Posts Tagged ‘money’

25th October
written by Randy

I recently had an opportunity to meet for lunch with a former boss. It was not long after my last job had finished, and I had just returned from my trip out to Yellowstone. He had recently been out of work for three months, and spent had spent that time with his family, and travelling, and it turned out that we’d been to several of the same places on our out-of-work journeys.

Referring to his own comfort with not having a job for three months, and in response to my own nonchalance toward the same possibility for myself, he said to me, “I’ve learned, lately, that the most important things in life are experiences, much more so than possessions or money. And I get the impression that you’ve known that for a long time.”

Regarding the second part, I’m quite flattered to know that my personality reflects my attitude and beliefs! Among which is the fact that I certainly agree with the first part. Experiences are worth far more than anything you can own.

What rich people have

People get caught up in a trap of trying to get rich, because they want what rich people have. But where I think most people lose sight is that they think of the money as the thing rich people have. But money isn’t what makes people rich. Or happy.

What makes rich people happy is freedom. They can travel when they want, eat what they want, do what they want. They have the freedom to do what they want. They have the freedom to make choices based on how they value their time, and what they want out of life, rather than making choices based on what they need to do in order to pay the bills or feed the family.

My point is this: you can be rich without having much money. To be rich, all you need is that same freedom that rich people have. And rather than thinking you need more money to have that, it’s time to start thinking in the other direction: less. You need less bills, less obligations, less responsibilities, less commitments.

I’ve spent the past few years reducing my debts, my commitments, and my responsibilities, so that rather than making myself a slave, constantly in search of more money, I can reduce my dependance on money and gain more freedom. And that has already been manifest on several occasions over the past month.

My freedom

I was able to attend several foreign films at Chicago’s International Film Festival this year, something I’ve wanted to do every year that I’ve lived here, but never managed to do. But with lots of time and no obligations, this year I was able to do it. And the best part is, every film I attended was less than half-price, because I had the freedom to watch them during matinee hours.

I’ve also written more than one-third of my ebook already, because I’ve had the luxury of writing when the inspiration was there, rather than trying to force it out when I had the time to spare. And since I’m not forcing it, I’m writing better, more inspired material.

All month, I’ve been receiving phone calls and emails from recruiters who want to find me a job. But since I’m not desperate and I don’t need the next job that someone can get me, I have the luxury of keeping my self respect, and being much more demanding about what I get.

One recruiter got me an interview for a three-week position that sounded good (mostly because it’s short!) and after the interview, she called to ask how it went. And the thing is, I don’t really care how it went! I don’t need it.

During that call, in typical recruiter form, she asked me to take a moment and write up a little “thank-you” email, thanking the gentleman for taking the time to speak with me, and reminding him that I’m really interested in the job. And my response to her was: “You mean beg? Sorry, I’m not going to beg for a job. I don’t need it. He should be thanking me.”

There was a bit of tension on the line after I said that, but it ended in laughs, and more importantly by having done that, I had demonstrated that I am a person of value.

And guess what…

The next day, they called back to tell me that I had been offered the position. And now, instead of three weeks, they’re talking about six, and looking at possibly going longer, or even permanent. That’s a big change in position, which seems to validate me.

And my response? No. I don’t want a permanent position. I liked it when it was three weeks, and I’m willing to give as much as six, but that’s it. I have plans for December and January (including the fact that Hawaii is among the states I haven’t visited yet!). I’m not giving that up for some job.

Starting work

So now, I’m starting this new position with a new company in a few minutes, not worried about making a great first impression, not worried about any of the other stressful things that people think about on their first day.

I woke up today without an alarm clock, and without worrying about getting up on time. I’m sure I’ll be on time, but in truth, if I’m not on time I don’t care. I have no phone, so there’s no number for them to call if I’m late. And if they don’t like my attitude and the ask me to go, I still don’t care because I didn’t need the job in the first place!

Of course this doesn’t mean I’m going to be rude or inconsiderate or take advantage of anyone. There is still a lot to be gained from being responsible, on time, and polite to people. But the difference is that I get to keep my self-respect.

I’m on time because I choose to be, not because you threatened to fire me. I’m dressed well because I care how I look, not because you have a dress code. I’m respectful because I’m a respectful, pleasant person, not because I fear losing your paycheck.

I’ve won my freedom. I don’t have much money, but I feel rich. And that feels good.

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17th October
written by Randy

One of my goals for this year was to be completely debt free, and I am thrilled that I was able to complete it before the year was half done. But since this blog wasn’t started until after I had already crossed that finish line, I never really got much of an opportunity to talk about why that was so important to me.

With the exception of a few know-it-all economics majors who think financial leverage is good, I think most people understand that debt is bad. Most everyone I know, when asked what they would do if they won the lottery, begin by saying “the first thing I would do is pay off all my debts.” But if we all know that it sucks to owe, why do we all do it?

A system has been built up around us which sees citizens as nothing more than consumers. Our government refers to us as taxpayers, rather than as citizens. Our news is presented by corporations pushing an agenda. Our entertainment is filled with advertisements to buy, buy, buy. And with mortgages, loans, and credit cards, our banks have made it easier than ever to spend money we don’t have.

Why is it so easy to get into debt?

There is no advantage in giving away money, so you have to stop and think about why it’s so easy to borrow, to use credit, to finance things into the future. The reason is simple: debt is slavery.

If you buy a car from me and pay cash, I get just one transaction, and it’s only worth the price of the car. But if I can get you to finance it, I’ll not only make a bunch of extra money in service fees, but I keep you tied to my auto lot for a long period of time. As time goes on, I can make you special offers to trade in your car on a new one, and just move that debt around. You become trapped.

If it costs several hundred dollars to buy a cell phone, but I tell you that you can have it for free, so long as you agree to a 2-year service contract, I will not only lock you into two years with my recurring service, but over those two years I’ll also finance much more money than the price of that phone. (The difference in price for a no-contract service is usually around $15/month, which is $360 or more over the length of a contract.) And I’ll let you out of that contract early if you agree to sign a new one. Once again, you become trapped.

And that’s where we’ve ended up. Americans are stuck in they mortgages, stuck in their cars, stuck in their overpriced cell phones and cable television packages. Every year it’s a new credit card. Every two years a new phone. Every five years a new car. Every eight years a new house. Always moving bigger and bigger debts around.

The treadmill

It becomes a debt treadmill. Like the Red Queen from Alice in Wonderland, we’re all running in place, working harder and harder to get somewhere, but while the scenery keeps evolving, we’re stuck in place.

When you’re on the debt treadmill, stretched to the limit of your income, you can’t afford to be unemployed. Without a paycheck, you can’t service the debt, and eventually the whole house of cards will come crashing down on you.

That fear makes people do things they don’t want to do. Instead of taking that vacation to Europe you’ve always wanted, you find yourself having a stay-cation, which usually amounts to you doing those projects around the house you’ve been putting off while you’re on the treadmill. Imagine — taking a vacation from work… to do work!

That’s what we’ve become. Americans have become slaves. We’ve allowed those terms taxpayer and consumer to define us and control us, and like sheep we all follow the rest of the flock into a prison… with a treadmill instead of a floor!

It’s destroying the world

This treadmill is not just destroying ourselves — though that alone should be enough of a reason for you to want off. This cycle is also destroying our world!

In an effort to make things bigger, better, shinier, and more desirable every year, we’re mining up more resources from the earth, polluting the air as we refine them into building materials, and then selling them to people who take their previous baubles and toss them into the trash.

We’ve got junk yards filled with cars, most of which could have been repaired for much less than the cost of a new one. We’ve got landfills full of last year’s model of cell phone, computer, etc. We’ve got storage units syphoning money out of our pockets every month in exchange for keeping safe all of the things we don’t even use any more. And we’ve got a planet polluted with all the plastic wrapping that all of this stuff came in.

Our economy is in a shambles — and it affected the entire world! — because we, as a nation, exist only for the purpose of creating debt. Our national debt is astronomical, and the government’s budget runs in a perpetual deficit. Our entire country has become enslaved to the treadmill.

Getting off of the treadmill

It’s hard work, but it’s not nearly as impossible as it seems. You can get off the treadmill, as I did a few years ago. You can become debt-free, as I did this year. It just requires a conscious choice.

Getting off of the treadmill is the first step. When you find yourself stuck in a hole, the most important thing to do is stop digging. That means quit borrowing, quit spending, quit perpetuating the mess you’ve made.

I got off of the treadmill in 2008, and it was hard. When people around me were driving fancy new cars, I was riding the train or the bus. When people around me were eating in fancy restaurants, I was eating home-cooked meals. When people around me were buying the latest computers and laptops, I was using the same ones I’d had for 4 years.

But what I realized was that I was off of the treadmill. Instead of feeling deprived, I felt responsible. Instead of being jealous of that fancy dinner, or sexy car, or shiny new computer, I learned to look at those things as the bars of the prisons that everyone else was building around themselves.

I knew that if I stopped actively building that prison, I could start working on getting out of it. And over the next two-and-a-half years, I did occasionally buy things, but instead of carelessly spending, I now thought long and hard about whether I would value the item enough to justify adding bars back to the prison I was working so hard to escape.

Breaking free

Finally, after making difficult choices and living responsibly — for however long it takes — you do make it out of the prison, as I did this year. And it’s liberating!

When you’ve stopped spending recklessly, you find that life costs a lot less to live. And when you’ve stopped funneling every cent into servicing debts, you can actually save money. With a low cost-of-living and a very modest savings, you can work fewer hours, or even actually live comfortably for some time without a job if you choose.

When you’re not worried about how to service those debts and how to pay for that house of cards around you, your stress level reduces. Your health improves. You sleep better, feel better, look better, live happier.

When you’re constantly trying to have the latest television, or the fanciest cell phone, or the sexiest new car, you end up freeing a whole lot of attention that you didn’t realize you were spending on keeping up with those things.

When you’re not actively participating in the financial treadmill, you are doing your part to reduce its footprint on our society and our world. The more people stop playing the game, the less incentive there will be for banks to keep the game going.

You don’t have to make any more effort to be green; it’s a natural side-effect of being more frugal. Buying less creates less waste. Riding on public transportation consumes fewer natural resources. Fixing things instead of buying replacements keeps more garbage out of our landfills. And so on.

When you end your slavery, you gain your freedom. You gain the right to choose the job you want, rather than the job you need. You gain the right to trade things for experiences. You gain the right to go where you want to go, do what you want to do, be who you want to be.

Basically, the point is, if you want to make every year amazing, the most important first step is gaining the freedom to do so.

11th September
written by Randy

In 2008, after two years of incredible irresponsibility I had almost $50,000 in credit card debt, in addition to another $15,000 I still owed on a car I didn’t even have anymore. Irresponsible doesn’t come close. I had spent two years living recklessly and overindulgent.

I decided to buckle down in 2008. What’s more, I lived very modestly, in a small room in the basement of my cousin’s house. I decided to go completely carless. And I made elaborate spreadsheets detailing the balances on each card and the associated interest rate.

I started with the highest interest card and worked my way to the lowest, paying off as much as I could, and after one year I was able to cut my total debt almost in half.

Progress was much slower in 2009 thanks to a series of unplanned expenses, and I made almost no progress for the first 8 months. Still, I managed to get back on track at the end of the year, and some big overtime pay helped a lot, too. I ended the year owing just over $11,000.

Among all the many things that have made 2010 an amazing year, one of the most significant is that I paid off all of my debts this May. I do not owe any bank or creditor anything. I am happy to be 100% debt free.

Now I still use one credit card, but I pay the entire balance each month. So now I pay no more interest or monthly fees, my credit rating is impeccable, and thanks to my rewards program it’s as if the bank is paying me to use their card!

Over the past few years, I’ve learned very well about the prison of excessive debt. Having debt makes you a slave. Owing money often means taking jobs you don’t like out of fear that you won’t be able to pay your debts.

And more importantly, you can’t start saving and building a buffer when you’re always trying to catch up from behind. Now that I am 100% free from all debt, I have begun saving money. I have a positive net worth, and that means the freedom to take risks in search of happiness, rather than always playing it safe to avoid pain. That difference in motive is really a difference in lifestyle, and its value is immeasurable.

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