Don’t e-mail yourself a list of all your passwords and bank account numbers to yourself from work

So my buddy, we’ll call him Bob, runs Data Loss Prevention (DLP) for a big company. DLP is software that limits what you can do with sensitive information, in order to block it from going out of the company. The NSA wasn’t using DLP back when Ed Snowden was working for them; they probably are now.

Sometimes DLP blocks people from sending their own personal information. Doing so is their right–it’s their information–but from a security point of view, I’m really glad DLP kept them from e-mailing their entire life around in plaintext.

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My counterpoint to Forget Frugality

I saw a reference this week to an editorial by Ramit Sethi called Forget Frugality. While he has some good points, I think some of his advice is counterproductive and even contradictory. He argues that you should focus on earnings and negotiation instead of trying to actively cut costs.

I really think you have to do a combination of the three, and you should start with what you have the most control over, which is your own budget. Here’s what I have to say about his seven strategies. Read more

Another benefit of not having debt

I’ve written about how not having debt gives you power, though I can’t find the particular post at the moment. But I remember when I got my first mortgage. I went to a party, and my boss was there, along with my five other bosses, and the big boss got this look in his eye when I said I’d bought a house. That look in his eye said one thing: I own you, and I can do whatever I want to you.

And he did. From that day forward, all of the assignments nobody else wanted fell on me. Anything that was destined to fail went to me. And the cycle followed me from job to job, then stopped, like turning out a light, the day after my wife and I paid off our mortgage. It was the closest thing to magic I’ve ever seen. One day, I was the guy who got assignments at 3 PM on a Friday that were going to take me 8 hours to get done–and they had to be done by 8 AM on Monday, and one day, I wasn’t that guy anymore.

I tested it again this month. I turned down a job that offered me a $7,000 pay cut. Nothing unusual about that, right? Not in this case. In this case, rejecting that pay cut meant I didn’t have a job anymore. Read more

The Debt Tsunami is a gimmick, but it probably doesn’t matter

I saw some people passionately advocating both for and against a new method of paying off debt: The “Debt Tsumani,” which focuses on paying off debt in the order of its emotional impact on you.

As someone who paid off more than $150,000 worth of debt over the course of about four years in the last decade, maybe what I have to say about that matters to you. Read more

Don’t let debt cripple you

Sometimes people ask me for help with their finances. And I’ve seen the effects that debt can have on people. I believe having no debt is best. Having debt that you’re paying off is second-best. Festering debt, however, is crippling. That’s what you want to avoid, before it catches up with you. Not only can bad debts keep you from borrowing more money, it can also make it more difficult to sign a lease or get a job.

Here’s how to make a plan to pay off that debt and improve your credit score.

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Self-Perpetuating Depression

My longtime friend Steve brought up a good point as we discussed our job situations. He said he read that some companies may be using the current DEPRESSION (I hate that r-word, let’s call things what they are) as an excuse to lay people off that they’ve been putting off because it would hurt morale.

The idea makes a lot of sense.I’ve been privvy, unfortunately, to management waiting for an excuse to get rid of people in the past. It’s a strategy that can backfire, but nobody likes confrontation, and waiting for an excuse is an easy way to avoid confrontation. Or to avoid having to fix problems you really don’t want to deal with.

But that creates a problem. While one business is using economic depression as an excuse to cut staff, so are lots of others. That puts more people out of work. That means they have less money, and that means they spend less.

So your neighbors’ former employees aren’t patronizing you anymore, and your revenue drops. Welcome to the vicious circle. At some point, you probably end up laying off people you really never wanted to get rid of.

It kind of sounds like a conspiracy, but really it isn’t. All it takes is a few people having that bad idea.

And there’s no real way to prevent it. Everywhere I’ve ever worked, going all the way back to high school, I’ve seen people in management positions who had no business being there. And that won’t change.

You can try to work in depression-proof industries, but is there such a thing? Everything’s connected together.

You can do what I did and minimize the way a depression can affect you. With no mortgage and no car payment, I could support my family on very little.

Of course, economists wag their fingers at people like me. Part of the problem is that people like me aren’t buying new cars because we realized there’s nothing at all wrong with the cars we have. Bad Dave.

Then again, unlike some people, after I borrowed large amounts of money, I paid it back. And part of the reason for that was because I didn’t sign on the dotted line until I did the math to figure out what life was going to be like with that mortgage payment and whether I was willing to live like that. If more people had actually paid attention to the amount of money at the end of the document–the amount that you’re going to end up paying over the course of the mortgage–and been scared, then we’d be in a lot better shape than we are now.

I do think this depression is forcing us to be a little less materialistic. And I think materialism and conspicuous consumption was what sucked us into this hole to begin with.

And in the meantime, it’s forcing some companies to look at themselves and make some hard decisions. Some aren’t surviving. Some will be missed more than others.

It’s affecting me a whole lot more now that I’m suddenly in the job pool with that other 7.2 percent. I’m sure I’ll complain a lot more. I know it’ll take a lot longer than I want for me to find employment because it already has. But I’ll be OK. I’m Scottish. I’m scrappy and tough.

And I think in the long run our country will be OK. Maybe we’ll even be better for it.

How Generation X can take this country back

I’ve done some reading in recent days. First I read that GenXers aren’t happy with Corporate America and the feeling is largely mutual. It appears I’m not the only one.

But I see an opportunity in this. We have a window to take this country back. And I have a plan.The way I see it, the unholy triumverate of big government, big corporations, and big labor has done its best to ruin this country. Big government’s mess needs no introduction. While big labor drove some necessary reforms, it lost its way, asked for too much, and today we see the result when we look at the sticker prices of GM, Ford, and Chrysler vehicles. And as for big business, I could get into specifics, but I see the problem like this: Large corporations think only quarter to quarter, chasing short-term profits and never considering the long term. They hand out raises to their workers that don’t keep pace with inflation, while their CEOs make six- and seven-figure salaries plus equally large bonuses, no matter how badly they do their jobs. Since the people who do the work feel undervalued, they tend to jump from job to job a lot, so institutional memory becomes a thing of the past.

Forget them. It’s time to escape and start over. Here’s the plan.

Minimize the risk.

You can’t very well escape corporate America’s stronghold while you’re saddled with debt. Most small businesses die within three years because at some point in that timeframe the owners find themselves unable to pay the bills. So as long as you have debt, you are corporate America’s slave.

But you can escape. It doesn’t really matter how much you make or how much money you owe–you can be debt free in seven years or less. The main reason this works is because creditors generally won’t loan you more money than you would be able to repay in seven years.

I don’t know how long this movement has existed. My mother and father in law did it in the 1980s. A classic entrepreneurial book by William Nickerson, published in the 1950s, mentions the phenomenon, so it must have existed then.

There are lots of subtle variants on the plan, but it boils down to this. Gather up all your debts–car payment, credit cards, mortgage, student loans, furniture, whatever. Figure out the minimum payment on them. Now take 10 percent of your monthly income. Pick one bill, and add that 10 percent of your monthly income to what you pay on it. (If you can afford more than 10 percent, pay that.) Make the minimum payment on all of your other bills.

After you pay off that first bill, take what you were paying on that bill and apply it to the next one. Let’s say you have two $300 car payments and a $1,000 mortgage. You could start paying an extra $300 a month on one car, for a total of $600, and pay $300 on the other car, and $1,000 on the mortgage. When the first car is paid off, the $600 moves to the other car, for $900 on the car and $1,000 on the mortgage. Once the other car is paid off, pay $1,900 per month on the mortgage.

The hardest part is initially coming up with that $300. The rest is fairly easy because you’re always paying the same amount every month, but the longer you go along, the faster you’re retiring your debt because you’re paying more principle and less interest.

How you pick the order is up to you. Mathematically speaking, you’re always best off applying your extra payment to the debt with the highest interest rate. But in every analysis that I’ve seen, the difference between paying them off in the best possible order and worst possible order is only a month’s worth of payments. Many people suggest paying off the debt on which you owe the least first, so you get the psychological boost of having eliminated one debt.

I started in November 2004. It took less than a year to pay off my car. Not long after that I got married, and it only took a few more months for us to pay off my wife’s car. Right now the only debt we have is the mortgage and my wife’s student loans. Barring unexpected emergencies this year, we should be able to pay off our remaining debt by the end of the year. (We may keep one of my wife’s student loans, since the interest rate is lower than the rate we get on one of our bank accounts.)

This is the most important thing: I fully expect to own my home outright at age 33. If I played by the rules most people play by, I’d make my last payment on it at age 58.

Here’s why I say to eliminate your debt. Take a look at what you spend every month. When my wife and I looked at our spending, we found we were spending more than $2,000 a month on car payments, the mortgage, and her student loans. Meanwhile, we were spending less than $1,000 on food, utilities, and everything else. So in theory, without debt, we could live on $12,000 a year.

Which leads to the second part of the plan.

Find a business you can start that will make you more than $12,000 a year

I’m not talking about multi-level marketing or any garbage like that. Start a real business that you control and makes money for you.

I won’t tell you what business to start, because I only know what works for my wife and me. But I’ll give you some questions that will get your mind rolling.

What can you do better than anyone else? There must be something that you know how to do really well and can leverage. Find it.

What do you know how to find or make less expensively than anyone else? This can replace the question above, or supplement it.

What do you enjoy doing? If you actually enjoy doing it, you’ll work harder and more productively. I would moonlight fixing Amiga computers if there were any money in it. Frankly I find modern computers uninteresting, so I don’t moonlight fixing other people’s computers at home, because I find it boring and stressful.

And finally, what problem do people have that you might be able to solve for them?

Mull those questions. It’s OK if you don’t immediately know the answer to any of those questions, or if you know the answer but they don’t bring a business plan to mind. Keep thinking about it, and keep looking around for opportunities.

I started looking for something in mid-2004 when I realized I didn’t make enough to support my wife and me if she was in school. I don’t remember now when I first had the idea that ultimately worked, but I followed through on it in June 2005. It took two weeks for anything to come of it, but it did finally work, and it’s still working today.

Once you get an idea, explore its feasibility. Look and see if anyone else is doing it. See if you can do it better or cheaper, or in a slightly different way than everyone else does it.

If the idea looks feasible, start doing it part-time. Don’t quit the job yet. The idea is to get established while you still have the safety net of a 9-to-5 job. If you’re thinking about a service, start advertising on Craigslist. If it’s a product, eBay and Craigslist are possible venues. The upside to Craigslist is that it doesn’t cost anything to advertise there. The real key is to look at your questions as an opportunity to get creative, rather than as blockades to your progress.

Here’s one strategy for dealing with those questions. Ask yourself those questions, especially around bedtime. Your subconscious will mull over the question even while you sleep. The answer will take some time to come, and will probably come at an unexpected time. But I’ve tried it and it works. Your subconscious mind may be the most powerful tool you have.

Notice I didn’t say to go borrow money. One of the reasons businesses die young is because they can’t pay their debts. Keep your overhead low, and you have a better chance of being successful. Operate on a shoestring.

Once you have an idea and something to do, give it a try on a small scale. At this stage, don’t put up any more money than you’re willing to lose, and don’t be afraid if your initial attempts don’t get anywhere or fail. You’re learning. If you’re starting while you still have a job and you’re in the process of paying down your debt, you can afford to fail a little. At the early stages, gaining information and wisdom and knowledge is more important than success. Get enough of those three things and you will find success, and if and when success wanes, you’ll find it again.

The problem with big government, big corporations and big labor is that they are successful, but by and large they are not well informed, they aren’t knowledgeable, and they certainly aren’t wise. That’s why we’ve seen so many spectacular failures in the last 10 years.

I see lots of small business owners who aren’t informed, knowledgeable, or wise either. When their success runs out, that’s probably the end of them. But there are also small businesses in St. Louis that stood the test of time and became institutions. Lots of Fortune 500 companies have come and gone in St. Louis since Ted Drewes Sr. opened a frozen custard stand on Natural Bridge Road in 1930. And lots more will come and go before the two Ted Drewes locations close up for good.

During this time that your small business is struggling and you’re gathering knowledge abd wisdom, you’re still working for someone else and you’re paying off your debts. But along with those struggles, you should have some encouraging successes. Follow those successes, and tweak things along the way.

Chances are, by the time you have your debt paid off, you’ll have a successful small business that’s capable of bringing in enough money to support you full-time. So you can step out of the corporate world and into business for yourself. From there, the sky’s the limit, because you’re no longer working hard to make money to support the pyramid of management above you–you only have to support yourself. And without the burden of personal debt and corporate overhead, you’ll be more free to be successful.

And how does this save America?

On May 11, 2006, Robert X. Cringely wrote, “I’m counting on Google and eBay to save America.” He didn’t elaborate, but here’s what I think he meant.

Just before the dawn of the 20th century, there weren’t a lot of large corporations in the United States, but there were plenty of bright entrepreneurs with ideas. Thomas Edison, Henry Ford, and the Wright Brothers are examples.

The problem today is that large public companies don’t breed great people like Edison, Ford, and the Wrights. The shareholders won’t stand for it. Shareholders care only about the profits on the next quarterly report, and if the company doesn’t deliver, investors dump their shares, the stock price drops, and then (and only then) executives start losing their jobs. So companies tend to play it safe to protect their executives.

We’re seeing this problem with eBay right now, of all things. While eBay remains hugely profitable, its investors got spoiled with exponential growth. Now that the profits are steady but growth has leveled off, investors are whining, and eBay is trying all kinds of goofy things to try to recapture the magic. None of it’s really working, but they sure are alienating a lot of their best merchants.

Two years after Robert X. Cringely wrote those words, I no longer know if eBay is the right company for this recipe to save America, but it has the right business model. Someone else will pick it up if eBay decides it doesn’t want it anymore.

The small entrepreneur can’t afford to compete head to head with General Motors. But Google gives small businesses affordable, targeted advertising, while eBay and other online marketplaces provide small businesses with a low-overhead distribution channel. Google and eBay (or their replacements) won’t directly save America, but the small, bright, nimble businesses that they enable will. Small businesses can afford to think long-term, they can deliver a better product with better service (and do it faster) than the huge, lumbering behemoths, and they aren’t slaves to whiney shareholders who have lots of money but little idea how to run the companies they invested in and no vested interest in the company’s long-term health because in five years they’ll have their money somewhere else.

And since small businesses have more control over their own destinies, they’re in a better position to adapt.

If we believe the Businessweek article I linked above, corporations need us GenXers. But in my experience, as well as the experience of hundreds of people who commented on the article both at Businessweek and on Digg, by and large the corporations don’t want us. So the best thing for us to do is to compete with them. And in the long run, I think this country will be better off for it.

Surviving a recession

I saw a link to a short story on Get Rich Slowly called What to do during a recession.

I think I can do a little better. So I’m gonna try.You might not lose your job, so don’t become a self-fulfilling prophecy. The story states that most people don’t lose their jobs when the economy goes south. That’s important to remember. I lost not one, but two jobs in 2005, not the worst year on record but certainly not the best for either of those two employers. I was pretty certain in both cases that there would be cuts and I would be one of them. I couldn’t do anything about the second case because an edict came down from a new CEO to get rid of all contractors, and I was a contractor. In the first case though, yes, I probably made myself a more likely target for downsizing. I wasn’t as bad as the guy in Office Space who got hit by a truck, but if management thinks you think you’re on your way out, they have an excuse to not feel as bad about letting you go. After all, if you saw it coming and you’re not prepared for it, it’s your fault if something bad happens, right?

So if you think you might be on the short list, don’t let anyone know you think that way, and be quiet and discrete about finding your next job.

Work your contacts. When I lost that job, I knew some people who’d asked me at one point or another if I might be interested in opportunities elsewhere. Of course I called them within 24 hours. None of that panned out for me, but at least I got some practice interviewing and some good resume advice out of the deal.

I think it’s a very good idea to ask your friends once a year or so if they know of any openings. In the event of an emergency, it gives you a much better idea of what might be out there.

Build an emergency fund, just in case. Having an emergency fund is also important. When I got hired on at my current job, my boss told me to try to have half a year’s salary in the bank. Some vote of confidence, huh? But the reality of our business model is that we can be forced to make cuts at any time, with no warning. It even happened to him once a few years ago. The upside is that the pay is pretty good and we get at least one or two opportunities to make some extra money each year, so we put up with it.

Six months’ salary can be hard to save, but you should have at least two, and more is better. Sometimes I can find a new job in less than two months, but I can think of two times in my career where my new employer dragged the hiring process out by a month. That was fine the first time it happened, because I still had my previous job, but it really stank the last time, because I’d been out of work a month.

Make a bare-bones budget. I also suggest having a bare-bones budget. Make up a spreadsheet listing the non-negotiable expenses that happen every month (mortgage or rent, car payment, utility bills, car insurance). Then figure the cheapest you can feed yourself for a day. I have a coworker who might try getting by on three packs of Ramen noodles and feed himself for 30 cents a day, but for most people, $3-$4 per day for food is about as low as they can go. Multiply that number by 30 and add that as a line item. Then add a few bucks for gas (it costs money to drive to the store and to job interviews too). It’s much easier to make a budget like this before you need it than when you need it.

You don’t necessarily need to kick into the emergency bare-bones budget the day you lose work, but I did. It helped my savings last longer.

Start saving money now. Knowing where to get things cheaper will help you build your emergency fund faster, and it will help you when you can’t afford to pay full price. Find out where the nearest day-old bakery is. If there’s a thrift store near you, wander into it sometime to see if it’s any good. If there’s a farmer’s market near you, check it out and compare its produce prices to your regular grocery store–and prepare for a pleasant surprise.

Don’t bail on your stocks. This might be the most important thing. When the stock market takes a dive, a lot of people hop on the phone and take their money out. Unless you own marginal stocks, that’s exactly the wrong thing to do. You don’t need to know what to do with marginal stocks when a recession hits. If you own stock in companies that can’t survive a recession, you should sell them now and buy stock in companies that can. I had a relative who made himself rich by investing in boring companies like General Electric and Coca-Cola–companies that sell things that people buy no matter how much money they have–and holding those stocks for several decades.

That money vanished after a generation (and no, I don’t have any of it), but that’s another story.

There’s a financial cliche that poor people run to buy when stores have a sale, but when Wall Street has a sale, they rush to sell.

The thing to remember is that stock prices are purely theoretical unless you sell. So when they go down, you don’t lose anything. If the company still has decent products to sell, its price will rebound if only because vast heards of rich people will come in and buy more of the stock while the price is low. If you have some savings and you know how to stretch it, there’s absolutely no reason for those rich people to be buying that stock from you.

How to find motivation to balance your budget

This week I read a story on Get Rich Slowly about a couple who refuses to budget. The conversation ended when the person who needed to budget bragged about getting five shrubs on sale for $10 each. She didn’t need them, but the deal was too good to pass up.Consumerism is an easy trap to fall into because of easy credit, and the messages are all around us. Most people who know me probably categorize me as an extreme cheapskate. Certainly there are lots of things I could be doing that I don’t, but even by doing a few little things you can improve your financial situation immensely.

Watch less TV. I think this is a really big one, because TV is the primary source of marketing messages. It’s not just the commercials either. The TV shows give lots of messages about how you’re supposed to live. It’s not a realistic picture.

At one point in my life I was able to go a year without watching TV, just watching the World Series each year. I watch more now. I try to catch This Old House on Sunday evenings and sometimes I’ll watch a show with my wife, so I probably watch 3-4 hours a week now. But that’s a lot less than average.

My advice to someone who wants to watch more TV than I do would be to watch older movies (1940s-1960s), as that would make it harder to compare your life to someone else’s. Plus, there’s a lot less product placement and other marketing shenanigans going on, and if you watch it on video, no commercials.

Have realistic expectations. A lot of 20-somethings seem to think they have to have furniture as nice as their parents. That’s unrealistic and sometimes impractical. The previous generation didn’t always have what they have now. Walk into the home of a 50-something, and some of the furniture will be new, but some of it will be 10-15 years old, possibly more. The furnishings were bought over the course of many years. Plus, nicer things are impractical when you have kids running around. There will be spills and stains and dirt. Kids need to be taught to respect things, but what’s the point of ruining a $1,000 sofa to teach the lesson? It’s better to put something older and cheaper in harm’s way instead–much easier on the credit card and on your sanity.

Budget. A budget isn’t some mystical thing. It’s a simple list of your money as it comes and goes. It can be as simple as a spreadsheet. In one column, list all your sources of income–your paycheck, plus anything you make on the side. Add up that total.

In another column, list your monthly expenses. That’s everything–your car payment, rent or mortgage, credit card bills, utility bills, gasoline, food, and entertainment. You may have to save your receipts for a month to do this realistically. Add up that total. Hopefully it’s a smaller number than the first total.

I first did this in college when I was treasurer for my fraternity. We were in serious financial trouble but nobody knew why. I grabbed the checkbook, did the simple analysis I described above, and figured out we were spending more than $400 per member every month. We were only charging $380 a month for people to live there.

When we couldn’t raise rates, I started cancelling things. I cancelled the Super Bowl Party. I cancelled cable TV in the lounge. If it wasn’t a basic necessity of life, it went. It made me unpopular and it didn’t balance the budget, but it cut the shortfall.

I’m guessing most of the people who voted against me raising rates are having more trouble paying their bills today than they need to.

The expenses involved in a personal budget are different than for an organization, but the principles are identical. You still need to have more coming in every month than comes out, and if you can’t figure out how to make more, the only way to have more money is to spend less.

Reward yourself. Practically. A few years ago my budget was tight and I’d taken on an expensive hobby. Then I realized what I spent on food every day. It started with $1 for a cup of coffee and a doughnut. Lunch was $5 at the cafeteria. And usually I spent another dollar or two in the vending machine. I let my ego tell me it wasn’t worth my time to pack a lunch.

Then I did this math equation: (365-52-52-10-10)*7 and came up with $1,687. I was spending $1,687 a year on (mostly) bad food because I thought I was too important to pack my own lunch.

I was also making about $15,000 a year less than I make now. Dice.com tells me I’m slightly underpaid now, let alone then. Who was I kidding? That $1,687 was a luxury I couldn’t afford.

So I went to the store, bought a Thermos and a big can of coffee, bought some instant oatmeal and some breakfast bars and granola bars, and started packing fruit and sandwiches. What was left became my hobby budget.

I couldn’t motivate myself to cut that expense just to have more money, but being able to afford something I otherwise couldn’t was enough motivation for me. Eventually I shrunk the hobby budget and started using that money to pay down debt.

But had my situation been different I don’t think it would have been a bad thing, necessarily, to keep using that to fund a hobby. It’s easy to get discouraged when it seems like everyone else is passing you by, even if they’re passing you by on borrowed money.

Look at opportunity cost. Opportunity cost is about the only thing I remember from college economics. The theory goes like this: The cost of a new car isn’t $20,000. It’s what else I could have done with that money. So the cost of a new car is a plasma TV ($5,000), a high-def DVD player ($500), a nice computer ($1,500), a new high-efficiency furnace ($4,000), a nice vacation ($3,000), all three current generation video game systems (roughly $1,000), a new living room set ($2,000), and you’d still have $3,000 left to replace two or three appliances with high-end models, or all your major appliances with new low-to-mid-range models.

Would it be worth driving an older car for a few more years to be able to afford to go on a home-improvement binge like that?

Or here’s the way I prefer to look at it. I could invest that money conservatively, using a no-load index fund that just does exactly what the Dow Jones Industrial Average does. Historically, money invested in the DJIA doubles every seven years. Some seven-year periods are better than others, of course. If I dump $20,000 into that kind of a fund, it will be worth $320,000 in 28 years.

The sticker price on the Honda Civic sitting in my driveway was around $15,000, but that’s not what it cost me. It didn’t cost $16,500 either (I paid some interest on it because I didn’t have the cash to buy it outright immediately). It cost $264,000.

I know some people look down on me for driving what’s now a five-year-old car, but I can build myself a very nice nest egg just by keeping my cars two or three times as long as everyone else does. Will they still be looking down on me if I retire at 65 and they have to work 10 more years because they still have debt to pay off?

If the cost of a secure future is driving a car typical of what 16-year-olds drive, I’ll pay that price. It’s a bargain.

Don’t pay interest. If you have a choice between financing something and waiting a while and paying cash, wait and pay cash. Paying interest is like paying rent. It’s paying money off and having nothing to show for it in the end.

I do use interest-free periods to buy things because that gives me a little more time to get the money together. I financed a furnace earlier this year because they offered 6 months same as cash. I probably could have paid cash on the spot but it would have been less comfortable. Being able to spread my payments out over six months allows me to pay more on the mortgage, which does charge interest.

The road to financial independence

Early in The Millionaire Next Door, Danko and Stanley single out the Scottish. When my wife, Emily, read it, she said, “That explains everything about you!”

When I read it, I thought it explained everything about my two grandfathers–one was rich, one was poor, both were Scottish, and both spent their money pretty much the same way.

I’ve been reading a lot of these kinds of books because I’m not going to let what happened to us back in May ever happen again.But I blame Emily. She’s the one who started bringing me these kinds of books.

So what am I doing? I can’t list everything, but I can definitely give enough examples to highlight this Scot’s mindset.

Pick up that quarter. You know that adage that if a lawyer drops a quarter, it costs him more money to bend down and pick it up than to leave it be? Forget that. A lawyer standing in a parking lot isn’t billing time. I always pick up that quarter. I’m not a vulture–if I see someone drop a coin or three, I pick them up and hand them to the person. But if it’s on the ground and there’s no sign of the rightful owner, it goes in my pocket, whether it’s 75 cents or a penny.

Be scrappy. When I was out of work, I walked around picking up aluminum cans. At 45 cents a pound with a 10-pound minimum (a pound is roughly 35 cans), it was a slow way to make money. But if you’re out walking for exercise anyway, pick ’em up. I pick up cans when I spot them in parking lots, and I save the cans the local hoodlums throw in my yard. The last time we took cans in, we got more than $8. That pays for dinner for a night or two, if you cook. I only gather cans when someone’s not paying me to do something else, but during those times, why not?

Pay down your debt. Once Em and I got on our feet financially and it was clear we wouldn’t have to live off our savings anymore, we paid off our cars. We’d been making extra payments anyway. By paying off her 5-year loan in 3 years and mine in 2, we probably saved $3,000 in interest charges. That 3 grand is going to come in handy.

And that’s Biblical: Romans 13:8 says, “Owe no man anything, except love.” Does that mean my home mortgage and my car loans are sin? Yep. At least we’ve got two sins out of our lives.

If you can’t pay it all off, make extra payments. Even tiny extra payments help. Do a Google search for a financial calculator. Plug in your home mortgage. Many will figure the effects of extra payments for you. On my mortgage, just $10 a month pays off my house a full month sooner. A lousy ten bucks a month eliminates a single $1,000 mortgage payment. I can come up with 10 bucks. About 18 months ago I quit buying a doughnut and coffee at work, taking a thermos and a couple of packets of oatmeal every morning so I’d quit spending $1 a day on those things. The total savings per month was almost 20 bucks. Packing my lunch saved another couple of bucks a day. You get the idea.

Initially I was doing it for hobby money, until I realized how much more I would save by eliminating debt first. Once that $1,000 mortgage payment and $300 car payment are no longer over my head, I can buy a lot more $10 train cars. Even if the price doubles by then, which it probably won’t.

Keep an eye out for business opportunities. My brother in law has the right idea. He and his wife bought the laundromat in the town they live in. They have to fix something once a week, but compared to their regular jobs, it’s easy money. Within a few years it will have paid for itself and the money will just be there.

He’s looking to start another business too. Ethanol costs about $1.84 a gallon and the price is steady. That’s 70 cents less than a gallon of gasoline sells for in their town. So a lot of farmers use ethanol. Many would anyway, because they’d rather support corn farmers than middle eastern oil tycoons. So he’s looking to buy an ethanol station.

Emily and I moonlight selling stuff online. She loves shopping at thrift stores and yard sales. I spotted a copy of How to Make a Fortune With Other People’s Junk and bought it (with a coupon, of course). We’re not following it exactly, but it put us on the right track. We’re small time but we’re profitable, and now she’s getting paid to do one of her favorite things.

The goal isn’t the high life. This might be the most important thing. The reason most wealthy people stay wealthy is because their goal isn’t a swanky $500,000 home in a ritzy suburb with two new foreign luxury cars in the driveway all the time.

Don’t get me wrong: I may not drive a Honda Civic all my life. But I could see myself driving a Toyota Camry or a Honda Accord whether my net worth was $160,000 or $16 million. A BMW or Mercedes (or a Lincoln or Cadillac, for that matter) does nothing to improve quality of life.

The goal is something completely different: not to be anyone’s slave.

A year ago, whenever my phone rang after hours, I had to answer it. If I failed to answer the phone more than maybe once a year, I was afraid I’d be fired. So I picked up the phone and did whatever the person on the other end asked, whether it was reasonable or not, whether it made sense or not. Sometimes that meant I had to cancel plans. But it meant extra money, and I thought it proved how indispensible I was.

And it was all over one Thursday afternoon. There were cutbacks at work, and my position was eliminated. So I got in a car that belonged to Honda and drove to a house owned by the bank, where I sat down (at least the couch was owned by me) to figure out how much money was in the bank and how many months that money would last while I looked for another job.

Freedom is being able to say yes when the phone rings because it’s the right thing to do, not because it’s what you have to do in order to support your lifestyle. Freedom is when it doesn’t matter if your job evaporates because you boss’ boss’ boss screwed up and lost a horrific amount of money because the main reason you’re working for him is because it’s more interesting than sitting around at home watching daytime TV.

Most people don’t have a job. Their job has them. And the main reason is because their lifestyle has them.

In a way I’m glad I learned this at age 30. I’m also very glad that Emily understands it, and that when I can’t explain something peculiar about the way I spend or (more often) don’t spend, she trusts me. This doesn’t work very well when only one person is on board.

And as long as both of us can hold down a job for about five years–a reasonable expectation, since both of us have done it before–we’ll get there.

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