What is this strange new world called financial freedom? The more I watched her show, the more I wanted it.
Essentially, do I take the blue pill or the red pill?
As the title of this post implies, I took the red pill.
Financial Independence. I wanted the ability to do what I wanted, whenever I wanted without being tied down to a 9-to-5. But how would I do it? I needed a plan.
Much like the Scooby gang needed a Scooby trap, I was going to have to plan my way out of the rat race and into financial freedom. A financial road map. That’s what I needed.
It was like what Gail Vaz-Oxlade of Til Debt Do Us Part would always say in the intro of her show, I needed to go from red to black. My investment picture of over more than a decade is listed below.
Here’s a sneak peak behind Greenbacks Magnet financial magic curtain. Up first, from red. Then fade to black. Or in my blogs case, green.
Financial chaos bleeds. Here’s the red.
Oct, 2023: -$16,000 (market + house value ↓ )
Sep, 2022: -$22,000 (market crash + loss of 2nd income)
Feb, 2020: -$19,000 (market crash; where the bleeding really starts)
May, 2019: -$10,000 (market crash)
Dec, 2018: -$14,000 (market crash)
Oct, 2018: -$10,000 (market crash)
Feb 2018: -$4,900 (market crash)
Jan, 2016: -$4,000 (market crash)
Aug, 2015: -$5,000 (market crash)
Jun, 2013: -$4,000 (market crash)
Sept, 2012: -$14,000 (market crash + cash crash + got a new home!)
Feb, 2010 -$1,000 (market crash + got a new job!)
May 2009: -$3,000 (market crash + laid off)
Financial triage has prevailed. Here’s the black.
Nov, 2023: +$27,000(market rebound + 2nd job + house value ⬆)
Oct, 2022: +$17,000 (market up + mad hustlin’ 2nd job)
Mar, 2022: +18,000 (market up + bought condo)
May, 2020: +27,000 (market rebound; the green starts rollin’ in)
Jun, 2019: +$9,800 (market rebound)
Jan, 2019: +$10,000 (market rebound)
Aug, 2018: +$6,300 (market up)
Feb, 2017: +3,900 (market rebound)
Mar, 2016: +$5,000 (market rebound + tax refund)
Oct, 2015: +$6,000 (market rebound)
Feb, 2015: +3,300 (market up)
Aug, 2014: +$2,000 (market up)
Jun, 2010: : +$4,000 (market rebound)
May 2008: +$2,000 (market up)
Dec, 2006: +$1,000 (got a new job!)
First, I got rid of any payday loans and made a promise to myself to not ever sign up for them or any car title loans. Done.
Second, I needed tp pay off my car loan and stay away from car payments. So I paid off my SUV and freed up that monthly payment of $448.65 in 2009. I have not had a car payment since. Done.
I needed to get rid of the $20,000 personal loan I took out for $333 monthly. Done.
I needed to increase my income. So I finished my bachelor’s and got a higher paying job. Done.
I needed a goal to aim for. I decided upon one short-term and one long-term and one sensational dream goal.
Short-term I needed a $10,000 savings emergency fund. Done.
Long-term I wanted to retire a multi-millionaire. So I needed at least $2 million. Sensational dream goal is $10 million. I decided to break this all up into smaller goals. Therefore, I would start by having investable assets of $100,000. Done.
Then $250,000. Done.
Next was $300,000. Done.
Although, having over a quarter of a million-dollars is an incredible feat in itself, I had no time to rest on my laurels. I must keep going.
Then I started to press on toward my next goal of $500,000. After that is accomplished, I will set my sights on $750,000. The next leg in the journey would be $1 million.
At that point, I would be a 401k millionaire.
The next goal is to double my money. I would get to my next several money milestones by increasing my 401k contributions by 1-2% every year.
No vacations unless they were paid for with cash.
I also got a second job to bring in more income.
I signed up for credit card and checking account bonus offers that brought in thousands.
I invested my old car payments in index funds like the VTSAX and individual stocks like Apple, Google and Amazon.
And every time I got paid I would put a small portion in my Roth IRA.
I also make sure to keep track of my investments every month.
I’ll breakdown more of my behavior on how I went from $0 to over $300,000 in my next post.
In my 20’s, I started watching the personal finance show hosted by money expert Suze Orman.
The show ended in 2015, but I learned a ton about managing money from her. Continuing on my $500k journey, I knew if I wanted to be rich, that I had better invest my money.
Suze was hilarious though in her approach of telling people what they could and could not afford. It was watching this segment of “Can you afford it,” that put me on the path to conserve versus consumption.
I rejected buying new cars and instead invested that money. I started reading every book I could on investing from the Automatic Millionaire to the Millionaire Next Door. I would go to the library and browse the personals finance sections on read the books while commuting to work and on weekends.
Like Ramit Sethi, I like to ask the “$30,000 questions.” Personally, I really like to ask myself $10,000 questions. Meaning what in my life can I get for $10,000 less. How can I spend $10,000 less?
I want low fixed expenses. I didn’t need a $70,000 Tesla to make me happy. No offense to your boy Josh there in the video. I would rather have $70,000 invested in the market than driving around in one simply to go to target and have a nice fancy car to drive around in while I pick up my toothpaste.
That’s right Colgate, feel this leather and enjoy this new car smell while I take you home in my $1,200 per month shiny new car. Screw that! Let me make this money work for me. I want to earn $70k in dividends and interest, not pay interest on $70k.
Don’t get me wrong, I prefer the finer things in life…when I can afford them.
As a teenager, I worked as a telephone operator and a waitress so I know the value of dollar. I really didn’t know a lot of people that were socking away huge amounts of money in savings or investments. I just knew I wanted to have money to be able to take care of myself and not have to spend so much time worrying about how to pay the bills. I took the advice of Robert Frost.
Two roads diverged in a wood, and I— I took the one less traveled by, And that has made all the difference.
Instead of buying $50,000 cars, luxury vacations, expensive clothes and $500,000 homes, I poured my money into stocks. I started with $5 dollars. Then slowly worked my way up to $100,000.
It wasn’t until I saw a Kiplinger magazine on the boyfriends table and read it that I started to understand what it meant to manage money. Like a lot of folks I did not grow up learning about finances. It was not taught in school. And it was not talked about much at home.
Pretty much everywhere I went money was a taboo subject. I learned so much about money in that one article that I was hooked. I went to the library and checked out about five books on personal finance.
I know in the beginning it was a lot of Suze Orman and people I saw on television like celebrities whose books I read. Then I moved on to money experts like Peter Lynch, Warren Buffet and John Bogle. I also found books by money bloggers.
I remember over time going from $5,000 to $150,000. I increased my 401k contributions every year and eventually got to saving over 25% of my income! I knew that it was not enough to just open an investment account. I had to also invest that money.
A huge misconception is that if you open a brokerage account for Roth IRA then you are investing. Wrong. You have to tell the money where to go. If you don’t, its like putting popcorn in the microwave, shutting the door, and then saying to the microwave now pop without setting the timer telling it how long to actually cook the food.
I didn’t know this either. I just did what my 401k told me to do. Pick a fund. And that’s okay. You are just getting started.
What really helped me go from $0 saved to slowly making my way to over $250,000 in investments was watching a show on CNBC it was called…The Suze Orman show.
I took a much needed hiatus for the last few weeks to come to terms with the new world order of life during the COVID-19 lockdown.
I did the usual. Stockpiled water, canned goods, cereal, and toilet paper.
Now I’m back.
If this blog could talk, I am sure it would have asked me this question.
After making sure I had food, water, and medicine to stay physically healthy, my mind started wondering about my fiscal health.
Then I thought, shouldn’t people also be making sure they are staying not only safe, but also financially solvent during the pandemic.
Much like Angela Chase (Claire Danes) was constantly obsessing about her crush Jordan Catalano (Jared Leto) in My So-Called Life (MSCL), I would find myself constantly obsessing over my finances.
For those of you who are unfamiliar with the show, My So-Called Life is an American teen drama television series from the 90’s that aired on ABC and then in reruns on MTV for years after it ended with only one season.
The plot surrounded a young 15-year-old girl that spent much of her time trying to figure out life and navigate being on the cusp on adulthood. The cast also just recently did a virtual reunion and reunited back together in 2020.
Now, back to my story.
I needed a fiscal safety net and plan in place that would allow me to weather and fiscal storm, including the coronavirus.
With over 33 million people filing for unemployment, I needed to shore up my resources.
My So-Called Finances needed my full attention. I was up for the undertaking.
START FROM THE FISCAL BEGINNING
Many of my lessons about money started when I was very young. I knew it was very important to have money so that you could take care of yourself and your family.
I got in the habit of saving when I was only three years old. That habit hasn’t changed. I have technically always been a saver.
However, along the way, I got lost. Kind of the same way that Alice did in Wonderland.
I too found myself in a maze of things I did not understand. I needed those signs like Alice got.
You know the ones. They said things like; Drink me.
By high school, I was an angst ridden teen with a penchant for spending. Then it hit me. Maybe I should start reading about this money stuff.
My 401(k) would be my new boyfriend.
As, time went on, I started obsessing about retirement. The hand-to-mouth existence dd not appeal to me.
I thought about what the heroine, Angela, in MSCL would do. She would probably start reading a book and asking a friend for advice.
I knew the same way Amy March did in Little Women that I would not be pauper.
Fun Fact: Claire Danes also starred as Beth in the 1994 adaption of the book.
Therefore, I had to change some things. They say the first step to solving a problem is admitting that you have one. It hurt to see that low bank balance, but it had to be done. To know where you are going, you have to know where you are.
The first step was to set a goal. If I had something to aim for, then I had a purpose. The goal: A one million-dollar 401(k).
LEARN HOW TO BECOME FI
The Tools to Succeed 1. Learn skills to sell for money You need the skills to become Financially Independent (FI).
I wanted to be fiscally savvy. Therefore, I had to read. Angela started off the show reading the book, The Diary of Anne Frank.
I started my FI journey reading a Kiplinger magazine. Then from there, I started watching the Suze Orman show. I knew I didn’t want to sit at a desk for 12 years only to end up sitting at a desk for another 40. I needed a plan. Being able to escape the rat race sooner rather than later appealed to me.
I started devouring personal finance books and blogs. Some of my personal favorites are The Automatic Millionaire, The Millionaire Next Door and I Will Teach You to be Rich. Then you have to decide on a path. I chose passive investing.
That turned on the light-bulb for me. Wealth building is about action.
Building wealth would take time, sacrifice, and work.
PASSIVE VS ACTIVE WEALTH STRATEGIES
Some people choose to start a business, become doctors, lawyers, actors, musicians, consultants, chefs or to make their fortune. I would get mine by investing.
I still needed a career to get paid. So, I found an employer to buy time form me and I equally willing to sell time to them. You can work in the public or private sector.
You can get further up the income ladder by gaining skills in the public sector and then selling them at a markup in the private sector to arbitrage your valuable skill assets.
I picked a job in finance. Once I got that job offer, I made the choice to start investing ASAP.
The 401(k) offers a maximum contribution of $19,000 and the IRA (Traditional or Roth) offers a max of $6,000. That is a total of $25,000 annually. I got my start with 6% and a match of 3%. Then, I slowly started working my way up by increasing my contributions by 1% a year.
2. Passive strategies There are two strategies here: A. Live below your means (LBYM); B. work smarter not harder.
Your employer wants to make more off of you than they pay you. Your work will not go unrewarded, but will be under-rewarded. Therefore, it is your job to invest in yourself by saving for your retirement.
CREATE AN INVESTMENT ATM
You must save enough to start earning large amounts of interest off your principal investment.
3. Accumulation phase Your job here is to start contributing as much as you can to your 401(k).
After, saving a 6-month emergency fund so you are no longer living paycheck-to-paycheck, start putting in every dollar you can into your accounts. Save until it hurts. Even if all you can afford is $50 a month. Save something. This will eventually become your own personal ATM.
It will be like a vending machine. You step up, put in your request, and the machine hands you what you want.
The RMD has now gone from 70.5 to 72. Therefore, you can let your money ride on the interest gravy train for an additional 1.5 years. On a million-dollar portfolio, that would mean an additional $105,000 with a 7% rate of return.
KEEPING IT PASSIVE
Building up your assets. I started with $5 and then went on to my first $100,000 and beyond. It can be done.
4. Passively build a sizable investment pool Find ways to earn income.
This can be with royalties from writing a book, collecting rent on rental properties, or renting out your parking space.
The goal is to trade time up front to build an income stream that with essentially last forever. Then you can kick back and relax.
If you have to sell 40 hours a week or the sum of 2,080 a year, you should get something out of the deal. Simple math can change your life.
I knew that one-million could spit off $50,000 of income forever with a 5% return. I just had to get there first. When I got to the point where my next money milestone was going to be $300,000, I knew I was on to something.
FREEDOM IS THE ANSWER
Why invest so much money? It’s simple. The answer is freedom.
Free from worry over how to pay bills, over how you spend your time, and quality of life.
Money equals power.
Money lets you be more confident.
Debt consumes as it only takes from you and gives you nothing.
The way to build your confidence is through positive experiences. Paying off debt then saving and investing that money will give you that. This in turn will build your self-esteem.
My favorite scene in MSCL was the one in the episode titled, “self-esteem.”
Confidence is key my friends. It attracts things to you. In Angela’s case, it was Jordan. Oops. I meant to say Jordan Catalano. For some reason on that show, he could never just be Jordan.
So, you see in the end, that you can get what you want. You just have to be patient, ask for it, and work for it. They say ask and you shall receive. Try it. I did.
Here is Suze Orman’s FIRE protection gear: $5 million dollars to retire early. Really? Do tell. Care to elaborate. Absolutely.
It was around late 2018 that I heard talk of Suze Orman’s thoughts on the FIRE movement.
The rumblings in the financial blogsphere was that when Suze was asked her opinion about the FIRE movement on the Paula Pant podcast Afford Anything and she says, “I hate it, I hate it, I hate it.”
Suze told Paula Pant that $2 million isn’t enough for early retirement. At a 4 percent withdrawal rate, that’s $80,000 per year, which she says isn’t enough to protect you “when the floods come.”
“If you only have a few hundred thousand, or a million, or two million dollars, I’m here to tell you … if a catastrophe happens, if something happens, what are you going to do? You are going to burn up alive.”
The “Suze Slapdown” of ’18 was coined. And I thought watching WWE Smackdown was tough. Whew! They ain’t got nothing on Suze when it comes to laying the smackdown on finances.
She made headlines for saying that people who buy a daily latte are “peeing $1 million down the drain as you are drinking that coffee.” On Suze’s watch, spending at Starbucks SBUX is a no-no.
Let’s not drop out of corporate America on a whim and stop working. Get back to work.
Check out the tweet below that 2020 Democratic Presidential candidate Bernie Sanders tweeted out last year to see what I mean.
Wealthy TV "experts" are shaming millennials for buying coffee and avocado toast. But young people are broke because they’re drowning in debt and low wages.
The ruling class wants to divide the young and old to distract us from an economy that’s rigged for the richest 1%. pic.twitter.com/v4LCNpoExU
Suze Orman’s the sky is falling attitude about retiring early is not so far-fetched now during the coronavirus.
For anyone who isn’t up to speed on the FIRE acronym, it stands for Financial Independence, Retire Early. I am all for Financial Independence (FI).
This is me. Financial Independence: count me in!
Retire Early: slow down tito!
The focus of FIRE is to retire early by stopping the corporate grind and ending the rat race in your 30s or 40s, and not 55 or 65.
However, I am not yet ready to be put out to pasture. Luckily, other leaders in the FIRE movement gave some clarification and said that FIRE is not about stopping work, but finding your passion and earning passive income streams that keeps the money flowing.
The goal is to live life On. Your. Terms. So, I thought to myself okay. I can live with that.
Saving 25 times your current income and then retiring before age 40 without continuing to make money is risky.
The notion is that you can then afford to live off of your savings by limiting your withdrawals to just 4% of your assets each year.
Meaning if you earn $75,000 a year, then you need to save about $1.9 million before walking away from work. Money that was supposed to last starting from age 65, now has to starting from age 35.
The millennial had caught the FIRE bug and she was looking to hang it up within two years.
“Well, how much money do you have?” Orman asked. “Two or three million?”
No.
“A million?”
No.
“$250,000?”
Yes, but with some debt.
“Really?” Orman could only shake her head.
“Don’t talk to me about it. If that’s what you want to do, go ahead. But 40 years from now, I hope you remember everything I’ve said.”— Suze Orman, on retiring in your 20s
According to Suze, “time is the most important ingredient in your financial recipe.”
As financial blogger Mr. Money Mustache put it bluntly: “In the interview, Suze Orman goes on and on about what might go wrong, and how you need an incredible amount of money saved to protect you, just in case. But this thinking is completely backwards – money will not cure your fear, as megamillionaire Suze proves so clearly. Most high-income people are still within just a few paychecks of insolvency, because it is possible to blow almost any paycheck, simply by adding or upgrading more cars, houses, and vacations. Physical health FIRST: Salads and barbells every day, no goddamned excuses.”
Real estate financial expert and FIRE member Coach Carson posted some great advice on Suze’s opinion: “As Paula said after the interview, we should all make a practice of listening deeply to others (especially if you disagree). If you can reserve judgment temporarily, you can always learn something.”
Coach Carson says time not money is the most precious thing we have. The biggest regret is time wasted when people are on their deathbed. People do not wish they worked more or spent more time in that cubicle or corner office.
Very true. Washington Post financial columnist, Michelle Singletary, also weighed in on the interview. She says “let’s also put this debate in perspective. Many people aren’t saving enough to retire at all – early or late.”
I remember when my portfolio hit $100,000. It took half the time to get the next $100,000 and zoom to $200,000. Next stop, $250,000. That’s right a quarter of a million.
Then I was looking to moving on up like The Jeffersons to the tune of $300,000, $400,000, $500,000 and beyond. I only move forwards. I never look backwards. I could still work for another 30 years if I want to. Without putting in another penny, if I let this money ride I could have between $1 million and $2.6 million dollars. And that is if I stop investing. There is no way I am doing that.
I live for today. I live in the moment. I stop and smell the roses. I enjoy the present, but save like I am going to live forever.
Stop worrying about the world ending today. It’s already tomorrow in Australia. – Charles M. Schulz, creator of the Peanuts
I like to plan in advance. I have a plan to create a plan.
“If plan A doesn’t work, the alphabet has 25 more letters – 204 if you’re in Japan.”― Claire Cook, Seven Year Switch
If I want something, then I go get if. I get off my duff and go make it happen. Don’t complain. Go do something about it. To quote Mindy Kaling, “We are all just a treadmill and six laser hair removal treatments from being Ryan Reynolds and Blake Lively.”
Ask for credit when you don’t need it. Credit dries up like tears in a recession. That’s just my two cents. Back in the 2008-09 recession, they cut my credit lines in half. Overnight *poof* half my credit limits were gone. Like a puff of smoke.
The thing is that work gives us something to do. It lets humans be productive.
If you have $1.5 million at age 65, you have a much shorter retirement to spend on versus at 37.
What really makes the difference is that by age 55-60 many people are empty nesters, own a home, and already own most of their possessions.
You have a lot less things to buy because you have what you need already.
When you are 35, you may still have no kids, are just starting, or have a young family. You have costs that are still rising like inflation.
Empty nesters are not worried about paying for college. Its paid for. That’s in their rear-view. Juniors 529 is spent.
If you are still raising kids, it is likely you will need a decent income and a job. Kids cost…a lot. Most people are still buying homes, cars and having kids well into their 40s these days.
One of the biggest expenses that a job helps subsidize is healthcare.
Financial blogger Financial Samurai puts this into perspective: “Just know that once you get to your target number, you might find that your needs have changed. Life is unpredictable. A job helps you subsidize health care costs that are increasingly becoming a racket IMO, but it would help reduce our $2,380/month health care bill. However, I am grateful for every day.”
You want to retire early. Here is what Suze has to say.
Orman: “It would have to be in the millions . . . You need at least $5 million, $6 million.” (She later says $10 million to account for taxes.)
FIRE proponents fired back at Orman that she has it all wrong.
Really? When a government shutdown causes people to be in soup kitchen lines, then I beg to differ. Here were some of the things I read online during the 35-day government shutdown last year:
“I only have $1.06 in my bank account. I don’t know what I am going to do.”
“I can’t pay my bills.”
“I can’t afford groceries.”
“I’m scared I won’t be able to pay my rent or mortgage.”
“I can’t miss one paycheck.”
Not even one check? Even I try to keep a minimum of $10,000 in the bank at all times in savings. Just in case sh*t happens. I need that rainy day fund because when it rains it pours. Keeping a 3-6 month rainy day fund is what helps me sleep at night.
My 1-tweet financial plan government #shutdown edition. 😉
1. Save a 9-month emergency fund 2. Instead of maxing Roth IRA use extra funds for your rainy day fund 3. Do not get any student loans 4. Do not buy a new car, home, or go on vacation until rainy day acct 100% funded pic.twitter.com/Xmslbml3qC
Now to be fair, the FIRE movement is about saving and investing your money. The more, the better. If you are practicing FIRE, then, in theory, you should be able to weather any storm.
Meanwhile, Orman isn’t sweating her emergence as somewhat of a villain in the FIRE community.
Now that COVID-19 has swept across the globe, it looks as if Suze may have been on to something when she always says, “hope for the best, but always plan for the worst.”
On one of her most recent podcasts she stated that a lot of her advice on saving that eight-month emergency fund has come to roost. She now thinks you need a 3-year emergency fund.
I have always been more about FI than RE because no matter what happens in this world, I know one thing to be sure; you will always need money in the bank.
Now I’m going to sign off on this post the same way Suze Orman ended her show on CNBC every night, “now you stay safe.”
Til Debt Do Us Part is a Canadian television series that follows couples that are going through financial crisis and financial expert, Gail Vaz-Oxlade, comes in to help the couple find solutions.
The series ran for over 100 episodes from 2005-2011. It also had a spin-off called Princess. She teaches couples to go from red to black and gain control over their money.
The show would air right after the Suze Orman show during its run on CNBC. Read my post Dom Perignon Taste on a Budweiser Budget to see how it all went down on Suze’s show.
#1 REASON COUPLES BREAK UP
Money is the number #1 reason couples break up. She visits couples weekly and gives them challenges to help with their finances. Then at the end of each episode, after about 4 weeks, she awards the couple with up to $5,000 dollars to help them get out of debt.
CUT THE CHEQUE
By far the best part of the show, in my opinion, is when at the end of one month, Gail Vaz-Oxlade gives the couple a cheque for an amount up to $5,000, depending on their attitudes and how well they did during the challenges. Keep in mind, couples could get less and some have. One of the lowest amounts I have seen her give was $3,000, which is a 40% reduction of the prize money.
The show was so popular that a 52-Week Life Planner was released based on the television series and offers day-by-day, step-by-step strategies and tips for successfully managing household finances.
This reminds me of a Tom Holland interview he did for Spiderman talking about how Anthony Mackie always says, “cut the check.”
If you have never heard of the show Til Debt or can’t remember it, no worries, I will take you back down memory lane tonight.
WHO IS GAIL VAZ-OXLADE?
“We feel good when our homes are bright and shiny, put a little elbow grease into your money and it’ll glisten too.” – Gail Vaz-Oxlade
Gail Vaz-Oxlade is a financial writer and was a columnist for numerous publications as a freelancer including Yahoo! Canada Finance. She has helped people from high finance to low-income solve their money problems. Eventually, she became a television personality due to all of her work in finance and that is how the show Til Debt came into existence with her as the host.
She has written numerous books on the topic of finance. I have actually read one of her books called Debt-Free Forever.
Gail has a no-nonsense attitude when it comes to money. And that is what makes her so good at what she does.
FOR THE LOVE OF JARS
“You can have everything you want. All you need is a plan. And how do we spell plan? B-U-D-G-E-T!” – Gail Vaz-Oxlade
Watching the show was very interesting. One recurring theme was the jars. Gail advocated for couples to live on cash.
Every single episode, you got cash jars. You would put in a certain dollar amount. When you spend, you write it down in the budget binder cause cash slips through our fingers easier than that snail did with Julia Roberts in Pretty Woman.
Some couples were taking out cash at the ATM from their bank accounts or doing cash advances, which Gail said she could not track so we don’t know where the money went. When it’s gone, it’s gone. Without writing it down or keeping receipts, there is no other way to track cash. So, jars it is.
MONEY LESSONS FOR GAIL
Gai loves cash and hates banks. She thinks they are bleeding people dry slowly with their interest and fees. Gail says banks are wolves in sheep’s clothing. The only way this will change is to teach financial literacy in school. I say start in elementary when they are old enough to start asking for a $1 lollipop, it’s time to start the finance lessons.
This is the secret recipe to building wealth: You need to make more money and you need to spend less money.
Here are 3 lessons that Gail taught me: (1) both partners need to manage the money, (2) no retail therapy, and (3) debt repayment takes time.
LESSON ONE: GAIL ON COUPLES MANAGING MONEY
Do not have only one partner manage the finances.
“It’s not unusual for one person to assume the nitty-gritty of daily finances…. The problem is that when one person is excluded, or totally abdicates responsibility, it means the other can mess things up with no monitoring or grow resentful at always having to do the detail…. Taking turns managing the chequebook, and having regular conversations so that both of you are clear about what’s going on, means you’re both in the know and working to the same ends. It also means that one person doesn’t have to deal with all the crap, while the other merrily laughs off the stress and frustration with, ‘You’re managing the money, so this is your problem to deal with.’ (Yes, there are dopes who say this.)”
Always know what is happening with your money. I don’t care who signs the check and put it in the envelope. Just make sure you lick the stamp. Be involved. Ask questions. Don’t be in the dark.
It’s kind of like that scene in Charmed in the episode Be Careful What You Witch For. Remember that scene in the beginning, after the opening credits. I want you to be skeptical like Phoebe. Always know who you owe and how much. Nothing is for free.
The conversation went like this:
Phoebe: I don’t get it you’ve been stuck in that bottle for two hundred years then someone finally sends you to us and you’ve no idea who licked the stamp? I find that very hard to believe.
Genie:What? I don’t get it you win the lotto and you’re asking for explanations?
Piper:Actually we’d like to know who to send the thank you note to.
“Plastic is anesthetic — it dulls the pain, and then what happens is you just keep waiting for the next fake high.”
And don’t I know it. I had a huge shopping problem for years. It was done as a way to dull the pain of the things going on around me – low-income, working full-time, going to college – I was a mess!
I had some pretty terrible managers when I was younger too. All the stress was getting to me. I had to find a way to cope, but shopping was not it. As I got more mature, I found ways to de-stress that were cheaper or free.
I have said it before that credit is seductive and addictive. It should not be used to replace your emergency fund (liquid cash). However, if you do, be strategic and use credit wisely and sparingly.
“A goal without a deadline is just a dream.” – Gail Vaz-Oxlade
Slow and steady is the way to repay debt.
“One step at a time. You are on your way. Expect challenges. Keep your goal where you can see it.”
You better believe it. If it took you 8 years to accumulate the debt, thinking you can pay it off in 3 months is delusional. See my post Getting out of debt one step at a time.
The good news is that once you recognize you have a problem with debt, then you can work on solutions. I have noticed that generally 2-3 years of cutting back and attacking debt is usually enough time to pay off most if not all of your consumer debt except the mortgage and student loans. After 5-7 years, the only debt left is usually the mortgage. That is a small price to pay for freedom.
Money can’t buy you love. But keeping love alive without money can be pretty tough. In fact, ninety percent of marriage breakups are due to money problems. And to get advice on how to manage money usually costs money! Til Debt Do Us Part, is a series that offers tough-love solutions to those willing to face their financial troubles head on. In each episode we meet a couple in crisis. Some are on the verge of bankruptcy, hounded by creditors or facing eviction. Others are just getting by, but in the midst of a personal meltdown or relationship breakdown because of money issues. With the sensitivity of a therapist and the toughness of a CFO, our host, renowned financial author and columnist, Gail Vaz-Oxlade reveals what she’s found in a couple’s finances – and then she’ll dig a little deeper. She asks some tough questions and then they’ll be forced to face reality. Where will it end if they continue on this rocky road? To get things back on track, Gail takes control of their finances …
This show was very eye-opening in how people managed their finances. Many did not have a clue what was coming in and going out. Gail would come in with her screen shots of the couples bank accounts and spending and give it to them straight.
Many times the wives would burst out in tears after seeing how much debt the family was actually in. Lots of couples were in over their heads. Some so deep in debt they had to consider selling their house, or worse, bankruptcy!
Some couples did not want to make any changes. Even though they were debt up to their eyeballs. These people needed to get their priorities straight. Much like Hermione, in Harry Potter.
Here is the show’s Intro and theme song along with a promo. This is just a taste, a light sampling, of what you are in store for with this show.
There are 2 episodes that stand out for me. They were called The Worst Family Ever and Love Affair with Luxury.
MONEY WORRIES CAN CAUSE SLEEPLESS NIGHTS
In the S03E13 entitled, “The worst family ever?” One couple were living in the wife’s family basement for about a couple of years. They spent with reckless abandon. Oh, the couple popped bottles night and day. Especially, after moving out and buying their own home for about $225,000. That’s not bad. What is bad is that they saved zero dollars while sponging off her parents.
Then, to make matters worse, they threw non-stop parties at their house for friends and family. This was obviously all to make themselves look good to friends and family. In Yoda speak, so concerned with appearances they are.
“Happy people don’t worry about what other people think about them.” – Gail Vaz-Oxlade
OUT OF CONTROL SHOPPING FOR BABY BUT THE KIDS ARE ALRIGHT
In addition, they expanded their family and had a son, but financially were unprepared for this. At one point, the wife was spending $1200 a month outfitting junior! I couldn’t believe it. What is she buying Versace onesies? Get real. A baby doesn’t care. They just want to be warm, feed, and dry.
This couple were overspending by the tune of $4,100 a month! Holy spending gone bonkers, Batman!
Fun Fact: For those of you unfamiliar with that Batman line, here is where it comes from. The Batman television series from the 1960’s. Batman was American live action television series, based on the DC comic book. It starred Adam West as the titular character and hero Batman and Burt Ward as his sidekick Robin.
It was also turned into a cartoon series. Here is Robin at his finest with his sayings. Hilarious!
I decided to post it so you won’t ever have to get the tongue lashing that Penny got from Sheldon on an episode of The Big Bang Theory about Batman at 2:48 into the video.
It was about The Lord of the Rings. Even Raj used a Holy Robin saying in there!
In this next video, Sheldon gives a fun fact to Raj. Now, you know where I get it from.
Now, back to the story.
The way the couple on the show were able to overspend like that, drumroll please…the credit cards!
When Gail comes along they are so bad she tells them they have to sell the house. They flat out said they could not sell the house. Even though they are on the path to $1.3 million in debt and possible bankruptcy! Gail, at one point in the show, tells them they are the worst couple she has had on the show and that she had a few sleepless nights worrying about how to help them out of this situation. Coming from Gail, that’s scary.
The way it went down, it reminded me of that scene in The Chipmunk Adventure, when Jeanette and Eleanor was telling the Arabian prince that Brittany spends money like a drunken sailor and Brittany got mad. Hilarious. I just so happened to find the footage of that particular scene and the movie on YouTube. Hope you have fun watching! No need to thank me. Like Dean Winchester says, “You’re Welcome.”
SHOULD YOU FINANCE A $100,000 CAR?
“Change brings challenges, learning, and a sense of New. Change is full of promise.”- Gail Vaz-Oxlade
In the S04E03 entitled, “Love Affair with Luxury,” which aired March 6, 2008, is the gold standard of delusions of grandeur when it comes to money management. The wife, Simone, is a champion shopper and a spendthrift who manages to make 53 shopping trips in a single month! That’s nuts. Even though she’s on maternity leave, a luxury car is next on her shopping list.
The only reason the couple is able to afford such luxuries is because they have each other’s incomes. The minute one person’s income is gone or reduced, i.e. disability or divorce, the whole house of cards comes tumbling down faster than the stock market has in the last 30 days.
Frank and Simone’s combined $110,000 annual income is currently curbed by Simone being on maternity leave. Simone is addicted to what she believes she needs to keep up appearances in every respect, which includes working out at the gym, and spending money on “stuff” for herself, such as clothes, getting beauty treatments of various kinds, and having a beautifully appointed house. A $125,000 new car is next on the list. Simone, however, states that she would never do anything that would place her family at risk. But Frank doesn’t realize he is just as guilty, spending money on his electronics, which includes six large television sets in their house of four people, including one infant. This spending has resulted in $55,000 in consumer debt so far. They constantly fight about money, something having to give if their marriage can overcome this issue. As such, Gail issues them challenges largely focusing on dealing with their root problem, namely their addiction to luxury, this focus which not only entails them doing the challenges, but understanding why she has issued these challenges.
At one point in the show she says, “we can finance $100,000 can’t we.” For a car no less! If you have ever read this blog, you know I can’t stand cars for the simple reason that they can keep you in debt forever. You could spend a couple hundred grand on cars in a lifetime. You know how much interest you could earn on $200,000! Here are just a few on my posts on my beef with car loans below.
Money is a tool we use in the present to create the reality we want in the future. Learning about finance is a good start. Practicing good money habits and teaching your kids to understand the concepts of money – budgeting, saving, and spending – you help create their reality.
So, I want to always stay in control of your…I will now end this post in the last words of the Til Debt Do Us Part theme song, money, money, money, money, money, money, moneyyyy!
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