Simple Inspiration Interview featuring the Debt Free Guys

Debt Free Guys

 

Thanks for checking out this week’s Simple Inspiration Interview.  Today I have the pleasure of interviewing not one but two individuals this week.  This week we have an opportunity to hear from the Debt Free Guys.  I am sure many of you can relate to John and David’s financial struggles.  They offer some great advice on how they were able to overcome their financial struggles and begin to live a debt free life.

Let’s hear how John and David have simplified their finances and began to live a debt free life:

What event lead you to realize you needed to eliminate debt and improve your financial life?

About ten years ago we found ourselves as two thirty-something professionals living in a friend’s basement apartment and had two beat up cars. Our peers were passing us by and we wondered why. It didn’t take long to realize it was because we had $51,000 worth of credit card debt. We were borrowing from our future and had nothing to show for it.

What area of your finances needed the most improvement outside of eliminating your debt?

We had no budget. We spent unconsciously. If we wanted it, we got it. It didn’t matter if we spent cash or credit. Eventually everything was on credit and we were living paycheck to paycheck.

What was your biggest challenge or roadblock to improve your financial lives?

Our biggest challenge was realizing that we didn’t have to spend a lot of money to enjoy life. Once we realized that we could have a good quality of life within and even below our means, things changed for us financially.

How did you overcome this challenge or roadblock?

This took a lot of self-reflection and open dialogue between the two of us. We ultimately realized that we both had two primary goals in life. The first is to travel extensively. The second is to save for retirement. Once we realized those were the areas we want to spend our money, it was easier to get our spending in order.

What steps did you take to change your financial lives?

Initially, we eliminated all non-essential spending and travel. We did this until we paid off all our credit cards. This helped us embrace budgeting. When we were finally able to loosen the purse strings, we did so on a budget and have done so ever since.

How long did it take you to get your finances in order?

We quickly came up with a budget and payment plan to pay off our debt once we realized what we most wanted in life. It took us about two and a half years to pay off our credit card debt. It took us another year or so to feel more comfortable financially. It was at this point that we moved out of the basement apartment into our own condo.

How did you feel once you had your finances in order and eliminated your debt?

Amazing! We occasionally think about how we felt when we were mired in debt and how good we feel now. We have less stress. We’re happier. We can do the things we want. We own what we have. It’s just an all-around good feeling. We want others to have the same feeling.

What financial habits have you developed so you continue to improve your finances?

We’re what we call “money conscious”. We know how much we truly make. We know where every dollar will go before we receive it. We save aggressively for retirement. We have accounts for home improvements. We have an account we’re funding because we’ll need a new car in two years. We have these accounts because we want to spend cash and not credit on the things we want and need.

What advice or tips would you give to others who want to simplify their finances?

Our advice is to just simplify your financial life. All the spending, all the shopping and all the stuff makes our lives more complicated than they need to be. Figure out what it is you truly want financially and work for those financial goals. Just because something is important to your neighbor, sibling or coworker doesn’t mean it’s important for you.

Are there any areas of your finances that you still need to improve on?

Yes. We love to dine out on good food and wine. We don’t go into debt because of it, but we’d do better if we cooked at home more often and drank cheaper wine.

What book, blog, or podcast would you suggest to someone who is looking to eliminate debt or improve their finances?

We documented our experience and what we learned in our book 4: The Four Principles of a Debt Free Life. In 4, we break down what it takes to quickly pay off credit card and other debt and have a good time.

Do you have an emergency fund established, if so how did you determine the amount need to fund it?

We do have an emergency savings account. We have three month’s worth of living expenses in a credit union account that has no check writing or debit cards privileges. We have not had to use it, but it’s a great feeling know that it’s there.

What percentage of your income are you saving?

Among our retirement, saving for a new car and other financial goals, we’re currently saving about 25 percent of our income. We’re currently making a lot of changes to Debt Free Guys, LLC, too, and that’s taking some of our income.

What’s your best savings tip?

It’s almost too simple, but we still use the envelope method. We have a budget for groceries, gas, social spending, etc. Every other payday, we withdraw the money we need for each category and that’s all the money we get to spend in each category until another two paydays.

If money was not a concern, what would you do for fun?

If money wasn’t a concern, we would go on a world tour. We’d travel to everywhere in the world we want to go and see everything we want to see.

Any other thoughts you would like to share with others who are looking to simplify?

We think living simply is really a mental shift. It’s easy for us to get caught up in the hectic, fast paced, always on our phone lives and have the insatiable need for more, more, more. Once we make a shift in thinking, everything else falls into place.

Thanks John and David for sharing your story with my readers. As I mentioned earlier I am sure many can relate to your story and are looking for ways to improve their finances.  You provide some great advice to help them turn their financial lives around.

If you can related to their story want to learn more about John and David, check out their new and improved blog  www.DebtFreeGuys.com.  They use their blog, video and podcasts to help others with their personal finances. Whether it’s getting out of debt, investing for retirement or creating a budget, www.DebtFreeGuys.com has the answers.  You can also follow them on twitter @debtfreeguys or friend on facebook.

To read previous interviews in the series click below

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If you are interested in sharing how you have simplified your financial life, send me an email and I will follow up with you.  Enjoy the rest of your week. Til next time, take one step at a time to simplify.

Simple Inspiration Interview featuring MJ from Dream Beyond Debt

 

MJ

Welcome to another edition of Simple Inspiration.  This week I am honored to have MJ from Dream Beyond Debt joining me for an interview.

MJ blogs about her personal journey to debt freedom, while also nurturing her dreams. She also writes about how you can nurture your dreams while eliminating your debt.  The blog was started to help her keep track of the progress she is making to pay off her student and to keep her on course with her student debt elimination.  After only paying down her student debt down by only $1,079.00, She decide it was time for a change.

Here’s what MJ has to say about eliminating her debt:

What event lead you to eliminate your student debt?

I’d been carrying my student loan debt for almost fifteen years and made very little progress with paying it down. The New Year was on the horizon and I kept thinking about how I didn’t want another year like the last few. Something big had to change. I’d been living a very small life, which was refreshing for a little while. I was used to making big changes – cross country moves, jobs on a whim, experiences that would make good stories. But, in the last few years, I’d been referring to myself as “the friend with no news.” When I talked to old friends, I didn’t have much to catch up on. No house, no marriage, no trips, no work victories or promotions. Things were pretty stagnant. I got pretty cozy with Netflix. I didn’t go out. I didn’t meet new people. It was kinda lonely. I felt stuck. I couldn’t have the next year of my life resemble those hard ones.

What did having student prevent you from doing?

My student loan debt kept me from wanting more for myself and in my life. It sounds dramatic, but student loan debt is so oppressive. The longer I carried it, the more I resented my college experience. I kept looking back. I kept thinking, “Why didn’t I major in this or do that internship or make these connections?” I couldn’t shake the idea that my current financial situation could be traced back to bad decisions I made during my undergraduate education. I think student loans do that – they keep you tied to your past, which can breed depression.

Where did you begin to simplify and eliminate your debt?

I’d been reading personal finance blogs and books for years, but late last year, with the New Year approaching, I made a conscious decision to pay off as much as I could in 2015. I’d been paying for fifteen years and in that time, only $1,000 had been applied to the principal. I also had a drastically fluctuating income from the nature of my work – and my own moves throughout the years. It just so happened that I was on an upswing and making progress increasing my income when I made the decision to spend that income on eliminating my student loan debt. I think reading about side hustles helped in that way, as well. I’d also been nurturing an emergency fund for over a year, so I felt like I was in a good place to start throwing money at it. I wouldn’t have been ready before having the emergency fund or the growth of my income. Once those were in place, I had the confidence to give it a go.

What was your biggest challenge or roadblock when it came to eliminating your debt?

My biggest roadblock to eliminating my debt was my mindset. I had this nagging belief that it was too big to pay off in my lifetime. Or, that it wasn’t really my debt, since over half of it was money my parents had borrowed for my education without explaining it to me at the time. I had a lot of resentment around it. I don’t know how much that contributed to years of underearning, but my fluctuating income didn’t help my mindset either. Also, I wanted to be a writer, and I had conflicting beliefs about making money and being an artist and the kind of career you can build. It was all very complicated, and in the last year or so, I’ve started to unpack that baggage, which helped to move me forward in my debt elimination journey.

How did you get over this roadblock?

To get over the roadblock, I started reading personal finance blogs again. I’ve done a lot of priming in the year prior by reading Overcoming Underearning by Barbara Stanny and Money: A Love Story by Kate Northrup. I’d been playing with ideas from The Tightwad Gazette for years, but something clicked last November. I Googled “payoff student loan debt” and came across The Debt Myth blog. The success stories on that blog really inspired me. I found Dear Debt and saw how much debt she was facing and how much progress she’d made and I thought, “Why not me?” I thought I’d at least make one big payment to see what would happen. I gathered as much money as I thought I could gather, and that December, I made a “monster payment.” Seeing the principal go down as much as it did really shifted things for me. I’ve been telling my friends, “It takes one big payment to get motivated.” I think that’s true. It took a lot of priming beforehand, but once I made that first big payment, my mindset shifted drastically. A little action goes a long way.

Is there an app or tool that you used to help you eliminate your debt?

I use Mint. I have the app on my phone and I check it every morning. I look at my balances and practice gratitude. It sounds hokey, but it has made a huge difference. And I’ve seen my net worth go from alarmingly negative to breaking even. I can’t wait to see it as a positive number.

How has reducing your debt changed your life?

Reducing my debt has made me feel empowered. It’s increased my confidence. It’s trickled over into other areas of my life, and I find myself being more assertive and decisive and trying new things. For instance, I’ve been writing more, and pitching more, and sending out more work. There’s definitely a relationship between debt reduction and increasing income. Once I started paying down the debt, then my confidence grew and I was able to ask for more from myself and my work – which has led to more pay in a lot of cases. And a higher profile.

On your blog you mentioned several dreams you to accomplish how is your progress coming to accomplish these dreams?

Progress on the dreams I have listed is slow, but I’m just nurturing those now. The empowerment from debt reduction is contagious. It has a ripple effect. But, I can’t immediately do a few of those dreams AND pay down debt. I am looking at neighborhoods and researching house prices and trying to determine exactly where I want to establish my “home base.” I’m reading books about thru-hikes. My reading list is almost entirely fiction by women that has an anthropological setting or theme and memoirs/travel narratives from female adventurers. I joined a Meetup group that does local hikes. I’ve taken a quick, inexpensive class to learn about something that I think a character from my possible novel would know about. So, there’s progress, but it’s slow, inexpensive progress. I’m nurturing those dreams, and actively pursuing them, without putting pressure on myself to do everything right now. And it’s oddly very freeing.

How will you feel once you are debt free and what will you do to celebrate?

I imagine that once I’m debt free, I’ll feel incredible. I’ll pat myself on the back. And then I’ll start socking money away in a savings account. I’m gonna need money to feed that list of dreams.

Honestly, I can’t imagine what I’ll do to celebrate. I thought about this question for a long time. I thought of a necklace that I’ve had my eye on for several months. I thought of throwing a costume party. I thought of a spa day. But, honestly, I’m not sure yet. I’m going to sit with that question for a while until the right answer comes to me.

Besides eliminating debt what other areas of your finances do your need to simplify?

I desperately need to simplify my income streams. I don’t work at one place and get one paycheck. Right now, I’m managing three more extensive contract jobs with two smaller contract jobs, plus freelance work. I need to do better with both time management and streamlining the process. I’ve also got several bank accounts, and I could audit which ones would work best for the work I do. I also need to really look at what’s sustainable. I’m so focused on earning to pay off the debt, that I can’t take a step back and look at the body of work or see the pattern to see what makes the most sense. Maybe that’s how I’ll celebrate paying off the debt: taking a step back and seeing how much I need to make to fund my ideal life, then structuring my work and income streams to serve that life.

What advice or tips would you give to others who want to eliminate student debt?

Consolidate your loans if you can. That was a wise choice made early one. I’ve got one service to pay and everything is in one place with one interest rate. Then, make one big payment – as big as you can. Once you see a little bit of progress, it feeds on itself. Also, start a blog or a journal or some way to track your progress. I suggest a blog because your immediate peer group might think you’re nuts, but the personal finance community online will be your cheering section. Remember, too: once student loan debt is gone, it’s gone. You deserve to be rid of it.

Even though you are still trying to eliminate debt, do you have an emergency fund established, if so how did you determine the amount needed to fund it?

I do have an emergency fund. I keep $5,000 in it. I drive a 12-year-old car and I’m a freelancer, so having more in my emergency fund makes sense to me. With my current monthly expenses, I could live off of my emergency fund for four months. In that time, I should certainly be able to make some kind of income to help support myself. Once I eliminate the debt, I’d like to pump it up by $10,000.

What book, blog, or podcast would you suggest to someone who is looking to improve their finances?

Several years ago, a friend gave me “The Tightwad Gazette,” for Christmas. It made a huge impact. I realized that you could make a part-time job out of working for yourself to save yourself money by growing your own food and taking your own lunch to work. Then a year ago, I decided I wanted to grow my emergency fund. I’d read “Overcoming Underearning” by Barbara Stanny a few years before, but I wanted to really dive in this time. I asked a friend to read it with me, and we met weekly to talk about the exercises. I keep a copy on my bedside table and read something from it every morning.

I also like to read Wise Bread, Dear Debt, Budgets Are Sexy…and the debt-free stories from The Debt Myth were incredibly inspiring. They made a huge difference when I was just considering attacking my debt. I think they were the tipping point for me.

Any other thoughts you would like to share with others who are looking to simplify?

Educate yourself! Read personal finance blogs. Join Twitter – I discovered so many blogs that I wouldn’t have found otherwise. It’s also a very supportive community, and you can’t do this alone. You don’t have to do it alone. The PF community is so helpful. Join in the conversation.

Thanks MJ for time sometime to share with us your journey to debt your student debt as well as some of the roadblocks you have faced to eliminate this debt.  If you would like to follow MJ on her journey visit her blog at dreambeyonddebt.com and you can follow her on Twitter @dreambeyonddebt.

If these interviews inspire you and you would like to read more interviews in the series click Simple Inspiration Interviews.

If you are interested in sharing how you have simplified your financial life, send me an email and I will follow up with you.

Enjoy the rest of your week. Til next time, take one step at a time to simplify.

A Simple 6 Step Process to Eliminate Your Debt

 

 

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This is a guest post by Trea Branch.  She blogs regular at her site Trea’s Two Cents. Her goal is to help as many people as possible to achieve financial independence.

 

Getting out of debt is far from easy. If it’s massive (relative to your income) it gets harder, and if you have multiple debts, it’s even more difficult. The cruel irony of it all is that debt is so easy to get into. Companies are just begging for us to dive deeper and deeper into it, making it so easy that half of the time we don’t even realize what we’re getting into! But I’m here to tell you two things:

  • Getting out of massive, complicated debt is possible
  • A little process and a lot of focus can make it a little easier

So below is my 6-step process for getting out of debt (spoken from personal experience!).

Step 1: Shift that Mindset

Every major feat starts in the mind because it’s your most powerful tool. In fact, a lot of my posts are all about how you think about money and what it’s supposed to do for you. Your money mindset can be the difference between accepting debt as something you will pay on for the rest of your life and having a “do whatever it takes” attitude to free yourself of it.

The first step to getting out of debt is not being okay with it, realizing how it’s stopping you from doing more with your money. This isn’t so you get down on yourself. It’s to motivate you to take action, no matter the size of the debt, and to be encouraged to keep pushing through and adjusting to the different hurdles that are bound to pop up along the way. You know how athletes sit in the locker room before a big game, listening to that song that just gets them ready to go? This is your pre-game. You have to prepare your mind for your debt-free journey!

Step 2: Know the Full Damage

Now that you’re amped up, it’s time to know what you’re dealing with. How much do you owe in total? It can be eye-opening, maybe a little intimidating, but don’t let it be discouraging. We’ve already told ourselves that we’re all in and ready to go. We won’t get afraid, even with the major balances.

As of January 2014, I owed $180,000 in student loans (now closer to $100,000). Since starting my journey, I’ve met those who paid off a lot less and I met those who paid off a lot more. Don’t get overwhelmed with your balance (where you start is not where you finish!), but do know it, so that you can set a full strategy. Once you know all that you owe, you can go to step 3.

Step 3: Select the Chosen One

For those of us with more than one debt, simplifying your efforts by focusing on one at a time is critical. This can happen on two levels:
• Fight the urge to spread the love. You can have 3 credit cards, 2 student loans, and 1 car payment. Choose one to attack aggressively (paying above and beyond the minimum monthly payment) and continue paying the minimum payment on the others.

As a side note, to make it even easier on yourself, I highly recommend the Dave Ramsey’s Debt Snowball Method. This is where you start with your lower-balance loan to get a quick win and build momentum.

• Set aside your other financial goals. You’ll spread yourself too thin trying to build an emergency fund, invest, and get out of debt. To simplify and see progress more quickly, prioritize! For example, consider building that emergency fund before you aggressively pay down your debt.

Step 4: Hustle!

Once you are focused on a debt, it’s time to take action. We all know the only way to get out of debt and win the war on interest is to pay above the minimum monthly payment. So you need to find this extra money. It’s easier said than done, but you can either cut your spending, grow your income, or do it big and do both!

Again, easier said than done, so this is where that mindset shift from step 1 can really work to encourage you and push you through those times when you’re giving up what you love or working double shifts to earn extra money.

Step 5: Commit

With a payment plan in place you are good to go, but you’ll want to “lock it in” by giving yourself a deadline. There are several debt calculators showing how long it will take to pay off a loan based on a set monthly payment. Your deadline can be one, five, ten years from now (or however long you need). The goal becomes real when you have an end in sight. I also encourage you to set a few milestones that you can celebrate along the way. We’re doing big things here!

Step 6: Get a Little Nimble

Now you are focused, and your plan is strong. But every plan should be adjustable to a certain extent. When emergencies arise we can’t give up on our debt-free strategy out of frustration. No, we have to adjust, show our strength, so that we can keep moving forward. Adjusting may mean tightening your spending even more, missing an “aggressive payment”, or extending your deadline a bit. However you adjust, it is important to strike that balance between being determined and being flexible.

These 6 steps will make a tough experience a little easier by giving direction, focus, and a little encouragement!

Journey on!

 

If you are interested in learning more about how Trea is eliminating her debt make sure you check out her blog Trea’s Two Cents where she helps you stop living paycheck to paycheck.  If you want her to help you reduce your debt check out her coaching.

Simple Personal Financial Tip: Know your Score

Know the score. I am not talking about knowing the score of the sporting event you maybe watching. I talking about knowing your credit score. Knowing your score is important part of simplifying your personal finances. Having a high score will usually help you win the game depending on the sport you are playing. Having a high credit score will also help you win personal financial game and helps you simplify your personal finances.

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Here are ways that a high credit score will help you win the game.

Better interest rates
Knowing your score enables you to know what interest rate you should receive when you apply for home loan, car loan, or credit card. The higher the score the better interest rate you will receive. So knowing your score provides you with some bargaining power when it comes to interest rates.

Better approval rate
Not only will you receive better interest rates if you have a high credit score but you are more likely to get approval for your loan request. Having high credit score is more important than the amount of income you earn. I say this because before your loan goes to the underwriting process your credit report is pulled. If your credit score is low, your loan request will not even make it the underwriting process.

Lower insurance rates
Yes your driving record and claims history is important factor that determines your insurance rate. But your credit score is just as important. If you have a high credit score you will receive a lower rate if everything else is in order. So your credit score can impact the insurance rate you receive.

Improve employment chances
Yes your credit score can determine if you receive that next job offer. If everything else is equal and your credit score is lower than the other candidates, you maybe facing an uphill battle to land the job. With a tight job market, your credit score can be the determining factor if you get the job or not. Potential employer will look at your credit score to see if you are fiscally responsible.

Take Action:

Pull your credit report to review your credit score. Look to see what your score is and look for ways to improve your score. You want to do this prior to applying for a loan, applying for a job or purchasing insurance. In the financial game the highest score always wins.

Remember take one step at a time to simplify your personal finances.

This post was featured in Money Hacks Carnival # 102

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