Planning your Retirement from Z to A Part V. “Getting there slowly.”

Blogging Crap with Chip

Money does not bring joy or pain in and of itself. Money is just a tool. If we think of money this way, we might be able to control or guide the way we use it. Let’s face it, no one ever thinks they have enough of it. I’ve read stories of billionaires who thought… Maybe, just maybe if I had another billion then I would be happy.

I’ve heard it said that money doesn’t bring happiness, but it can pick your misery. I’m sure that’s true to some degree.

I think one of the first things we have to do is let go of the idea that if we had more money we’d be happier.

Happiness is what you make it (in most cases). Look, I understand that shit happens and that some people can be in bad situations where happiness seems to be impossible to achieve. I could say things like there are people worse off than you and stuff like that, but I don’t know you or your situation. All I can say is, try.

I’m sure you know that almost no one wishes they had made more money on their deathbed. They only wish they’d spent more time with family and friends. What we really need to do is put our want for money into a “whole life” perspective.

Ok, enough already… money is a tool.

I’ve read a lot of books and articles about saving money, getting out of debt and retiring rich. But for an average person like me, who worked their whole life and didn’t have a huge amount of money to put aside, the “pay yourself first” and “start your own company/become a real estate guru” ideals were not realistic for me at the time. Yes I wanted to be rich. We all think about it when we’re young. We all think we’re going to make our first million before we’re twenty five.

The reality of it is, I’m just a simple guy trying to get by. Even as I write this I still live a very simple life. My goal was never to travel the world, but to go for a walk in the park. I wanted a future, I wanted to retire some day, I wanted a life where I could do what I wanted to do, when I wanted to do it. So how did I get there?

As it turns out… slowly.

The first thing I had to do was assess my situation. I had to look at the money coming in and the money going out. I had to find a way to pay off my new mortgage (maybe for you right now that’s rent) and get out of debt and save for my future.

What did I do? The first thing I did was admit that I had no idea how to save or spend money. Looking back now I see how badly I used money. I was in love with spending it and I did a lot of that. I didn’t have much of it, but I sure made sure to spend every penny of it.

It wasn’t so much buying stuff, as it was spending itself. I bought tons of crap I didn’t need. Then by the time I realized I didn’t really want, whatever it was I bought, I’d say the same thing, “Oh well, it only cost X”.

I had to figure out how to spend without wasting, but I still wanted to spend. My wife and I talked about it and brainstormed for a while and we came up with the idea that I would take charge of the finances.

I would pay the bills. This had a twofold effect on our lives. By paying the bills I got to spend money and I also got to set goals. I would see our bills go down. This became my new addiction.

As soon as I was put in charge I set goals to eliminate our credit card bills within 5 years. It was a lofty goal considering I was just making interest payments at the time. The first thing I did was call my creditors and ask them to reduce my interest rates. I’ll be honest, it scared me having to make the calls. Don’t ask me why it was scary… maybe it’s because I had no confidence, maybe I thought it was impossible, maybe I thought the person on the other side would judge me? I’m sure it was all those things and more. But I made the calls.

Here’s what my credit card situation (kinda) looked like at the time.

  1. Visa $10,000.00 at a 19% interest rate.
  2. Visa $3,000.00 at a 17% interest rate
  3. Mastercard $12,000.00 at 19% interest rate.

Before making the call I had my plan. I would let them know my situation. I was having a hard time making the payments and I was committed to paying them off and I didn’t want to go to a debt consolidator. But I would IF I had to.

I made the call to the first Visa at 10K, they wouldn’t budge on interest rate. Then I called the second Visa, they lowered my rate to 14%, wow that was awesome… I had a win under my belt. Who knew this would actually work.

I was pretty excited when I called Mastercard. At first they said they couldn’t do anything for me. Then I remembered reading an article that said if a credit card company says no to reducing your interest tell them you’ll cancel the card. I thought what the hell… So I told them, either reduce the rate or I’ll cancel.

Well, it turns out they didn’t want me to cancel or go into debt consolidation. They said they could reduce the interest rate to 4.99% for six months. It was a “special offer”. I figured I’d take it and then call them again in six months.

Ok, that wasn’t so bad. Two out of three helped me out. But now I had to make a tough decision. Since Visa 1, said no to reducing interest rates, I would call them again and this time they would either reduce my interest or I would cancel my card.

I loved my credit cards… I still had this idea that it was “free” money, even though I damn well knew it wasn’t. Too bad, I needed to suck it up. I made the call, they said no dice and so I cancelled my card.

My goal now, was to figure out a plan to pay everything off.

The first thing I decided to do was pay off Visa 1. It was the highest interest and I wanted to get rid of that card ASAP. I would put as much money as I could on Visa 1. The other two cards would get the minimum payment + interest. That way they were going down too.

It wasn’t easy and some months were harder than others. Things went wrong with the car, kids needed stuff for school, the electricity bill was bigger than we predicted, land taxes were due, etc…

I thought ok, I still need to make payments to keep my credit good, so what can I do? I have no extra money. Well, as it turns out, I was lucky enough to have medical benefits at work. I had 80% coverage. Here’s what I did.

I took my lowest interest card and my wife and I went for a massage. The massages cost $100.00, I used my MC to pay. I went home and sent the bill to my insurance company, who then paid $80.00 back to me. I took that $80.00 and made a credit card payment. I realized that the credit card company didn’t care if I spent or not, they just cared about the minimum payment. So I paid $20.00 to drop an $80.00 payment on my card. At the time I considered that a win-win. It was all about keeping my credit score up and not missing a payment.

This plan got even better when my wife started working and we had 100% coverage. We used to take the kids for a massage too and we’d end up making $200.00 payments on the card (of course we added the interest payment too).

I’ll be honest it took 8 years to get out of credit card debt. We ended up needing a car and we dealt with other things life threw at us.

The point is, we set a goal to rid ourselves of credit cards and we made it.

The next thing we’ll talk about is rewards. We worked hard for our money and we did want some for ourselves, so we rewarded ourselves…

Tune in next time, when we talk about “allowances”.

To be continued…

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