Debt Destruction: Credit and Alcohol

     Let me begin by stating a truth: my wife and I carry no credit cards.  We do not use credit cards, period.  Personally, we despise credit cards.  And I’ll tell you why.

     Credit cards have only been around since the 50’s, and have really only become a “way of life” since the late 70’s.  In the early 70’s, 15% of Americans had credit cards.  Today, there are over one and a half BILLION credit card accounts open in the USA.  This is a relatively new phenomenon as far as our culture goes.  So keep that in mind, you people who say “you can’t exist without a credit card”.  People did it for CENTURIES.

     We’ll talk about math another time.  I don’t even want to get into the numbers, because in reality it’s a behavior issue and a heart issue at hand that makes credit cards so dangerous.  Let me explain.

     I like to compare credit cards to alcohol.  Once I’ve finished the metaphor you’ll understand it better.  You see, as a Christian, I don’t believe the Bible says at any point that alcohol in and of itself is a sin.  I know some Christians out there think that all alcohol at any point in time is a sin, and that’s okay if you feel that way, but honestly I don’t see that in the Bible.  The Bible DOES however say that drinking is not wise and that being drunk is a sin. 

     Now, no one ever wakes up one day and says “You know what I’d love to do?  Completely ruin my life by becoming an alcoholic.”  It just doesn’t happen that way.  People just take a drink every now and then and they’re fine, right?  You see, if you drink too much, you get a physical reaction in your body telling you that you drank too much, and that’s called a hangover.  If you continue this behavior too long, too often, too irresponsibly, then you become addicted to the activity and have become an alcoholic.  Alcoholism can and will destroy your life, but it wasn’t an overnight event.  It took a long time of bad decisions.

     Drinking also has immediate consequences.  It lowers your logic capacity, inhibits your motor skills, and therefore can cause some pretty awful car accidents even after just one drink.  There are so many risks.

     So is drinking morally wrong?  No.  Drinking in and of itself is not a sin.  Is drinking a risk?  Yes.  And for me, the risks associated with drinking are more than enough to keep me away from it.  I want to avoid alcoholism, for sure, but I also want to avoid hangovers and car accidents, so I avoid drinking.

     You see, as a Christian, I don’t believe the Bible says at any point that debt in and of itself is a sin.  I know some Christians out there that think all debt at any point in time is a sin, and that’s okay if you feel that way, but honestly I don’t see that in the Bible.  The Bible DOES say however that being in debt is not wise and that financially destroying your life is a sin.

     Now, no one ever wakes up one day and says “You know what I’d love to do?  Completely ruin my life by going bankrupt with my debt.”  It just doesn’t happen that way.  People use credit every now and then and they’re fine, right?  You see, if you use too much credit, you get a financial reaction in your life telling you that you overdid it.  You are a slave to your payments.  If you continue this behavior too long, too often, too irresponsibly, then you become addicted to the activity and have become what I call a debt-aholic.  This can and will destroy your life, but it wasn’t an overnight event.  It took a long time of bad decisions.

     Debt also has immediate consequences.  It lowers your income, inhibits your ability to save and give, and therefore can cause some pretty big losses and fees even after just one use.  There are so many risks.

     So is debt morally wrong?  No.  Debt in and of itself is not a sin.  Is debt a risk?  Yes.  And for me, the risks associated with using debt are more than enough to keep me away from it.  I want to avoid debt-induced bankruptcy, for sure, but I also want to avoid income loss and interest/fees, so I avoid debt.

     Credit card debt is a lot like drinking.  A lot of people say that they use both and it doesn’t affect them, but in reality both will cost you money.  The benefits to using those things in my opinion does not outweigh the risks associated.  The funny thing is, it’s impossible to become an alcoholic when you don’t drink.  It’s impossible to get a DUI when you haven’t been drinking.  Likewise, it’s impossible to go bankrupt from credit cards when you don’t use them.  It’s impossible to pay interest and fees to a credit card company when you don’t use their card.

     Moral of the story:  Just like drinking, debt is unnecessary.  You don’t have to drink alcohol to enjoy life, and you certainly don’t have to use debt to enjoy your life either.  They’re not needed and only offer risks of life-altering negatives.

     Now I fully expect emails that start with the phrase “But Heath…” giving me reasons why credit cards can be used beneficially and/or why drinking is okay.  Remember before you send those, though, that I didn’t say they’re morally wrong, I said they are unwise and risky, therefore I avoid them.  You aren’t a horrible person if you use them, you’re just unwise.  And really, I didn’t say that, God did.





Debt Destruction, a Primer

Last week I told you the story of how I came to hate debt.  I have to be honest, though.  Even though I hate debt…I was in it.  I financed my Jeep (it’s now paid off), I financed my wife’s engagement ring (thankfully it was paid off before the wedding – just barely), and I financed a computer.  The funny thing about that computer, though, was after we paid it off we ended up selling it because we needed money more than a computer…probably would have been smarter just to not buy it in the first place.  Now we have a simple laptop (that I’m typing on currently) that we bought in cash and got a great deal on.  Thankfully we were able to pay off all our debts except our mortgage in the last year.  Check out some previous posts of mine for the full story.

Look, the point is this: debt is everywhere in our culture.  Even those who earnestly try to avoid it can end up in it.  I mean…I’ve actually got a tremendous amount of debt weighing me down right now.  It’s called a mortgage.  It’s a big, nasty, hairy monster that sits in the darkness threatening me every time I want to make a bold career choice.  It’s got six big ol’ digits in it, too.  But “you’ll always have a mortgage,” right?  Wrong.  My wife and I are currently on a plan to knock out that big hairy monster.  A lot of people see a lot of debts as little monsters running around eating their money.

My goal is to take the fangs out of those monsters so they are much easier to fight.  Your weapon of choice?  Information.  Over the next several weeks I’m going to be posting a series on debt that I call “Debt Destruction.”  The goal isn’t to just reduce debt (which is what all the banks advertise – funny story the banks own ¾ of American consumer debt) but to completely eliminate debt from your life.

“But Heath, why should we get rid of our debt?  Won’t that kill our credit scores?”  Yes, little Timmy, it will kill your credit score.  Which is a-okay in my book, because I don’t plan on borrowing money ever again.  If you never borrow money, your credit score doesn’t matter.

“But Heath….”  There’s going to be a lot of “but Heaths” that come up, and my goal is to address as many as I can.  I know this is truly counter-cultural, and I like it that way.  Listen, I believe what the Bible says, and Proverbs 22:7 puts it this way:  “The rich rules over the poor and the borrower is slave to the lender.”  Let’s break that down.

The rich rules over the poor.  Well that’s kind of a given, right?  I mean the leaders in every country are rich, right?  Stop!  Look at the full context.  The rich rule over the poor and the borrower is slave to the lender.  The rich rule over their slaves.  The borrower is slave to the rich.  These two statements go together.  So who are the rich?

True fact: JP Morgan, Chase, Bank of America, Citigroup, and other credit-lending banks are all MULTI-BILLION DOLLAR companies..  Listen, I’m not talking that it’s a multi-billion dollar market.  Those companies’ net worth are each over a hundred billion dollars.  They’re the RICH.

When you sign up for a loan from those banks, you are the borrower.  You owe them money.  They are the rich who now rule your life because you owe them money.  You are now their slave, because every bit of work you do gets sapped to pay them back for the money they loan you.  And they’ll treat you like a slave too.  Just be late or miss a payment.  They punish you with fees.  If you lose your job, they don’t care.  They’ll still sue you for the money you owe them until you have to file bankruptcy.  You become the slave of the rich, and allow them to rule over you when you borrow their money.

A lot of people see that as an extreme way of thinking.  But my Bible says to “owe no man anything except to love one another. (Romans 13:8)”  It also says in Proverbs 6 that if you find yourself in debt you are to “give no sleep to your eyelids and deliver yourself like a gazelle from the hand of the hunter.”  If you’re in debt you have to WORK to get out of it.  The Bible doesn’t just tell us to work, it tells us to not rest until it’s paid off, because the lender is the hunter coming after us.  The only way to escape the slavery of debt is to RUN LIKE YOUR LIFE DEPENDS ON IT!

And that’s what my wife and I are doing.  We are running full on towards the goal of being 100% debt free.  We knocked out the cars, the computers, and the doctor bills.  Now we’re going to use our new money muscle to take on the big hairy monster that is our mortgage.  And you know what?  I think you can do it too.  Are you tired of paying payments to the banks?  Are you sick of their net worth being absurdly huge and yours being negative?  THEN DO SOMETHING ABOUT IT.  Deliver yourself like a gazelle from the hand of the hunter.  RUN like your entire life’s earning depend on it, because your ENTIRE LIFE’S EARNINGS depend on it!  Stop being a slave, stop letting the rich rule over you and gain freedom like you’ve never known before.

Join me on this journey as we break down and destroy the myths around debt and I’ll arm you with knowledge and truth to combat those monsters.  You can do this.  We can do this.




Why I Hate Debt

I used to work in foreclosures.  That sounds like a depressing job, right?  Yeah, it had its times.  But I also learned a lot and even gained some.  I’ll explain.

You see, my mother’s company worked as a contractor for the Dept. of HUD (Housing and Urban Development).  To simplify it, someone would default on their mortgage and get foreclosed.  That house was then taken into HUD custody and processed.  After a few months, the house would be contracted out to a local (or semi-local) contractor to do clean up, repairs, and safety inspections.  That’s where my mom would come in.  She would help get a house ready to go back onto the market.

There are three kinds of people who get foreclosed on.  The first kind are the people who own up to their fate.  They realize they have been foreclosed on and get nearly everything out of the house.  These were the kind of houses that we loved, because there would only be a handful of things inside and it would just take some vacuuming and dusting to be done.  Simple and easy.

The second kind of person was the one who would get mad.  When they learned they were being foreclosed, all of a sudden they forgot to clean out the litter box for Fluffy or let Fido out when he has to pee.  All of a sudden they would start practicing baseball inside.  These kind of people would leave holes in walls, would leave rotten food in the fridge or even on the counters, and would even bust out a few windows here and there.  They normally left behind a lot of junk and trash.  These were no bueno houses and needed a fair amount of work.  All because they didn’t own up to their problem.

The third kind of house…and I still have nightmares about this…belonged to a hoarder.  I don’t know if there is any research on this topic, but I think there may be a significant correlation between foreclosure and hoarding.  We had these houses all the time.  You’ve seen the shows on TV before, right?  Floor to ceiling, wall to wall, every closet stuffed full and stuff all over the floors…  Nasty stuff.  Lots of dead animals in these houses.  Lots of roaches and spiders.  And they always stunk, because big piles of boxes, book, clothes, and newspapers would hold an odor pretty well.

I can’t tell you the number of houses we cleaned out, or the number of things we threw away.  You see, once the property came to use, everything in the house was considered “trash.”  So, if we found something good, say a functioning game console or a stack of good books, we took it home.  One man’s trash is another man’s treasure, after all.

So a lot of people like to ask me what kind of things we would find in those houses.  After years of doing these places, I saw some consistent patterns.  For example, you would almost always find old Christmas decorations.  I guess when you lose your house you no longer feel very festive for Christmas.  This would almost always be left deep in a closet, up in the attic, down in the crawlspace, or even still up from the previous holiday.

Another thing you would always find is pictures.  Pictures.  And pictures.  Family pictures, wedding pictures, etc. etc.  This had the potential to be very depressing.  You could see the smiling faces in the pictures and see people being happy.  But when you looked around the house…that happiness was long gone.

The last thing, and this was always in about 95% of the homes, would be a simple stack of papers.  Usually found on a counter or kitchen table….the papers would be everything from credit card bills, to late notices for utilities, overdraft notices, and almost always sitting up on top was the notice of foreclosure.  The way they were stacked always seemed intentional, as if before they left the house for the last time, the person would look through that stack.  You could almost feel the tears and heartache associated with those papers.

I always poked fun at my mother, saying that her business relied on the failures of others.  If no one got foreclosed, she would be out of a job.  As cynical was I was by saying that, it was true.  My mother’s job was to clean up the mess of someone else who wasn’t able to get their life under control.  Through all the extraneous circumstances, they couldn’t get it together.

It was in those houses that I learned to hate debt.  Every single foreclosure had one thing in common: it was a loan that defaulted.  And in that stack of papers was almost always stacks of credit card bills that were overdue, student loans that were in danger of default or already had, and utilities notices of shutoff.  These people had bitten off much more than they could chew, fell on hard times and were unable to get up.  This stirred in my heart a hatred for debt…because I saw the end result of lack of control.  I saw what happened when debt destroyed a life.  To be moved out of your home forcefully is something that person will never forget.  I wasn’t just cleaning up someone’s house, I was clearing out someone’s home.  That’s where they lived.  That’s where they had their hearts.  And it was all taken from them.

Debt has a funny way of sneaking up on people.  It’s “all of a sudden” they have too much and can’t handle it anymore.  But in reality, it’s just like being an alcoholic….you don’t wake up one day and decide to become an alcoholic.  It happens over time and takes a long time to build up to.  Debt is the same.  You have some here, then some there.  Eventually you open your eyes and have no idea how it got this far.  That’s why I hate it.  I hate debt.  And my goal is to get out from under our mortgage and become 100% debt free.  Our mortgage is all that’s left, but it’s a big monster to tackle.  But we can do it.  We can be free.  And so can you, if you’ll only try.




Ministry, not Business

You know, when I began this journey this year, I started with a few expectations that I probably shouldn’t have had.  One is that I expected that people would get as excited about their goals, money, and life as I have been.  Sadly, I’ve learned now that while many people are unhappy with their current lives, they are perfectly content to sit in their unhappiness.  That’s okay, I’ll just keep motivating and teaching anyway, because I’ve also seen a lot of people make real changes in their lives.  It just seems that some people think the effort to change outweighs the results.

Another expectation I’ve had is that this blog, my one-on-one coaching, and public speaking would take off and become more popular.  This expectation wasn’t unreasonable in scope but in time frame.  I had in my mind that by the end of the first year I would have thousands of readers and be speaking to several groups and have people that needed coaching and help calling regularly.  To date I don’t have those things, but it’s not because the message isn’t good, it’s because Common Cents is still in its infancy.  I want it to get up and start walking long before it has learned to even roll over.  This expectation took me some time to get my head around, because I now know that I will be in this infancy stage for a while.  I can’t expect everyone to jump on board when I’m still unknown.

A third expectation is that somehow Common Cents would turn into a business.  Somehow it would begin to turn a profit and make me some money so that I could feasibly begin preparing to do it full time.  This expectation had noble roots, but ultimately was based on my want for money and my dislike for my current job.  Since I’ve made exactly $0 to date from Common Cents, I needed to sit down and re-think this one.

I really did, too.  At first I was telling people that the coaching was free because I wanted to build experience.  My first public speaking event is free because I need experience.  While that is true…something began to prick my heart about that.  God moved into my heart a desire to do this.  And in the back of my mind I was thinking that God would provide me this as a career and a money-making method.  Then I realized that it’s not my things I’m teaching, but God’s things.  I realized it’s not me that needs the help anymore, it’s the people around me.  I had to have a painful realization: Common Cents isn’t about me.

It’s all about God and helping other people.  That’s where my heart started and where it’s found its way back to.  If I never make a dime off of Common Cents but I’m able to help people…it’s all worth it.  If I can help someone get out of their debts and into financial peace, I don’t need to make money on that.  If I can help someone get motivated to move forward and change their life, me getting a paycheck out of it just doesn’t matter.

Don’t misunderstand, I know that one day God may choose to let me make a business out of this.  But that’s down the road.  For now, this isn’t a money-making business to me, and it never should have been.  This is a ministry that God has placed in my heart.  I want to help people.  Money or not, I want to help people get parts of their lives in control.  So Common Cents is free.  It’s free to those it helps, and it’s free to grow as a ministry.

Thank you for joining me on this journey so far.  I’m humbled with what God has been doing in my life through this and I can’t wait to see what is in store for my future.




Being Weird is Awesome: Hiatus and Depression

So….three week hiatus.  Yeah, my bad you guys.  You want to know the reason?  Honestly, I got depressed.  “But Heath, you’re such an awesome guy why would you be depressed?”  That’s a good question.  Let me explain.

I was doing so great on all my goals, my blog, my family, etc.  I had reached five miles running, I was getting lots of readers, my wife and daughter are awesome and I was able to spend time with them…and then I hurt myself.  I hurt my leg running.  I had to stop.  And when I stopped…well I took about a week off of running and then tried again.  It was worse.  Honestly, it felt like my leg was going to fall off it hurt so bad.  So I got scared.  I was moving forward so fast that I crashed…and I feared crashes in other areas of my life.  So I got depressed.  I felt like a failure.  I felt like if I got back on my blog and talked about it, people would see me as a failure because I stopped.

So it was like the overdue library book syndrome.  It’s late, so if I take it back I have to pay the fee, but if I don’t take it back I’ll feel bad and the fee will get bigger.  Either way, something had to give.  I chose to bring it back.  I’m back here now to confess to you all that I failed.  I didn’t fail because I hurt myself, or even because I took time off.  I failed because I was too afraid to get back up afterwards.

Dealing with that depression for over two weeks drained a lot of my energy to move forward.  I missed my goals, cancelled the 10k I was planning on running (because I hurt myself, afterall), stopped working out and started eating unhealthy again.  By being afraid of failing, I spiraled back down into failure.  I’m here today, though, to change it.

I’m back on here today to say something that’s fairly common sense, but no one admits it.  A loser isn’t someone who doesn’t win.  A loser is someone who doesn’t finish.  Slow and steady wins the race. Slow and steady finishes the race.  If all you are is a bright blaze that burns out really quickly, yeah you were cool looking while it lasted, but you’re gone and not coming back.  I want to slow down, take this seriously, and continue on.  I don’t want to burn out.  I want to burn bright enough to lead others to safety.

Thanks for reading, and remember that quitting is normal.  However, being weird is awesome.




Overdoing It

So I’ve been running now for about two months.  I recently hit 5 miles running and honestly felt pretty dang great about it.  It only took me about 8 weeks to hit 5 miles, so I figured either I was pushing myself too hard or I am much more naturally inclined to running that I thought I was.

Well looks like I was just pushing myself too hard.  Over the past week and a half I have been hobbling and wobbling because I strained my Achilles’ tendon.  I don’t know if you’ve ever strained your Achilles’ tendon, but it kinda feels like someone is constantly jabbing a knife into your leg and laughing maniacally while doing so.

So what happened was I was running.  Like “normal”.  And I ran 5 miles.  Not normal.  Then after that I went to the gym and ran another mile.  Also not normal.  Then the next day I ran another mile, and the next day I ran another mile faster than I normally do.  This, coupled with introducing rock climbing into my work out at the same time, put far too much strain on my legs.  Needless to say, I was hurting.  Over the next week I was barely able to run a mile, which I shouldn’t have been doing either.

On the following Saturday I ran a mile and a half, thinking my leg was feeling better and had just been cramped.  Wrong.  My leg literally gave out and I stumbled my way home afterwards.  I got inside and had to rest my poor leg and put it on ice.  I could barely walk.  So for the past week I’ve been limping around and trying to baby this thing so it can heal.

Sometimes in life we want to hit our goal so hard that we can actually endanger our goal.  My goal was to run a 10k in October, so I trained super hard.  Much harder than I should have.  And because I trained so hard, I hurt myself.  Now I’m not able to run in the 10k because my leg will take much longer to heal than I would like and I need to back off training to let it heal properly.

What is your goal?  To meet our goals we need to be willing to sacrifice and work hard.  But if you work so hard on that goal that you begin to ignore the warning signs that everything might not actually be okay, then you have become just as blind as I was.  If you strive to meet your goal at the cost of your health, your family, or your dignity, you’re in for a bad time.  Because when it’s all said and done, you won’t have your goal or those things.

Are you currently seeing any warning signs in your pursuit of your goal that you might be overdoing it?  Learn how to back off a little and re-plan to make sure you will actually benefit from hitting your goal the way you’re going now.  There are likely many paths to your goal, and some may take longer.  But I’d rather it take longer and be done correctly than to have it come quickly when I’m not actually prepared for it.  A goal that you’re not ready for or that you haven’t earned yet is a bittersweet victory.  Just my little piece of Common Cents for the day.



Faith and Family

     I’d like to take a quick break from my Smart Savings series and talk about something really important to me: My faith and my family.

     I have been asked how my faith affects my family life.  People want to know how faith can enter into the way you parent and how it can change your marriage.  The answer is very simple:  God calls us to love our families unconditionally.  We are called to love them, sacrifice for them, encourage them, support them, protect them, and lead them.

     Faith can affect your marriage in a thousand ways, but all of them revolve around love and forgiveness.  As a husband, I have been given the tremendous commandment to love my wife as Christ loves the church.  This means I am to be willing to literally give my life for my wife.  When you start to consider your wife more important than your own life, you begin to treat her differently.  You begin to see that the things she does wrong just aren’t as important.  You begin to see that time with her has much more value because that is time you get to spend with someone more important than yourself.  Faith helps you to see the needs of your wife as more important than your own, and that allows you to bless your wife and love her in a way someone without faith cannot even imagine.

     Before I was a father, I was told by multiple men that when I held my child for the first time I would just “know.”  Of course, since I wasn’t a father I had no idea what they were talking about.  The first time I held my daughter, though, it changed my life completely.  You see, I “knew.”  I think that sense of “knowing” is the feeling that even though you just met this little person you love them more than you knew was possible.  Even though they are so small and tiny they make up a huge portion of your life and fill a piece of your heart you never knew existed.  I was blown away by just “knowing” that I would give my very life for this little girl without a moment’s hesitation.

     Overall, marriage and parenthood give us imperfect pictures of God’s perfect qualities.  In marriage we learn God’s forgiveness and willing sacrifice.  In parenting we learn God’s patience and love.  Without faith, those would be theories that made me think.  With faith, those are precepts that help define my actions and life.  Doing things God’s way just makes it better and makes better sense.




Being Weird is Awesome: Paying it Off

Having a house is pretty awesome.  You can do what you want to it, i.e. decorate it, change things, mount your TV to the wall, pave your driveway, and overall have your home reflect you.  It’s a very personal thing to have a house.  It gives you a sense of home and security.  It becomes a place of memories and happiness.  All of this of course is assuming your home isn’t falling apart and/or hoarded.  But even then…it’s your busted pile of stink.  And that’s cool.  Better than not having a pile of stink I suppose.

My wife got a house before we got married.  We were engaged at the time, so I had some input on the house, but my wife’s decision was the final one.  She looked at about 47,000 houses before she decided on the one I’m currently sitting in writing this almost 4 years later.  It’s not a bad house, though this house and I honestly have a bit of a love-hate relationship.

You see I love this house because it’s our home.  It’s where we’ve been raising our daughter.  It’s where we’ve made some great memories.  It’s where we’ve have plenty of friends come by and hang out.  It’s where we make all our important decisions.  And it’s certainly the place I can’t wait to get back to after a long day of work.

However, this house also makes me upset at times.  In my opinion, it’s small, cramped, and trying to kill me.  Whether or not the house truly has the intention of ending my life is unimportant, but what is important is that I really don’t want to have a big family in this house.  When too many people come over it feels like we’re loading up the clown car.

My wife would be upset at me if I didn’t finish that thought with a positive note, so here it is:  I’m slowly getting over it.  I’ve decided to make an effort to stop complaining about the size of our house, because ultimately it’s our house.  I need to own up to owning it.

But that’s the actual problem at hand.  You see…we don’t actually own this house.  It doesn’t truly belong to us.  It belongs to the bank.  Why do I say that?  Because the bank loaned us six digits and fully expects us to pay it all back plus interest.  So we like to say it’s our house, but in reality it’s not.  If we stopped paying on the mortgage, they would take the house away from us.  Which would be awful.

My wife and I decided something this past week that truly rocked our worlds when we put it all out and looked at it.  We decided that while this house is small, it’s our home.  It’s cramped, but we enjoy it.  So we came up with a plan to get the bank off of our backs.  We’re going to pay this house off.

You see, the way I think about it is that if this house didn’t have a mortgage against it, it might open up a little space around here.  If we could get rid of our monthly payments against this house, it might feel a little less cramped.  When this house – our home – no longer has a giant weight of debt around us holding us down…the walls will certainly stop feeling like they’re closing in.  Thus our journey has begun.

We’ve only owned this house for a little less than 4 years.  We now have a goal and game plan to pay it off in the next 7 years.  That means we’ll have paid off a 30 year mortgage in 11 years.  How is that possible?  Well we’re going to throw everything we have at it.  Extra money from side businesses, extra money we can squeeze out of our budget.  Whenever we have overtime and/or extra days at our current jobs.  All of that will be used like ammunition to attack the target: our mortgage.  You see even if it’s only a little bit, everything beyond our standard mortgage payment will knock a little more off the principle every month, meaning there is less to charge us interest on.  Less interest means more principle paid per monthly payment, which of course means less interest, etc. etc. ad nauseum.

This simple principle will help us accelerate the pay-off process.  And it actually is that simple.  As long as you’re paying more than your standard mortgage payment, you’ll pay off your house sooner.  You can turn a 30 year mortgage into a 25, 20, 15 or even 10 year mortgage by adding extra money to each payment.  How much you can knock it off depends on how much extra you put in.

We have a goal to pay this sucker off.  If we can do it in seven years, I’ll be 35.  I’ll be a 35 year old with a paid off house.  And that will be weird.  But you see, normal is broke and boring.  Being weird is awesome.



Newsletter, Sept. 7th 2013

Good morning to you all and thanks again for your support of Common Cents, where we’re putting the “Personal” back in Personal Finance.

First let me take a moment to congratulate @Ciao_Erin for winning the drawing for a copy of Dave Ramsey’s Total Money Makeover.  The new 2013 edition of that book comes out this month, and Erin will be receiving a free copy of the e-book version.  Stay tuned for more giveaways in the future!
Speaking of winners, this past week has re-taught me an important lesson that might be cheesy but it’s true.  Quitter never win and winners never quit.  This past week two things happened that blew my mind, and neither would have happened if I gave up.
One is that my wife and I finally hit our goal for our emergency fund.  We hit the number we had set what feels like forever ago (it was actually a little over a year ago).  And when we hit it, man it felt great.  But it came at a cost of sacrifice, hard work, and diligence.
Second, both my wife and I hit 5 miles running.  To go from 0 miles to 5 miles in a little less than 2 months…that’s awesome.  We still have a goal to hit a 10k (6.2 miles) by the end of October.  And when we hit that goal, man it will feel great.  But it will only come at a cost of sacrifice, hard work, and diligence.
Do you see a pattern?  Sacrifice, hard work, and diligence.  When the Bible says that the hand of the diligent will prosper, it isn’t kidding.  If you want to hit your goals, here’s the secret:  DO IT.  It won’t get done without you.
Here’s a recap of this past week’s blog posts:
Sept. 3rd: Being Weird is Awesome: Giving
Sept. 4th: Lessons from a Heart Attack Victim
Sept. 6th: Smart Savings: How Emergency Funds Work
Let me know what you guys think, and as always, thanks for your support!
Youtube channel coming soon!



Smart Savings: How Emergency Funds Work

A lot of people falter when they realize how big of a goal a fully funded emergency fund is.  We recommend (like several other financial gurus) several months’ worth of expenses saved up.  That way you have a lot of money in the bank if for some reason you can’t work.  Financially, not earning money is much worse than having to spend it.  So one of the biggest financial emergencies you can have is not having an income.

Obviously you save for other emergencies, such as a car accident, home repairs, medical bills, etc.  But those are all spending costs and spending can be replaced with income.  Without income, all you expenses become emergencies.  So that’s the rationale behind why a good emergency fund should constitute several months’ worth of expenses (typically 3 – 6 months, but sometimes more is necessary).

My wife and I are currently sitting at approximately 4 months’ expenses.  Now, if you looked at our budget and what we currently spend per month, you would quickly realize that our emergency fund doesn’t actually cover 4 months.  But you have to understand two things: one is that my wife also works, so if I lost my job we’d only lose half our income.  Second is that if I lost my job tomorrow, I’d have another job the next day.  I might not have a job I like, or even a good paying job.  Heck I might have a job at McDonald’s or Pizza Hut.  I might have a job at the local Walmart.  But I’d have a job that I could work to make an income until I found another comparable job. So with that mentality honestly our emergency fund could last us…kinda indefinitely.

You see, an emergency fund isn’t just a big pot of money that you let sit there.  It’s a big pot of money that you draw from if you need it, and replace afterwards.  You have to understand that if you have a fully funded emergency fund and you draw from it you no longer have a fully funded emergency fund.  You have to take a couple steps back and build it back up.

My wife and I just finished our emergency fund this past month, capped it off at a good even number of the five-digit variety (the amount is unimportant).  We got there by being intense.  We got there by being intentional.  We got there by being content.  And now we have a big pot of money.  If something comes along that punches us for two or three or four thousand dollars, we are going to be a-okay.  But then we’d have to put our new financial goals on hold until we replaced the money spent.  That’s how emergency funds work.

Keep these principles in mind as you build yours.  Decide how much you need in it.  If you are a single income home or if you are still in a lot of debt, you will need more than we do.  If you are a two income home you’ll need about the same as us depending on where you live.  The whole idea is risk management.  If you have more income, you have less risk.  If you have less income, you have more risk.

For some people it’s also about peace of mind.  But understand the key difference between saving and hoarding.  You don’t need a $100,000 emergency fund unless you have some serious liabilities and/or medical conditions.  The average person will do fine somewhere between $10K and $20K.  Some may need to go higher and some may even lower but that’s going to be about average.

Get intense.  Get intentional.  Get on a budget and start hacking away at the massive tree known as an emergency fund.  You’ll thank me afterwards for imparting some Common Cents to you.