy health insurance for Kim. My work covers mine, hers doesn't.

That's not going to stop us, though, from living in our own way. We've worked it out so that, while we're digging out of the 10-year hole, we've got a pretty good life. No more bullet-points, but we build furniture and other projects, I write, we work out and go for walks. It's all quite fun fun. But over it hangs this hideous dead cloud, this idea that old age will be 10 years closer by the time I'm able to even start saving a significant amount towards retirement.


What do we do? We follow the Get Rich Slowly ideal: Try to get more money, while trying to spend less of it. Still, without some kind of major change, we're looking at 10 more years. Minimum.