I just want to shout out loud, I am officially debt free!!!
The only loan I've ever taken out was for a Subaru Outback, which I bought with my soon-to-be-ex husband 3 years ago. I don't know what we were thinking. Even though we could afford the payments and the interest rate was ridiculously low, it was clearly more car than we should have paid for ($28,000 plus interest). I guess we got caught up in the adventure-mobile fantasy and had dreams of driving cross-country and visiting all the national parks, sleeping in the back.
While it was a nice idea, it never happened. Jobs got busy, and then we decided to get divorced. So then we were stuck with a car that was difficult to split until the loan had been paid off (or refinanced). I own an old, somewhat grubby but still perfectly functional Toyota Corolla, while my husband drove the Subaru. He wanted to keep the car, which was fine by me, but I wanted to get my name off the loan asap.
Well after months of heel dragging, per our agreement (which we worked out privately, without lawyers), he finally paid off the remaining $5000 on the loan and will be sending me payments over the next several months to buy my half of the car. Once that's done, I'll sign the title over. But while getting a little extra cash is nice, I'm mostly just pleased to be off that stupid loan and officially debt free! This is going to make buying a house just a little easier now and that's one of my major goals for the next year (a very modest house near the local university where I can be sure to find a roommate).
So if I'm debt free, what happened to my student loans? Well, I never had any. My parents were always very up front with me about the fact that they didn't make enough money to send me to college. I knew I would be paying for most of it myself, which meant either staying in state (a great option) or earning a scholarship. Well, at the time I didn't want to stay in state if I could avoid it (ironically I went there for my Ph.D.), so I worked my ass off in high school. I didn't have much fun then. No parties, no boyfriends. All I did was study to make the grades, and then study some more to get good SAT scores. My major memory of high school is of sitting at my desk in the dark, studying under my reading lamp. And I did that night after night for hours. When it came time to actually apply for colleges, I applied to my dream school (NYU), but the rest of my applications were to colleges that were slightly lower-tier (at least reputationally) but well known to be generous with scholarships and merit-aid (because my parents fit firmly into that section of the middle class that made too much money to qualify for need-based aid, but didn't make enough to actually afford a $40,000 a year tuition, especially with my brother only two years behind me in school.) I also applied to every scholarship I could find and I was lucky enough to get one at Tulane University that was virtually a full ride. So even though I got into my dream school, I turned it down for the money.
So I that's how I got past the undergraduate level without any loans. Then I went to graduate school in Chemistry where they actually pay you because you're really more of an employee than you are student. It's basically a low-paid apprenticeship that's not much more than minimum wage. But I did get a fellowship from the Department of Energy that paid slightly better for my last three years, which really helped me focus on my research rather than having to teach undergrads at the same time.
So that's how I did it, and let me tell you, there are pros and cons to this method. Pros: it put me in the great position of being debt free after receiving a very substantial and excellent education. Cons: I had to sacrifice what I really wanted to do in my heart of hearts (get an MFA) and settle for less acclaimed schools. BUT, I am extremely happy that I'm not 180K in debt for a degree in the arts, which no matter how much I would have enjoyed - let's face it, is not very employable.
Sure, sometimes I've felt a little held back because not only did I not go to a high-level undergrad or graduate school, I didn't even try. I'm pretty sure I could have gotten in somewhere if I had been willing to swallow those student loans. But I just didn't see how I would be able to pay back some $150,000. That's like buying 4 luxury cars over a period of 4 years! Insane! It just didn't seem possible, so I didn't do it. And so it goes. I don't have the ivy league education or the arts degree I really wanted, but I'm not doing too bad, and I don't have any loans, which leaves me in a better position to do more creative work now.
I'm not sure where that fear of debt left me when I co-signed for that car with my husband, but I guess I thought we were on stable ground and building toward a life together. And sometimes that means you need to replace a broken down car and you don't necessarily have the cash for the new one. So I don't regret it exactly, but I probably would have done things differently, like buy a cheaper car, if I had to do them over again. Live and learn. Avoid debt or minimize it wherever possible.
So if you're new to the blog, you might not know that I'm going through some pretty major life changes, including getting divorced and temporarily living at home with my parents to save up money to buy my own place (renting with pets is tough, and frankly, I've been ready to own a home for a while). Since I don't want to live at my parent's house for much longer, I'm working really hard to save up the last $10,000 or so I need for my down payment.
The biggest thing I've done to reach this goal is set up a strict budget, which has mostly involved fiddling with an excel spreadsheet for the last few months until I finally came up with some realistic numbers. This has required being really honest with myself about my expenses, including looking ahead to future costs and factoring that into my savings. I've found that opening multiple savings accounts for specific purposes has been really helpful to ensure I never need to dip into my down payment money. For example, I have separate accounts for pet meds and vet bills, car maintenance, reoccurring software and website costs, medical savings for upcoming copayments and deductibles, etc., and I contribute a small amount of money into each one of these accounts every month so that when I do need to pay for any of these items, I already have the money set aside to do so.
On top of that, I've started using another cool app called Daily Budget. Basically, you input your fixed expenses and your savings goals, and then it calculates how much remaining money you have to spend per day for the rest of the month. Every purchase you make outside of those fixed expenses gets entered into the app. If you over-spend one day, then you'll have less for the remaining days. If you don't spend any money one day, then you'll have more later. It's not a groundbreaking idea, but it is helpful to have a little app that instantly does those calculations for you so there's never any question about whether you're over-spending. I guess it helps me feel more accountable and aware of where my money is going. Because it's not like I'm saving 100% of my money. Living with my parents, I think it's pretty important I get out of the house at least once a week and hang out with people my own age. That means spending a little bit on gas, parking, public transportation, drinks, what have you, but using the Daily Budget app makes sure I never over do it.
If anyone's interested in a more detailed post on how I do my budget, particularly as a freelancer, let me know. I'd be happy to share some tricks I've learned.
To get me in this savings mindset, I've also been listening to the Dave Ramsey podcast. He's not 100% my cup of tea, I don't really care for his attitude at times or his political opinions, but I generally agree with his money principles. Basically, pay off your loans and then stay out of debt however you can (excepting a mortgage) by living within your means and keeping a strict budget. Again, it's not groundbreaking, but it works, and I find it's kind of helpful to have a virtual "cheerleader" for my savings and budgeting plans. I think his books are pretty good resources as well if you're looking for some money guidance.
So I'm feeling like I have a much better handle on where my money is going, and now I need to focus on increasing my salary. Getting divorced and having my household income suddenly cut in half has been quite a blow, and I need to make up for some of that loss. Increasing my hours with my university appointment has helped, but I need to take it a step further. I have ideas about teaching an online class and finishing my science writing book to sell on Amazon (and I have a pretty large Facebook group for marketing), but it's so hard to find the time to create new things when I feel like I'm always just barely keeping up with the freelance editing. Add to that my social life, which despite being fairly marginal takes up a disproportionate amount of time because of all the commuting I have to do to the city just to be around people my own age. Sometimes, it feels like I'll never have the time to work on these extra sources of revenue, but I guess if increasing your income were easy, everyone would be doing it.
My ultimate goal with all of this is to get back my independence so I can focus on the things that are important to me, like writing and other creative pursuits. I guess I think of this as the responsible road to life as an artist. Maybe you can relate.
How are your finances these days? Any savings goals or budgeting tips you'd care to share?
I sometimes listen to The Minimalists podcast, though I can't entirely recommend it. They spend way too much time promoting themselves and whatever product it is they're shilling (particularly their documentary and speaking events). And I can't get on board with everything they suggest (no, I'm not going to teach kids to find "joy" in throwing out family photos and artwork - that's just weird). Plus, it's kind of frustrating when you realize how much of an initial monetary investment is necessary if and when you decide to adopt a more minimal lifestyle.
For instance, I decided to get rid of a lot of the clothes I owned, because I wasn't actually wearing them (didn't like them). But then I didn't have anything to wear, so I bought multiple copies of this one t-shirt I really like and made a sort of uniform out of it with gym leggings. The thing is, that's only possible because I'm in a secure financial position right now. So to lecture people to adopt a minimal lifestyle with less stuff - well, some people can't afford to throw out sub-par things that they will then have to replace. Yes, even bad, ugly clothes have function and worth. They keep you warm.
So all of that is just to say The Minimalists kind of rub me the wrong way.
BUT, I still find their podcast just useful enough to give them an occasional listen, if only to reiterate this one fundamental principle they constantly repeat:
Does it add value?
That's the question I've learned from them to ask myself before I purchase anything and before I decide to throw anything away. If the object in question adds value to my life (or will add value), then I'll keep it or maybe buy it. Though I have to be REALLY honest with myself about the answer to that question. Dishonesty = impulse/regretted purchase. If the object doesn't add value? Donate it (or just don't buy it).
Those old clothes weren't adding value to my life because they made it harder for me to get dressed each morning (decision fatigue) and they made me feel frumpy. They also made it harder to see/find what I actually owned (a lot of good stuff I had forgotten about because it was hidden out of sight due to sheer volume). And I happened to have the money to replace those clothes with a t-shirt that I already own and love, so I know it will add more value to my life. It's a pretty good rule of thumb and has helped me to make better purchasing decisions, something that I've always struggled with. (Maybe a lot of people struggle with it too?)
Taking inventory the other day, I noticed there are two objects in my life that add a HUGE amount of value to me.
The first is our robot vacuum cleaner. With two cats and a dog, our place can get pretty gross, pretty quick, what with mud getting tracked inside and fur clinging to just about every surface. Before we got the ILIFE vacuum, I was spending so much time cleaning our house. And that was time I really valued to do other things, like write. Eventually, it was my husband who talked me into getting one of these robot vacuums, because they had one at his lab and he saw for himself how useful it was. So we sprang, dropped the dough, and have never regretted it. That vacuum cleaner picks up SO MUCH DOG AND CAT HAIR. I don't have to vacuum or sweep anymore because of it, which has given me more time to do the things I actually value.
The second thing that has added a lot of value to my life is my convertible standing desk. I'm an editor. I work at a computer all day long. Being able to switch between sitting and standing in a matter of seconds has significantly improved my health in so many ways. I feel good at the end of the day, which wasn't the case before I bought the desk. My back feels great. My core muscles are stronger. And I've dropped a little weight that I had gained once I started working from home. I value all of those things, therefore, I really value my desk. If it broke, I'd buy another one, though it feels so sturdy I can't imagine it ever will (knock on wood, cause I love this thing).
Does it add value to your life? What a great question. Seriously, ask yourself that whenever you're of two minds about buying something. Will you value this thing in 6 months? If so, get it (if you have the money). If not, then don't worry about it. I wish somebody had taught me this 10 years ago. I would have saved so much money.
For obvious reasons, I've been trying to spend less and save more money lately.
This means drastically cutting down on "want" type purchases. I've stopped buying books and started borrowing everything from the library (especially graphic novels). I've also stopped buying or renting movies now that I've discovered the library's collection, which is actually pretty good.
But to really save money, I've been seeing how far back I can trim "needs" as well.
For example, tofu is a cheap and healthy alternative to meat that both my husband and I enjoy. I've also learned that Dove soap is a perfectly good makeup remover and is significantly cheaper too. In a pinch, corn starch works just as well, if not better than dry shampoos (plus, there's no weird ammonia smell).
But there are some needs I just can't ignore. The other day, I was putting on my shoes and discovered two quarter sized holes in the back of each heel. Granted, I've been wearing these shoes for almost seven years now, but I didn't realize I'd worn them out quite so badly.
So I need to buy a new pair of shoes, but it's never that easy.
I'm really, really bad at shopping. I consistently make stupid choices and end up wasting money. I don't know how I do it. I will spend over an hour trying on different pairs of shoes. I'm very careful to test them for comfort and how well they'll work with my outfits. Eventually, I'll make a decision and buy them.
But once I've worn the shoes a few times, I almost always decide I hate them. I'll think they make me look stumpy. Or they'll hurt my feet if I walk in them for longer than five minutes. Something like that. And by that point they're too scuffed and worn to return. This happens almost every time and then I'll have to go out and buy another pair. And maybe another. It might take me three or four purchases before I've finally found the shoes I like.
Isn't that wasteful? And expensive? I just can't afford to shop like that anymore.
It's gotten so bad that for the last year or two, I haven't bought any new shoes and have made a point to get as much wear out of my few favorite pairs as much as I can. My old Rockports and Coach shoes have worked pretty well, but obviously they can't, and aren't, lasting forever.
I'm the same way with clothing. I'll need a dress for a specific kind of function (say a casual sun dress for the summer), but it will take me two or three tries before I find one that I love enough to wear.
Last winter, I found a cute plaid shirt for less than $25. I loved it so much in the store, that I decided it would be smart to buy two, knowing how picky I am about my clothing.
Well, I got home and discovered that these shirts had the strangest cut that had somehow escaped my attention in the dressing room. They were really short on the sides, so they covered the entire top-half of my body...except for my love handles, which were completely exposed.
How did I not see that in the dressing room?!!! Now I have two fugly shirts that are useless to me. $50 down the drain.
Solution: Don't go shopping. Clearly, I suck at it.
But then this morning, I put on one of the few remaining t-shirts I own and found there were holes beneath each armpit. Not cute little holes. You could stick your fist through these. Mortifying, but I wore it anyway (with a sweater) because it was literally the best option I had. I need to do some laundry, but I also really some new clothes.
It seems like everything that's being sold is low-quality. It looks good in the store, but it falls apart almost right away, or there's some hidden flaw that doesn't appear until later.
Do you have problems finding good clothes? I feel like it's been a repeated swing and a miss for me lately. I think it makes sense to spend more money on higher quality items that last a long time, but even the expensive stuff is often just a pricey label on a piece of sweat-shop junk. It's hard to know the difference sometimes.