Day 1 - The Plan

So, as I was saying yesterday, I discovered a lot of financial blogs that I enjoyed a lot and paid off my credit cards and car debt and all that jazz. Then I got depressed. I had several thousand dollars of student loan debt and a crappy salary and I was sick of being deprived, working in a cubicle and dealing with my life in general. I'm still all of those thing, btw. So, instead of paying off debt or working to be better, I gave up. I  started spending my money on visiting people and new places and just ignored the happy debt that seems to be mounting. Now, don't get me wrong, it is fun. I like seeing friends and visiting new places and doing new things. It's awesome. It's just that I realized this week that I could do more of those things if I had more money. The majority of my money right now goes to pay other people, which is completely ridiculous. Or save for retirement, which is also silly because it's unlikely that's going to happen. The getting old. Not retiring. I hope to retire sooner that I get old because I'd like to actually enjoy my free time. And the best way to do that is to pay my debts off sooner.

That brings us to the plan. As I said, I love Mr. Money Mustache and would love to be way more logical in the way I approach debt, but... Not sure that's going to happen. So, I'm going to turn to what I think is financial planning for dummies: The Dave Ramsey Method. The truth about this is that it's not great. Paying off the smallest debt with the lowest interest is definitely not the most efficient or fastest way to do anything, BUT it's better than nothing, which is what most people do. Also, his hatred of credit cards is ridiculous, unless, again, you're an idiot with low self-control. If you are, then yeah, you probably shouldn't have a credit card. So... I'm going to follow a modified version of the Baby Steps, with some advice from MMM. This is primarily because I have SOME self-control, but I also know myself well enough to realize that I'll get really depressed if I do one or the other. I was doing Dave Ramsey before, which was fine, but the truth is that it didn't make enough of a dent. I paid off debts that had very very low payments associated with them, so even though they were gone, that 43 cents I got extra every month was not enough to motivate me to be better.


So, here's the idea. I'm going to look at my debts and pay off the ones with the highest ROI first. And the ones that will give me that high first. So, first things first, gotta figure out the payments and all that. Thank goodness there's a handy little chart available at http://www.vertex42.com/Calculators/debt-reduction-calculator.html. It's an Excel table that calculates all sorts of nifty things for you.

	Creditor Information Table

	Creditor Information Table
Row	Creditor	Balance	Rate	Payment	Custom	Interest-only
1	Card #1	1,516.05	0.00%	25.00		0.00
2	Car	-	0.00%	-		0.00
3	Student Loan #1	2,326.75	1.86%	10.27		3.61
4	Student Loan #2	2,935.17	1.86%	12.96		4.55
5	Student Loan #3	7,893.80	6.30%	34.02		41.45
6	Student Loan #4	5,077.80	6.30%	21.88		26.66
7	Student Loan #5	4,680.58	6.30%	20.17		24.58
8	Student Loan #6	1,500.08	1.86%	7.39		2.33
9	Student Loan #7	8,542.17	6.55%	36.84		46.63
10	Student Loan #8	13,883.76	6.55%	59.83		75.79
11	Student Loan #10	7,601.21	6.55%	32.76		41.49
12	Student Loan	7,308.65	5.50%	98.00		33.50
13	Student Loan #9	8,557.23	6.55%	36.90		46.71
14						0.00
	Total:	71,823.25	Total:	396.02

So, according to the debt snowball (lowest balance first), I'd end up paying around $19,000 in interest and be done in May 2025 if I paid a total of $500 towards my debts each month. (Yes, I have other debts, but they're ongoing - insurance, mortgage, etc. I'm only listing things I can pay off for real here). The debt avalanche (highest interest first) would have me pay $15,000ish in interest and be done is 2024. That's vaguely better, but still not great... So...

***Side note, I probably shouldn't list that credit card on here. ***

I'm going to do a custom thing to determine how to pay it off, trying to pay off the ones that will free up the most money first, then moving to the next ones. As you can see, some of those aren't even getting paid the minimum interest, but I suspect that'll change as soon as they're done recalculating my minimums or something. 

For me, the biggest thing is probably maximizing my current earnings. I have some extra money, but an extra $200 a month could be something like $10k in interest savings. Also, no way am I taking 10 years to pay this off. That's ridiculous. I intend to be debt free by January 22, 2016. Don't know how yet, but I'm going to work on it. 

So, first things first:
- Dave Ramsey and Man vs. Debt recommendations: Sell your stuff. I'm also really fond of the Richest Man in Babylon, so I'll also be saving 10% of my income just because. So, this week (I'm having this run from Wednesday to Wednesday), I'm aiming to sell the stuff in my basement. It's been there for 2 years, so I'm clearly not using any of it. Except for my books. God help anyone who touches my books. Unless I leave the state, in which case, fine. >.>
- Optimize my income. This is a Ramit Sethi thing, which I think is often overlooked by most financial gurus. I like his stuff, but it comes with the unfortunate downside of him wanting to be paid a lot of money for his courses. I get that it's probably a great investment, blah blah blah, but I'm not in a position where paying someone 3 grand is feasible. Even if it does get a 100k job. Also, buried in his site, he has stuff like not everyone can earn 100k and explains that it's for top performers. I'm not sure I'm a top performer and unless he has some analysis out there saying that I can earn that, it may not be worth my money right now. What IS worth my money is taking the patent bar. If nothing else, I can write patents. I mean, I studied them. I really want to do copyrights and trademarks, but patents are also amusing. So, those are my things. And there may be other ways to make more money...

Money and Debts

If you ask people I know what my main characteristic is, you'd likely get an answer somewhere along the lines of "likes money". I'd say that it's inaccurate, except it's really accurate. I have other things I enjoy, of course, but money is my passion. I like reading about it, talking about, thinking about it, etc. Which makes for some uncomfortable conversations. 

When I worked in surveys, I was once told that Americans would rather discuss their sex lives than how much they make. From conversations with friends, I'm starting to believe it's true. Nobody will ever admit to how much they make, except for a select few people that I consider close friends. Now, I'm not sure if they tell me because they also consider me a close friend or if I'm more likely to be friends with people who like to discuss money, but whatever. 

*** This would be a good time to go off on a tangent and whine about how I don't really understand the bonds of friendship and how I'd like my friends to like me more, but it's hard to make someone like you more if they won't tell you how much they like you now and why is it so difficult to quantify liking because I do it all the time... Friends have levels: people you don't have to schedule anything with because whatever will be good, even if it ends up being lying on a couch talking about music, dates, or terrorizing a Walmart after midnight; people you know well enough to wear minimal clothing and  be yourself around; people who are friendly enough that you wouldn't mind spending 4-5 hours around; people who need a set activity; brunch friends, etc. Yes. I think about this a lot. Oddly enough, most people I've dated don't fall super high on this spectrum. I don't think I've ever dated someone that I felt comfortable enough to not have scheduled activities or just be myself around. Maybe that tells me something about my process for choosing romantic interests versus friends. I'm WAY pickier about friends. ANYWAY. Not going off on that tangent. Clearly. But seriously, people. LIKE ME. Not everyone. Just the people I consider to be friends. Which is not super useful because I don't think anyone reads this blog, so....

***

So, where was I? Definitely not on a tangent that is completely irrelevant to everything to do with money. Fine. Money and relationships. Those are my things. Not necessarily romantic relationships. I'm an Aquarius after all. 

Okay, so I went to law school. And though I had scholarships and stuff through my undergrad and graduate careers, my parents were essentially completely broke when I was in college, so I didn't actually get anything from them. I'd also never had a job and spent most of my time pursuing d***holes jerks, so it's not terribly surprising that I graduated from school with a lot of student loans. I've had some trouble finding a job that pays anything close to what I'd need to pay off my loans (according to the federal government), so I've been in Income Based Repayment since I graduated. I have a tendency to not be great with money, because I spend when I'm sad. Which is frequently (especially when I'm in a relationship... Hum, I'm starting to see a correlation between things). I also had a lot of debts to pay off from my first relationship (let's not talk about it), so a few years ago, I started to get serious about my life and decided to change my financial picture around. 

When I first graduated, I had a 23% car loan, among other ridiculous obligations and a very vague understanding of how student loans actually worked. I'm pretty sure I was under the impression that they were free money. Here's a tidbit for anyone who's still confused. They aren't. They actually expect you to pay that back. No matter how long you spend in school, they will still be looming over you eventually. 

So, one day... I actually remember it really clearly because I was stressed out of my mind while eating the hotel's free breakfast, I saw something about a guy who had paid off his Harvard debt in just a few years and was clearly, in all ways, better than me. Now, I hate admitting that people are better than me, so the first thing I did was look him up so I could emulate his lifestyle and beat his record, then taunting him in my head. Spoiler alert... Did not happen that way. 

But anyway, as part of my reading about his debt repayment plan, I found one of my favorite websites EVER! Mr. Money Mustache (especially his early stuff). So, I've embarked on a journey to be better. And pay off my debt so I can be free to do whatever jobs I want and pursue my other passions. Somehow... Relationships are probably improved by money, right? And vice versa. 

So, summary. Here's my financial picture, courtesy of Mint.com. 

Student Loans: $70,893.55

Credit card (0% - I use it for springy debt purposes and rewards. Can you say free trip to visit friends?): $2,267.00

Investments: $16,361.00. I'm not sure if I can count this because it's not like I can access it at all. It's all in accounts that I can't touch until I'm old. I'm not as daring as the NMHD guy. I like having retirement accounts. 

So, my goal is to pay off this crapton of debt, using my current salary of about $35,000 - $45,000 a year and any raises, new jobs, what-nots I may get.