A Penny Saved

I hate being in debt. Every monthly payment seems so minuscule compared to the principal balance. -$50,000. I’m very eager to be through with debt, but I know, realistically, I’m going to be in it until I’m almost 30. I’m 22, so that’s a long way off. There are still years ahead of me of making monthly payments and scraping together whatever else I can to put towards my debt.

It can be demoralizing to realize just how deep in debt you really are.

It’s helping me to focus on just one debt in particular. Right now, it’s my Stafford loans. All $15,482 of them. It’s still a large number, but at least it’s less than my yearly salary. I’ve chosen do to a “high-interest-first” style snowball rather than a David Ramsey-style one because it works better for my circumstances. My smallest debt is still $11,450, and it doesn’t begin accruing interest until May, so it doesn’t make much sense to pay it off earnestly now. My Stafford loans are already accruing interest, and the Perkins loan is large enough that it would still take about two years to pay off, not soon enough to provide a significant psychological edge over my Stafford loans. Since it’s going to take a long time no matter what I do, I’m preferring the method that’s more mathematically sound.

Still, I hate being in debt. I hate it. It makes me feel so trapped. Like Paid Twice wrote earlier this week, it’s hard to get back to zero. It’s weird realizing that I had a higher net worth when I was a child than I do know. I know my debt helped me to get an education and I’m grateful for the experiences that I had while in college. But college is over now. And I feel like there just isn’t enough money to pay down my debts AND save for retirement AND provide for myself AND save up for the memorable things in life. I know I can find a way to do it, I can find a way to become finacially free, but sometimes it just seems so hopeless. And it isn’t so much that being financially free would improve my material standard of life; no, I’d be as frugal as ever; but that it would improve my psychological standard of life. Instead of paying 30% of my salary towards debt, I would be putting 55% of my salary into my savings. (Of course, that’s just talking about my earnings as they are now. In the future, I could be earning even more money, and thus, saving even more.) I could do the things that I want to with ease.

The thought of financial freedom is the light at the end of the tunnel. To be able to go where I want to, to do what I want to, to be free of the 8-to-5 world and free to pursue my passions full time. In this life, two things I want for myself are to be well-educated and to experience financial freedom. So until the day comes when I send in my last student loan payment and see the balance fall to zero, I will keep fighting. For my freedom and for my life.

Christmas went well this year. I spent that weekend with my roommate’s family on the other side of the state. We hung out around the house, talked, watched movies, and ate delicious food all weekend. My roommate’s younger sister is my age, and is married and has a 21-month-old. It was weird to hang out with her and her husband, because it’s like looking through a warped mirror at some of the other possibilities of what my life could have been like. It was also weird to play with her daughter, because in college it’s possible to go months upon months without ever talking to, or even seeing, anyone under the age of seventeen. I had kind of forgotten about children, even though I used to baby-sit a lot in high school. So, being around the three of them was like being re-introduced to the real world after the academic sabbatical known as college.

Two of my friends were out here for New Year’s Eve weekend, and that was awesome. They graduated a year before me and have been out in Pennsylvania ever since. K.’s going to grad school out there, while her boyfriend F. works as a programmer. K.’s still deciding whether or not she wants to go for her Ph.D. If she doesn’t, they’ll probably move back here next year, but if she does, they could wind up in any of six states. They drove back on the first.

I have my January paycheck, but I’ll probably have to wait to deposit it until Friday, when the banks are open a little later and I can go after work. My roommate’s been driving me to work because of the poor road conditions, so I can’t go to the bank on lunch break like I usually do. I’d carpool, but no one in my office seems to share my bank, and I was well under budget for last month, so I don’t need the money immediately.

Two factors contributed to being under budget:

1. I didn’t give presents, aside from two vintage Dungeons and Dragons book sets for K. and F. that I bought back in September, an awesome find at a Goodwill for $0.50 a piece. I warned my friends and family of this years no-gifting policy in advance, and most of them were relieved. “Great! That means I don’t have to get you anything!” Precisely. The gift of spending time with them and eating tasty food together was plenty enough blessing for me.

2. I stayed home a lot. I don’t find driving in the snow that pleasant, especially because I’m an inexperienced driver. It’s been snowy here since about December 15th, so I’ve been staying in a lot more since then. That means I spent less money than usual. Instead of going out, I watched lots of Avatar:The Last Airbender (awesome show!) and Sailormoon (another awesome show!); played Dungeons and Dragons with K., F., and my roommate; and played in the snow. We did hit the mall on Saturday when K. and F. were here, and I bought a five pairs of VS cotton underwear. They are my favorite kind (they always fit me perfectly) and were on special 10 for $25, so K. and I went in on one together.

But now vacation time is over, and it’s back to work. My next day off is for Good Friday.

On Monday night my wife and I took our three children ages 7, 6, and 5 to shop for a gift for each of us. First my wife took the three girls and shopped for me, then I took the three girls and shopped for her. It was a great time, filled with laughter and joy, and it was also a time for teaching:

• They had to agree - since they were only buying one gift for each of us. At first they all wanted something different, but they slowly came together and all agreed on one thing. They were so excited when they all agreed. A great moment, and very important when it comes to finances-agreement.
• They had a budget - they could only spend up to $25 for each of us. This was a little harder since they are so young, but with a little (okay, a lot!) help, they were able to find something. Another great teachable moment about finances and making spending choices.
• They were buying and giving for someone else. They were so excited about getting something for Mommy and Daddy. A great lesson on the joy of giving. Financial training is not only about what we do with money, but how we help and impact others.

All in all a wonderful night. And a great reminder that teaching your children about finances, or anything in life, does not have to be boring, but can be fun and exciting.

It’s almost time for our church’s annual Christmas program. Of course one of my daughter’s is in the program so I am pretty excited. As I am sitting waiting for the program to start, I started thinking about Christmases past. What struck me the most as I took a trip down memory lane is how few of my favorite memories had anything to do with gifts. It was mostly about spending time with family and friends and holiday traditions - like my father baking Christmas bread, or eating cookies by the fire on Christmas Eve, or taking a drive to look at Christmas lights.

So what does this have to do with finances? Don’t overspend money this Christmas. Sure shiny new things are fun for a while. But if you really want to make Christmas special, then overspend - on time, on making memories with your family, friends and loved ones.

For the past two months, I’ve gotten free health insurance through my work. It’s supposed to be $78/month for a Blue Cross/Blue Shield Community Blue PPO enrollment, but so far, the woman who does payroll has forgotten to take it out of my paycheck. I’ve been  getting paid $2065 instead of $1987. I went to go see her about it in November, right after it first happened, and offered to “refund” the money, but she said not to worry about it. So, I was surprised when my December paycheck was for the same amount, as I’d thought she had fixed it. I went to go see her about it again. This time she fixed it while I watched, and told me to consider it a gift. Apparently, this was not the first time she’s forgotten to deduct someone’s health insurance from their pay. And she’s married to the president of the company, who’s a very laid-back guy, so it’s not like she’ll get in trouble over it or anything.

It was a nice present–a $156 paycheck error in my favor. It went towards loan repayment, fulfilling a $20.07 donation to my college that I pledged in June (If 20% or more of the senior class made a donation of that size, someone rich was going to donate $10,000–and we made it! 40% of our class donated. But no more donations until the loans are gone!), and paying off last month’s unexpected expenses so I wouldn’t have to dip into my emergency fund.

My wife and I just finished writing a Christmas letter with pictures of the girls at the bottom. I was able to take the letter to work and make 400 copies for a cost of only $40. As employees, we get to use the color copier for personal use and are only charged 10 cents a copy. That’s a great perk! It got me to thinking, what other perks do I get at work? Here are a few off the top of my head:

• Free food. Often there are activities at the church and food is left over. Yahoo! Helps the budget, but not necessarily my waist.
• Flexible hours. Being a pastor is not 8 to 5. Sometimes that means working evenings and Saturdays (and of course Sunday!). But it also means I can be flexible when I take a day off - like taking 1/2 day today so we could celebrate my youngest daughter’s fifth birthday.
• Church Mailbox’s. Our church has mailboxes for most of the families in the church. We use it for church business, but can also use it for personal correspondence. So those 400 letters - we didn’t have to mail 350 of them! That’s a savings of $143.50.
• High speed Internet. Where we live, cable is not available, but the church has it. So when I need to do some serious surfing, I head to the church.
• Babysitting. Being a pastor, my family gets many offers for free babysitting! And since our church does criminal background checks and some training, i know the children are in good hands.

I am sure I am missing some. What about your workplace? What perks do you get? I would love to hear from you.

I have always been a big fan of libraries. When I was little, I went far more often than I do now, and checked out videos, cassette tapes, and books on a weekly basis. My mother took me to their children’s activities, like puppet shows and seasonal craft projects. And every summer I participated in their summer reading program and won fabulous prizes, like gift certificates for free pizza. They got me young.

Right now I’m lucky to live in Kalamazoo County, which has one of the nicest public library systems in the nation. I go about once a month. I usually make out a list beforehand of what I want, and check it against the online catalog to make sure those books are in. Then, while I’m there, I pick up the books on my list and browse a bit, picking up one or two unfamiliar titles. It gives me the same feeling of excitement that impulse buying does, except it’s even better because the books (or cds, dvds, whatever) are free. I don’t currently attend any of their book clubs or other events, but I am aware of them, and I often mention their free computer education programs to my more computer-illiterate friends (or older relatives of friends, as the case more often may be).

The book I’m reading now is The Way We Eat: Why Our Food Choices Matter, by Peter Singer and Jim Mason. It’s a difficult book for an omnivore like me to read. I have trouble with the idea that the acts of using animal products (milk, eggs, honey, wool) and killing animals in order to eat them (meat) and otherwise use their components (fur, leather, feathers, bone) are in and of themselves unethical, no matter how someone goes about them. I guess part of the reason I feel that way is that I have farmers in my family, only one generation away. My maternal grandparents and my mother’s brothers still run the family dairy farm. Their cows get to hang out in wide, grassy pastures during the day. Their chickens are free-range and have the run of the farm. But, then again, I’ve never thought to ask my relatives about the type of feed they give their animals, or whether or not the milk and eggs they produce are organic. It’s kind of a funny question, because once upon a time, everything was organic. Now organic is the exception, not the rule. But regardless of the ethics of our long existent practice of hunting/trapping/fishing wild animals and farming livestock, this book has informed and convinced me that industrial agribusiness as it exists now is unsustainable. (I had done some reading on the subject before, but this is the first time I realized just how bad the situation is.) It’s not good for animals, it’s not good for the environment, and it’s not good for people. Sure, low prices are great, but, as this book points out, not when the reason for those low prices are externalities that are paid by all of us in other ways. I already don’t eat meat every day, but I’m willing to cut back even my own consumption. I guess I’m willing to eat out less in order to spend more money on groceries to get more sustainable food. But, especially in America, it’s a kind of privilege, evident of both my education and class, that I am able to do so. And I suppose the argument could made that if the leather jacket is already in the thrift store, the egg is already laid, the animal is already slaughtered and the steaks are in your grocer’s freezer, then it’s far better to use these things rather than to let them go to waste. It’s a very complicated issue and one that I feel is very inter-related with the idea of frugality. (As usual, this is not me telling you what you should do, hence me not citing outside sources other than the book itself. Do your own research on the subject and make your own decision.)

On a happier note, another book that I read and enjoyed over the past month was To Say Nothing Of the Dog, by Connie Willis. It took me a few chapters to get into it, but if you like British humor, romance, and/or time-travel, pick it up. The writing’s lovely and the story’s zany.

I realize that it’s somewhat hypocritical to talk about saving the environment in a post about books, as paper comes from trees, etc. (I once performed a self-written monologue about the odd inherent horror of seeing a paper sign tacked to a tree that ended with me screaming “It’s trees! Paper is trees!” a la Soylent Green.) But you can think of it this way: in a world where many books are produced and then read only once, or never at all, using the library is the equivalent of carpooling.

I’ve been thinking a lot lately about what I want for Christmas. A glass casserole dish, for one. I talked to my mom about this the other day, and she got all excited.
Me: “You know, just the regular 9×13 Pyrex kind, something like that.”
Mom: “Oh! I know just the one! I saw a really pretty one in a catalog. It had flowers on it.”
Me: “Flowers?”
And so I worry that my mother cannot be trusted with even this simple task.

The other thing I’d like is one of those super-hyped Vosges’ Mo’s Bacon Bars, which I already mentioned here. Bacon and chocolate–finally united as one. It’s a good gift item because it really isn’t something that I’d buy for myself. It’s a $7 chocolate bar, for god’s sake. But if I don’t get one from someone else, I think I might go ahead and buy one, and share it with all my friends in town who want to try it.

Other than that, there’s not really anything I want. My roommate and I already agreed not to exchange presents. I dunno, the obligation to give and receive gifts has always bothered me. As far as receiving goes, two gifts are always welcome: good food (tasty cheese, a favorite beer, various homemade dishes I’ve professed love for–it’s not hard to tell when I’m enamored with something you’ve made, I eat all the leftovers) and cash (what? I have debt). I don’t much care for gift cards. They are as big of a scam as bottled water.

And as for giving… are you really experiencing “the holiday spirit” if giving is an obligation, if you give solely because it’s what you’re supposed to do? And what are you really giving? Something that will truly delight the person who receives it, or just another bit of junk that will add to the clutter of their lives? Don’t buy me things in the name of being generous to me, when really the only person you’re being generous to is yourself! If I give you something you don’t like, and you give me something I don’t like, wouldn’t we have been better off from the start if we had each just gotten ourselves something we actually wanted? How many toys do children remember years after they were given? How many video games do you really love, and re-play over and over again? How many clothes do you own that go unworn?

Give the gift of your company and conversation. Give the gift of simplicity. Give the gift of allowing families to stay in their own homes for Christmas if they choose, instead of having to drag over-tired, cranky children all over the place. (One of my co-workers has to take his two- and four-year-old children to a total of four different Christmases.) Give the gift of “I didn’t go out and fight the Black Friday crowds for some piece of junk you didn’t even want and that I would’ve guilt-tripped you about not liking.” Give the gift of freedom from the burden of having to receive. If someone’s really in need, then yes, try to help them. Feed the hungry, clothe the naked, do all that Jesus stuff. (You remember Jesus, right? The “reason for the season”?) Try to help people be happy, but recognize that happiness through consumerism is a false idol.

Perhaps I was getting a bit ahead of myself with that last post. What exactly do I mean by temporal freedom?

Temporal freedom is financial freedom’s older cousin. Because time and money have a deeply intertwined relationship (though they are in no way equivalent), if you have financial freedom, you most likely have temporal freedom as well, and vice versa. Temporal freedom is the freedom to spend your time however you please. As uncertain as money is, time is even more uncertain still, which makes it very precious. The sooner I can make my time mine again (ie, quit the day job), the better. I could then work on alternative projects that still bring in income, but don’t require me to sell my life away to the 8-to-5 way and that I have a much greater personal interest in. Such independence would require a strong financial base to protect me against the perceived chaos and insecurity–though whether or not this is actually a less secure model than having a traditional job is certainly up for debate.

Financial freedom is my goal; temporal freedom is the reason for the goal. I’m young now, but I know I’m not going to be that way forever. I want to get all the value I can out of every moment of my life! It’s just as important to be frugal with your time as it is with your money. What are frugal uses of time? Self-improvement, spending time with friends and family, exercise, creative pursuits, sleeping enough. What are un-frugal uses of time? Sitting in front of a television for hours on end, excessive drug or alcohol use, shopping for junk you don’t need, procrastination, doing anything passively that you would be better off doing actively. Being frugal with my time is just as important to gaining financial freedom as being frugal with my money is. And with money, a negative balance can be always made positive, but time spent is time spent and it’s never coming back. Death is a hell of a lot more permanent than bankruptcy.

It’s important to apply a frugal mindset to all things. Don’t be cheap with your time, but don’t be a spend-thrift either. Here are some ways to be frugal in how you spend your time:

-Commit to less. Having fewer responsibilities means you have more energy to devote to each one you have.

-Get enough sleep on a schedule that works for you. Is staying up really late working really the best use of your time if you’re exhausted and useless the next day?

-Don’t spend too much time day-dreaming. Learn to recognize when you have given something enough thought and have come to the point where you should act.

-Likewise, try to limit procrastination.

-Take an active role in your life and your community. Participate in local events. Volunteer. Get out from behind your television or computer monitor and get out of your house. Keep learning and experiencing new things. I’ve found that time always seems to move a little more slowly when I’m on an adventure!

If you plan on being financially independent, it’s important to develop good habits now, so that when you do manage to break free of the the 8-to-5 structure, you’ll already know how to manage your time and get the most out of every day.

The novelty of having a “grown-up job” grows old quickly, doesn’t it? I mean, I’ve only had mine for six weeks now, and already I’m looking for alternatives. Now, don’t get me wrong, it’s a great job, as that sort of thing goes. But I can’t help but notice that the days are already whizzing by faster than ever before, in a seemingly endless cycle from Monday to Monday. I know part of it is that I’m older now. But another part of it is the monotony. Get up, go to work, do work, eat lunch, do work, go home, do “real person” stuff for a few hours, go to bed. I can easily imagine the next five or ten or forty years of my life slipping away before I know it.

But what can be done to counteract this? I’ve been giving it a lot of thought over the past week. First, I had to decide what I value. One of the things I value is my own time:

I want to spend less time watching television and on the internet, and more time reading books, writing and drawing, and talking with my friends.

I want to work hard at work, but not spend more time at it than I have to.

I want to develop alternative streams of income, so I can become, over time, less dependent on my day job. For me, this includes such things as developing my own website for my comics and other creative works, perhaps doing freelance web design, and investing.

Earning a huge salary isn’t something important to me, and I have no intention of climbing the corporate ladder. However, financial and temporal freedom are important to me. Things like creativity, self-sufficiency, friends and family, and supporting my community are important to me. In order to put more emphasis on those things, I’ll have to restructure my life.

Expect more posts on this topic in the future.