Subscribe to the newsletter!

debt

Traveling While in Debt

Traveling while in debt is possible if you remember three important things. Find out how

Traveling while in debt, is it sensible? When thinking about it from surface level, there appears to be only two options. The first is to be the aggressive saver and the second is to be the minimum payment payer.

When making debt repayment a priority involves the usual getting on a budget, tracking and cutting expenses, and looking for ways to make more money. Traveling and taking vacations is usually one of the big areas done away with.

However, your wanderlust vibe may not need to lay dormant while you finish paying off debt. When I started paying off my student loans, I originally thought travel would have to be put on the back burner. I soon realized it didn’t have to be that way.

While travel is usually costly quest to set out on, with planning and tenacity it can be a possibly while still in debt.

UNDERSTAND THE KIND OF DEBT YOU HAVE

If you have credit card debt, student loan debt, or auto debt, then paying it off in a timely manner is important. If you have high interest debt over 5%, consider a plan of action about how you will pay off more of it

The biggest thing to remember when you want to travel while still in debt is figuring out a way to stay on track with repayment. If you’re making aggressive debt payments every month and don’t have much money left over, the refocus on what type of travel you want to do.

Travel doesn’t have to be a big, expensive thing

You don’t need to stay in high-end hotels and go to popular tourist areas. If you live in the U.S., destinations like Canada, Mexico, and Belize are great options. Southeast Asian countries like Vietnam and Thailand have hefty plane ticket prices but the costs once there are really inexpensive. Many people are able to travel in Vietnam and Thailand for $30-40 dollars a day. Awesome, right?

Cruises can be another option. I went on two in 2015, one to Mexico and the other to The Bahamas. Lots of free activities and food was provided.

Exploring National Parks and Canyons is something I’ve been wanting to do. I’m a diehard watcher of Parks and Recreation, so Ron Swanson’s love of National Parks rubbed off on me. I’m planning to go on a road trip through Arizona and Utah in the next year or two, visiting The Grand Canyon, Horseshoe Bend, Upper Antelope Canyon, Bryce Canyon and Zion!

 

Have a separate savings account for travel 

Create a separate savings account specifically for your trip. Consider opening a high yield savings account with places like Ally or Synchrony Bank which offer around 1% APY.  It’s better than the 0.01% you are getting at a regular bank.

Remember than every little bit counts. Using automation apps like Digit, which periodically pulls a few dollars from your checking account, is a great way to trick yourself into saving more.

Give yourself a timeline

When I started with my student loan repayment, I gave myself a rough timeline of when I wanted to have a specific amount of money set aside for a trip. I didn’t even know where I wanted to go yet, but I knew it was somewhere!

It took about 15 months of saving, stashing away small amounts of cash, and automating my savings. Eventually I was able to reach my goal and got to take the travel trip I wanted this past March.

While I have been traveling while still making solid progress on my student loan debt, I understand the challenges of wanting to travel while in debt. If money after debt repayment is tight, really try to consider locally exploring to parts of your state or nearby places. Monitor flight deals to see where you can travel to cheap.

With some savvy planning and commitment, you might not have to wait until after you’re debt free to take a trip.

How do you feel about traveling with debt? 

 

The Rocky History of an Emergency Fund

What has your history with an emergency fund been like? I share my experience over the years having one.

Emergency funds are kinda hot right now, don’t ya think? Well not really…people have most likely had them for a long while. There has, however, been an increase in posts discussing the nagging but super important topic of emergency funds.

The discussing of these surprisingly not so common savings accounts got set off by a Billfold post on The Story of a Fuck Off Fund.

Age 12: Budding Business Owner?

My first real tango with the aspect of an emergency fund happened when I set out to start a business. I was 12 years old, had just finished 6th grade and felt ready to conquer the world. Sort of.

My mom owned an assisted living business and had just opened a new location. I pitched the idea of having a candy counter to serve the residents snacks and promptly got to work

I had separate bank accounts for my regular savings and my business money. I started buying the snacks in bulk to save money and from there I understood the importance of having a “buffer” in my accounts.

Every month I would stash away some of the money I made and put it into my savings account to be used for “a rainy day” or a business investment, as my 12-year-old self liked to call it.

Age: 18-20 University Life

My years at university consisted of going through different shades of broke. “Being worried but still sort of okay” type of broke. “Not having a lot of money” type of broke. “Oh my gosh, am I going to overdraft” type of broke.

My emergency fund fluctuated a lot during this time. Emergency funds were an ingrained aspect in me because of my car. Faced with the aspect of having to pay for repairs, oil changes, registration, and car insurance costs, I knew very well how expenses could sneak up.

I made it a habit to always have at least $1,500 in an emergency fund during the time.

Present-ish day

For a while after graduating university, I worked a job I that was really exhausting and draining both physically and mentally. During this time, I made solid efforts to not let the job become a long term thing.

In addition to job hunting, I started contributing more and more to my emergency fund. For a while, I contributed a good chunk, until my student loan repayment started. Then I was stuck at a cross-roads.

Contribute more to my emergency fund (it was still small at this point) or pay off more of my student loan debt? What was the “right” thing to do?

After reading a dozen or so articles, I decided to make big payments on my student loan debt, but still contribute a sizable amount to my emergency fund. It’s all about personal circumstances and priorities. I figured out what would work for me.

I am so glad I did. 

My job started to become unbearable, I had a decent size emergency fund, and an opportunity to move overseas for a while presented itself.

I still find it funny how a story on emergency funds went viral around the same time I was making a plan to quit my job without a solid new job lined up.

I quit my job, went to an interactive technology festival, went to Oregon, then started my new job in Thailand. My emergency fund was my friend during those few short weeks, when expenses started to pop up.

Thank you emergency fund. I’ll never stop giving you attention 🙂

What is your history of an emergency fund? How much or how many months of expenses do you consider is necessary to have in one? 

Financial Lesson My Parents Were Wrong About

financial lessons from parents

I feel the need to clear the air. I like reading about people’s journey with money. A lot of the endearing stories detail how the individual’s personal finance journey came to be. There are tales of being high in debt, maxed out credit cards, frivolous purchases later regretted and so on.

The stories unveil how parents or a financially sound voice of reason came into the light and kicked them into gear towards getting better with their money. The stories are passion filled and inspirational. It makes me feel less than jazzy about sharing mine.

My interest in getting better with money was inspired in part by a feeling of languish I had as a kid.

My parents made a good living throughout my childhood. My mother ran her own nursing home type business and my dad happily worked (and still works) for the same employer since he was 20 years old (37 years and counting! That doesn’t happen much anymore!).

However my parents lived a live influenced strongly by consumerism. They bought a wayyyy bigger house than they needed, constantly added unnecessary additions, put a lot of stuff on their credit cards (and didn’t pay in full every month), and were big on lifestyle inflation. My siblings and I lived a fairly frugal childhood on the other hand, weird…

I love you mom and dad! Despite all the knocks I’m about to take towards your personal finance attitude…

1. Credit cards are evil and should be avoided

I want to apologize to the polite Wells Fargo agent who I turned down every time when she tried to help me apply for an (actually good) credit card while I was in college. You the real MVP. 🙂

I was afraid of credit cards and turned them down at every turn due to advice from my parents to avoid them. Both mom and dad had a history of carrying credit card debt. Due to their constant hate-fueled talks towards credit cards, I viewed the piece of plastic as the devil’s advocate.

After getting my first credit card last year, I found out they are not all that bad! They actually have some solid benefits to using them (besides the obvious building credit thing 🙂 ).

2. Buy your cars new

“You’re better off buying a car brand new. With used cars, you have no clue what you’re going to get.” – my dad

I get where my dad is coming from when he said this. I don’t want to go drop a few thousand on a used car with 153,000 miles that might cause me more problems than I want down the line. The best bet? Buy pre-owned/new-to-me vehicles.

New cars depreciate so much in value in the first few years. My brother and his wife have both bought pre-owned 1-2 year old cars with low mileage and were able to save several thousands.

Better tips? Buy your vehicle with good ol’ cash. If you do finance, don’t get it through the dealer. They always try to make more money off you through the financing.

3. Buy a house, renting is just throwing money away

Yeah…my parent’s opinion on this changed when they tried selling their house in 2007, right as the housing market crashed.

Reading up on Afford Anything’s take on the rent vs. buy debate and Lifehacker’s take on it, reaffirmed me to not feeling bad for putting off homeownership for a while.

4. Money can’t buy happiness

It was ironic my parents always said this considering they bought several new cars, hot tub, extensive home renovations, and filling up the house with a lot of material possessions.

It weird how this saying is repeated over and over, as if happiness and making a good living are mutually exclusive. They aren’t…

Money can buy happiness to a certain extent. Being broke is expensive and time-consuming.

I partly get where the saying comes from: don’t work a job you hate just cause it pays good, there is something great in living with less, and so on.

However flat out saying money can’t buy happiness isn’t completely right. Having a lil’ extra to put away for a rainy day doesn’t hurt.

What financial lessons, either good or bad, did you learn from your parents? Have they carried with you throughout the years? 

Naysayers of Personal Finance & What to Do About Them

 

personalfinance_hate

There are always those people that kill your vibe. The ones where, when you explain some things you’re doing, they instantly retort against it. Sometimes, certain topics get more of an adverse reaction than others. Personal finance is one of them.

Talking about money makes many people nervous. Money management, saving, making more, and investing aren’t talked about much because for some reason it was decided to be a hush hush type of topic.

It’s interesting (and sometimes heartbreaking) when people brush off the discussion of money. When it comes to the naysayers of personal finance and money talk, I’ve experienced and learned of the different kinds of people who are so resistant to talking about money. Let’s take a look at them.

1. The Yolo (You Only Live Once) person

This is a big problem with millennials and people my age (I’m 21). Whenever the topic of saving and budgeting comes up, the YOLO person throws up their arms.

“You only live once! I want to enjoy my life, not have to restrict myself! I could die tomorrow for all I know!”

Yes, you could die tomorrow, but there is a greater possibility of you living much longer. Don’t you want to make sure you have a good financial foundation to enjoy your later years as well?

They make lots of impulse purchases and cover with the guise of “treating themselves” or “buying things that they need”. These are the “treat yo self” people. The type of people who may need to get better at being more intentional with their money and seeing the long-term.

The YOLO person fails to see money management as an opportunity rather than sacrifice [LINK]. They don’t understand it’s possible to live a good life and financially prepare for the future. These two are not mutually exclusive!

2. The “Thanks Obama” person

The title doesn’t have much to actually do with Obama, haha, it’s more discussing a particular mindset. A “thanks Obama” person is someone who complains about their situation and attributes their problems towards other things rather than focusing on actively working to better themselves.

They’re the ones who would rather hope for getting on a loan forgiveness program rather than look for ways to pay off their loans. They’re the ones who don’t know how to take the meaning of something and and shift it to fit their needs and goals.

How often have you read articles on income reports, people paying off big amounts of debt, working lucrative side jobs and so forth? On those articles, there is usually always someone in the comments who says how the situation won’t work for them.

I have three kids and a mortgage, there is no time for a second job! 

I only make $12 an hour, there is no way I can pay off my debt faster!

This person paid off 8,000 of debt in three months? That’s not possible for me!

This type of person focuses on the exact details of the above example stories, rather than focusing on the overall lesson: having a reason behind doing what you’re doing and making a plan that works for your situation.

3. The “On a better day” person

Most often known as a person who always says “I’ll do it tomorrow”, a “on a better day” person waits to get started. They believe things in their life aren’t in order at the moment and they will focus on their financial goals “on a better day”.

They constantly talk about how they don’t have this or that to get started or are too busy right now. Often times, they cast this mindset on others and try to guilt them.

“You run your own online business? Well I could run one too if I had a fancy laptop like yours.”

“You maxed out your Roth IRA this year? Well I have too many bills, I couldn’t possibly do that. Maybe when I start making more money…” 

4. The Overly Optimist

There is no need to build a good size emergency fund, right? Things will work themselves out. That debt will eventually be paid off. A big experience I had with this was when I was in college and talked with other people about their student loan debt.

“Oh, I’m not focused on it. I’ll worry about it when I graduate”

Besides rolling my eyes at the statement, my college self thought maybe it was just people not being exposed to the real world as the reason for this overly optimistic attitude. Nope! Being out of university now, I realize even lots of people in the real world do it.

They don’t pay their credit cards in full every month, they don’t make bigger payments towards their student loans, and they don’t focus on building up a bigger emergency fund. I mean, having $1,400 in a savings account is a good enough emergency fund, right? Right…

These types of people can bad for your finances. They may be great people, wonderful friends, and so forth, but they’re bad with money. How can you do about them?

Explain your ‘why’ and provide an example. 

The types of people above don’t have a definite ‘why’ behind their personal finance, so that’s why they see things like saving, investing, and making more money as not something worthwhile to focus on.

You could tell them your reasoning in dealing with personal finance and what you hope to get out of what you’re doing.

“I’m practicing frugality in terms of cutting my cable bill and limiting dining out. Nothing too extreme. I want to use the money I save to take that vacation to France I’ve always wanted to do.” 

“I’m working a second job as an Uber driver. I’m using the extra money to pay off my student loan debt. I want to pay it off faster so I can focus more on my passion project of painting, without having to worry about debt.”

“I made a budget for myself. I want to see where my money goes every month so I can see where to save. I want to use the saved money to put towards a down payment on a house.”

A lot of times, people just need to be explained why something might be beneficial to them. They may see personal finance as some daunting, big task. It doesn’t it have to be.

Everyone starts somewhere. It all starts with one thing. Doing one thing every day and working towards building a more solid foundation.

 

Have you encountered naysayers of personal finance and money management? What did you do about it? 

Photo credit

5 Things I Know to Be True About Money

money truths money management

Lately I’ve developed a not so good habit of reading copious list articles on personal finance. You know the ones that go…

10 money things you need to know before turning 30

7 finance fundamentals you should know

8 ways to get better at money management

They’re addicting, aren’t they? This past weekend, I spent more time than I needed to scanning through LifeHack and Rockstar Finance reading several different list articles. I digress, it’s because I’m trying to learn more about finance and get better at managing and growing my money.

Throughout the trials and tribulations with life, I’ve learned something: being knowledgable about money is super duper important. I’ve always known this but have also resisted it. I would scribble down things I had spent money on for a certain day but then not want to actually go through with making a budget. I’d read about credit card rewards but then scurry away from them because I thought credit cards were horrible things to have.

Money is something we have to interact with everyday and whether we like it or not, many of our decisions involve money in some way or form.

As I’ve become more involved with my money and the personal finance world, I’ve learned some things. This list isn’t comprehensive of any and all money lessons (that’d take a while to talk about!). It’s just a few key takeaways I’ve learned so far.

1. Focus on building wealth in your early working years 

Building wealth and investing early is one of the most talked about things in the personal finance world. Most have seem the various charts showing 20-year old investor A and 40-year-old investor B. Investor A usually always comes out on top with more returns on their investments over the long run.

A while back while in my remaining semester for college, I was looking for information on retirement planning. I felt lost and needed actionable information. No one around me (twenty-somethings as well as older adults) talked about retirement planning.

Whenever I spoke about it with older adults in their 30-50’s, they would get this frightened look on their face and just say “Do it! Do it! Save anything you can!” over and over without giving any clear advice on how to go about doing it.

Things are moving along better now. I’ve been reading more about index funds, Lifehacker’s April money challenge, and even picked up The Index Card: Why Personal Finance Doesn’t Have to be Complicated (Loving it! Will write up a review on it soon). 

2. Just because everyone else is buying the next “life” thing doesn’t mean you have to

When I graduated college (about 1.5 years ago), I continued to drive my rickety Ford Focus with 185,000+ miles on it. I knew I didn’t want to buy a new car and have to take on a car payment. So I made a savings goal and started putting money toward buying a preowned car in the future.

Everyone questioned me on this.

The most memorable occasion was when I was over at my mom’s house one day. My brother made a sly remark about how it was “embarrassing” that I was still driving my old car. He went on and talked about how I “needed to stop being cheap” and just go ahead and buy a new car. (This is a guy who bought a truck he didn’t need and wastes his money on irrelevant things every month).

Buying a house and financing a new car were two big things repeated over and over. A lot of people around my age started buying new cars, getting really nice apartments, and so forth.

Do I regret not taking on 20-30K in additional debt by getting a car? Heck no! Not being tied to a car payment is what helped ease the transition to moving to Thailand.

3. Having good credit is super important

The importance of good credit has really been ingrained in me recently. Having good credit is so critical to financial wellness. I’ve been vigilant and made sure to pay my bills on time and my credit card balance in full every month.

A person’s credit score is now even started to affect their employment prospects. W0o0w!

4.  Credit cards can be useful (i.e. not evil) things to have

All throughout high school and college, my parents as well as other adults would give horror stories about people saddled with high-interest credit credit card debt. Credit cards were made to seem like the devil’s advocate.

I would picture Janice Ian from Mean Girls whispering: Evil takes the plastic form with credit cards.

Credit cards are not evil. When used responsibly, they can be really beneficial.

There are three big benefits to using credit cards: building credit, security, and rewards! Resolving charges from getting a stolen credit card is easier than with a debit card. Credit cards provide a myriad of rewards based on the type you get and they help you build credit.

As long as you are responsible with them and pay your balance off in full every month, they are pretty useful things to have.

5. Finance wellness takes practice and patience

When I started getting into personal finance more, I quickly got discouraged. Everywhere I looked, I would read things about people having 10,000+ in their emergency funds, bloggers making 10K+ per month, people maxing out their IRA’s every year and so forth.

Reading all these success stories made me feel less than stellar with my efforts. Almost as if I was doing personal finance the “wrong way”. I’ve moved away from that bad feeling and follow something better now.

Do what you can, with what you have, where you are —Theodore Roosevelt

There are different stages to financial wellness and big things usually don’t happen overnight. The important thing is to just start. Make small steps towards a bigger goal. Everyone has to start somewhere.

I’m sure as time goes on, I will learn more “money truths”. I’m only 21 after all. Still a long way to go!

What are some things you know to be true about money? What has your journey in personal finance looked like? 

photo credit

1 2 3 4

Disclaimer