One of my primary approaches to getting out of debt has been being frugal. I see this as more relevant over the short term versus the long haul.
I’d like to start off with a quote I found a book by one of my mentors, Ramit Sethi of I Will Teach you To Be Rich fame.
To live a richer life, spend extravagantly on the things you love… as long you cut costs mercilessly on the things you don’t.
I am by definition a very frugal person. I also realize that all the cost-cutting in the world doesn’t help me simply aren’t earning enough to get by.
Ramit has adopted what he refers to as CEO strategy:
Cut costs + Earn more + Optimize your spending
We cut costs by using coupons from restaurants.com, buying when items are on sale or clearance, and of course shopping around in general. I’m working on the earning more part for myself. Last year I joined Ramit’s Earn1k course, did a few jobs on the side and earned about $600 between cleaning office buildings while my friend who runs a cleaning business was on vacation and testing an iPhone app for a very friendly couple from Arizona. Not quite enough to cover what I paid for the course, but it was something.
One of pre-exercises is a to write down 50 ideas on how one can earn income on the side. I came up with a list then deleted it because I questioned how serious I was about implementing the ideas. The top ones for me include Blogging, Research and Technical Support. If I can write about a topic people are interested in and make 100/week off it or more it would allow me to get close to my goal much, much faster. 15k after 3 years along with the real-world experience having gone through the process. What I write here is mostly ‘shooting from the hip’, without a specific purpose in mind. Changing it to a more structured / polished format while keeping true to my voice and the message really wouldn’t add that much time to the process and get more people interested in this site.
My biggest challenge here is being good at something to the point where I feel I am good enough to get paid for it. Selling myself short some would say, but I am a harsh critic and am pretty transparent when I don’t believe in a product or service.
Another component of the course is exposing yourself to new ideas. As an MBA student I was exposed to new ideas relevant to business and marketing all the time. After graduating, not so much. I let others voices, complaints and life situations overpower my own. Then got saddled with debt and lost sight of the big picture. I will give it my all, but never ever will I let the feeling of being in a dead-end job crush my personal spirit and drive.
In order to be the best, you need to learn from the best. The process of figuring out who is good vs who sucks and is a total waste takes time. In 2000 at the tender age of 16 and making 5.15/hr I read a book by Robert Kiyosaki called Rich Dad, Poor Dad. I read the book as though it was gospel. My first exposure to business outside of college. Looking back though, I really think he viewed the people who worked for a business and not running their own as inferior.
I’ve had a bunch of bad experiences with money / business. This is almost a part 2 of Ground Zero – My Challenges Getting it out here, once and one time only:
- In college…2 days of a horrible telemarketing internship. Reading a script to help companies save on their telecommunication costs.
- Also…having a peer of mine push Quixtar along with his religious views on me. I didn’t take the bait and really felt like unless I was working in the MLM system. He’s a wrestler / preacher, didn’t know I was a gay and we never spoke since.
- Family members pushing PrePaid Legal. “Oh brotha, you really need to get in on this now”.
- An internship last month I almost did before getting a position and going to be given an undisclosed stipend. I got three offers within 48 hours. One goal was to contact local colleges and launch an internship program. They wanted top talent essentially for free. Not a good vibe. At 19 or 20 I would’ve agreed to it, but at 28 having been burned too many times in my life and not believing strongly in the services they offered.
- At the time I had 10k in the bank (09) and switched careers. Having a boss post a full-time position online, change it to part-time when I interviewed and per diem after the 2nd month. I didn’t have the balls to start looking elsewhere immediately or tell him I needed more hours. He kept saying he was working on a deal with local government to start a technology incubator and referred to me as an Entrepreneur-In-Training. It never panned out, I was able to work my own hours, but was micromanaged to the core (keeping track of what I did in 15 minute intervals) and at no point did I feel like I was ever more than an assistant. 6 months of that and I was back to banking. After getting sh*t pay, the grass started to look better on the other side.
- General upbringing : I saw my non-working disabled father make all kinds of money mistakes which dug our family into a huge hole and have a blasé attitude about it all while my mother worked cleaning houses and in a nursing home to make ends meet. As a kid I begged him to get a job at least once a week for a decade and it never happened.
- Losing money in the stock market – After my father died suddenly, I got around 40k from his life insurance policy. I was making about 10/hr part-time when it happened and was given the money in small amounts over a 3 year period. Today I have little to show for it, as my monthly expenses and purchases eroded through it. I do have some guilt since I never had that much money before in my life but try not to let it hinder me too much. I used part of the money to fund a Roth IRA along with an individual stock tracking account that was in a penny stock (DPDW.OB) a coworker was going nuts about. I thought it was worth the risk at the time but then ended up losing my shirt to the tune of about 50k my initial investment on the stock and ~20% in an index fund. My risk tolerance went from moderate to minimal over a month when the housing market crashed in 2009.
- Selling a 5 year old car that was working fine other than some hard shifts for 6k and seeing the dealership sell it for 10.
The point I’m making is bad things have happened to all of us. The question is do you use that story to hold you back or instead use it to propel you forward. My story might suck, but there are plenty of other people with worse stories. It is part of me yes, but I don’t let it define me.