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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Paid in full.

This week, my wife and I drove to the bank and signed some papers initiating a wire transfer to our mortgage company.

Yesterday, I had the satisfaction of logging into the mortgage company’s web site, clicking on my account, and seeing the words “paid in full.”

I moved into this house in October 2002. Five years and eight months later, I own it outright. Between the house and our cars, my wife and I have paid off nearly $180,000 in debt in those five-plus years.We aren’t completely debt-free yet. We still have some student loans from my wife’s college education.

Some would argue we should have paid those before the house. I opted against it because one of the loans has a very low interest rate (lower than the house), and because the payments are small. If I walk into work tomorrow and find out I no longer have a job (that very thing happened to me not once but twice in 2005), I can easily make those student loan payments. Scraping together enough for a mortgage payment is harder.

But I’ve gotten ahead of myself. Here’s how we did it.

The debt snowball
The trick is to make your minimum payments on all debts, but pick one debt to pay off first. Then scrape together some extra money to pay it off sooner.

In my case, I started with my car. The payment was about $300. I tried to pay at least $600 on it. Sometimes I paid $900. When I got my tax refund, I paid a whole lot more than that.

By mid-2005, I owned the car outright.

By then I was also married, so we turned our attention to my wife’s car. Her payment was also about $300. So we paid $300 plus $600, the amount I’d been paying on the other car. I had a better job that summer, and we had my wife’s income too, so it wasn’t all that long before I realized we had enough surplus piled up in the bank to pay that off too. So we did.

And that left the house. The mortgage payment was around $1,000. So we paid $1,900. When we started making more money, we increased that. In recent months, I’ve been paying $3,000 on the house since I now make quite a bit more than I made in 2005.

Last month, I noticed we were very close to having enough in the bank to pay the house off while still leaving a comfortable emergency fund. I called the mortgage company to find out exactly how much we’d need to do it, and to get payoff instructions. I figured out that every month we didn’t pay the house off was costing us more than $200. So scraping was worth it.

Finding extra money
I’ve always been a tightwad (just ask my family), but in my late 20s I fell into some bad habits. I didn’t rack up debt, but I definitely wasted more money on conveniences than I needed to. I saved a lot of money the last five years or so by packing a lunch and bringing my own coffee and breakfast to work.

Do the math. I used to spend $2 on coffee and breakfast, plus $5-$6 for lunch. Call it $8/day. Figure 240 working days a year, and that’s $1,920.

I figure I whittled my daily food bill down to about $3 per day, so I saved $1,200 per year. That’s $4,800 over the course of four years. That alone allowed me to pay the house off at least nine months early.

Don’t let other people spend your money
But this is the big one. Everyone has their own ideas what kind of car you should drive, what home improvements you should be making, and other status things that really don’t matter that much.

I drive a 2002 Honda Civic with more than 100,000 miles on it. I know some people look down on that. But the car is still in nice shape, still runs like new, and has never needed anything more than routine maintenance. Plus it consistently gets 35 MPG.

If I had traded that car in after driving it for three years like the marketers say you’re supposed to, it would have slowed down the house payoff by six months. Had we done the same with my wife’s car, we could make it a year.

Frankly I’d rather have the house. In fact, if I could turn back the clock to 2003, I wouldn’t buy the same Civic I bought then. I would have been better off buying an older one that I could pay off more quickly. I could have saved an extra $4,000 or even $6,000, and we would have had everything finished a couple of months sooner.

So what about the cars now? Well, what about them? Remember, I was used to paying $3,000 a month on the house, and that obligation is gone. A year from now, there’ll be enough cash piled up in the bank to buy two cars outright if necessary. Not that I expect to need that, since Civics are famous for going 200,000 miles and beyond. The last time I went to the dealer, they told me someone had traded in a Civic with 500,000 miles on it.

As for home improvements, yes, now it’s time to do some. But why do them sooner? The boob tube tells you to do it to increase the value of the house. But why would I want to do that? So I can pay more taxes? Without me doing a thing, the paper value of this house has risen nearly $40,000 since I bought it, at least according to the county assessor. That means I paid $400 more in taxes in 2007 than I did in 2003.

Unless I was planning to move, there’d be no reason whatsoever to be concerned about property value.

On the other hand, at this point in the life of the mortgage, I was paying more than $200 per month in interest. Now that I’m not paying interest, that’s like getting $2,400 per year for free. That’s enough to finance a modest home improvement project.

But then again, if there’s something else my wife and I want that costs $2,400, we’re entirely free to go after that instead.

In what order should you pay off loans?
This is the paralyzing question for some people. Mathematically speaking, you should pay them off in order of interest. If you have a credit card balance at 19%, a car loan at 7%, a mortgage at 5%, and a student loan at 3%, then you should pay them off in that order.

I’m not enough of a math genius to run the figures, but paying them off in the worst-possible order (reverse order), generally only slows you down by a month or two.

We paid ours off somewhat less than optimally because the student loan is less paralyzing than the mortgage. The minimum payment on the student loans is about 1/5 what the mortgage payment was. When I was out of work, the mortgage was a bit of a struggle to make during a couple of those months, whereas the loans are comparable in size to a utility bill.

If nothing changes between now and then, we can have those loans wiped out in another year. If the economy tanks and I lose my job and my income drops to nearly zero, I can nurse those loans along almost indefinitely, since I have numerous options for making the $1,000 per month it would take to cover utilities, groceries, and those loans.

What about retirement?
Some people argue you should give retirement planning priority over your debts, while others say the reverse. My wife and I haven’t done much for our retirement since we got married in 2005. Frankly I can see the arguments both ways. But we’re still in our early 30s, and now we’re in position to contribute the legal limit into Roth IRAs from now until the government starts making us collect. There’s still time for both of us to pile up enough to retire.

The counter argument is that it’s foolish to invest when paying down debt gives you a guaranteed return. In this economy, given the choice between investing or paying down debt at 6 percent, what’s safer?

While there’s room for criticism if you go either way, either way is preferable to doing nothing. Unfortunately there are all too many people who have lots of debt and little or nothing saved for retirement.

Don’t refinance!
This is another big one. I refinanced in 2004. I got a lower interest rate, and I switched from a 30-year mortgage to 15. The interest rate dropped, but I got nailed for a $2,000 closing cost.

I saved $500 in interest the first year, but I didn’t have the loan long enough to recoup the closing costs.

If your mortgage is the last thing you’re going to pay off and if you can drop the rate, or if refinancing will allow you to consolidate some higher-interest debt, it might make sense to do it, but factor in that closing cost. If you can pay off the mortgage in less than five years, it makes more sense to just pay it off rather than go to the expense and hassle of refinancing.

In my case, if I hadn’t refinanced, I may have owned the house a month sooner.

What about the tax deduction?
Short answer: Forget about the tax deduction. The tax deductions for mortgages are more overrated than Derek Jeter.

Let’s say you’re in the 25 percent tax bracket. I’d have to ask my accountant if such an animal exists this year, but the numbers are convenient. If I’m in the 25 percent tax bracket and I paid $1,200 in interest this calendar year, then that means in return for me paying my bank $1,200, the government is giving me back $300.

Every other time you spend $1,200 and get $300 back, it’s called losing $900.

For the past five years, I’ve been paying a lot more in interest than I ever got back as a tax refund. Eliminating the mortgage won’t completely eliminate my tax refund, but it did eliminate that interest. In effect, by paying off the house, I gave myself a $1,200 raise this year.

So there’s no sense in keeping a mortgage solely for tax purposes. If you need tax deductions, take your tax return to a good accountant. The accountant’s fee is tax deductible, and the accountant will probably find you additional deductions you didn’t think of.

If you’re in a higher or lower tax bracket, it can make a little more or a little less sense, but you’re still trading dollars for small change in any case.

In conclusion?
There are any number of things we could have done differently. But the important thing is we now own our home and two cars outright. It’s possible that doing a few more things might have made it happen a month or two sooner. But if I’d done everything the traditional way, I wouldn’t own the house outright until age 58 (if I’d kept the original 30-year mortgage) or 44 (since I refinanced to a 15-year mortgage). Compared to 11 additional years of paying interest, what’s an extra month or two if I get a couple of details wrong?

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.

Why I never kept up with the Joneses

I had a bit of a financial epiphany over the weekend.

I have a well-deserved reputation for being a tightwad. Part of it is in my blood; I’m largely of Scottish descent, and Scots just tend to act that way. But I think part of it is what I observed growing up.My wife and I were sitting at my mom’s kitchen table, and for whatever reason, we were talking about my teenage years. In 1988, we moved to a new subdivision in Fenton, Mo. Fenton is a boomtown today, thanks in part to urban sprawl and also because of its first-rate school district, but in 1988 it was still largely an industrial town. Lots of people worked there, and not many wanted to live there. But in the late 1980s, the McMansions started sprouting up like weeds, and lots of families started moving there, ours included.

We talked about our neighbors, and something immediately occurred to me. Most of them were in their early 30s. They were the same age I am now. Not only were they my age, but they drove new cars, and most of them had at least two kids. Meanwhile they were trying to make payments on houses that cost $125-$150,000 at the time. According to inflation, they should cost a quarter million today. Not only that, though, in 1988, interest rates were a lot higher–10 percent wasn’t uncommon according to my quickie research.

Dad could afford that lifestyle–barely. He was a doctor and had been practicing medicine for 15 years. But even we made sacrifices in order to afford to live in that house.

The problem is, I shouldn’t say "even." Most of our neighbors had nicer furniture than we did. Some of them drove fancier cars. And their kids had bigger, costlier toys.

The absurdity hit me. I wouldn’t even try to compete with the lifestyle of a 45-year-old doctor. Not at 33. I make enough that a bank probably would let me have a mortgage of a quarter mil. I could lease cars that don’t depreciate quickly in order to keep my monthly payments down. But there wouldn’t be much of anything left at the end of the month, and I could probably forget about retiring any earlier than 73 (which is what Social Security is saying my retirement age should be). Just because I could make the payments doesn’t mean I should.

I wondered why so many of them got together every weekend and drank themselves senseless. And I don’t think I consciously ever realized I was living in a neighborhood full of people living way over their means–even the family next door, headed by a young dentist trying to establish his practice with five kids and a wife who insisted they needed a Jaguar.

Suddenly, sitting there at the table, telling old stories, I realized why that woman was such a psycho. She couldn’t pay her bills.

And that was also probably why another neighbor wouldn’t go anywhere without a thermos full of wine, and why another young couple who lived nearby smoked pot every Saturday night.

They had everything any reasonable person could dream of having at 32, but if anything at all ever went wrong–a layoff, an extended illness, or a serious injury–they would be in serious danger of losing it.

For whatever reason, I never measured my lifestyle against them. My first few jobs didn’t make me a lot of money, but they let me do pretty much anything I wanted. I had a nicer apartment than Dad had at a comparable age. I could go out to eat any time I wanted. I could buy a new computer every year if I wanted to, as long as I didn’t go overboard on it, and for a few years I did. I drove small cars, but there were always at least two or three cars in the parking lot that weren’t as nice as mine, so I was content to drive my 1992 Dodge Spirit. When it died, I got a 2000 Dodge Neon. It wasn’t a status symbol, but it had power locks and windows, which were two things Dad’s 1981 Chrysler LeBaron didn’t have. It had a nicer radio too. And that LeBaron was supposed to be a luxury car.

My lifestyle was far ahead of where Dad’s had been at my age. And not only that, I had money left over at the end of every month.

There were two things I wasn’t happy about. At the time, I didn’t have a steady girlfriend. And my apartment rent was going up by about $50 a year but the management company wasn’t taking care of the place. When stuff broke, they fixed it halfheartedly, and I didn’t want to pay $575 a month to live in a slum.

When my rent hit $575, I told them I wasn’t going to pay it. They offered me a seven-month lease at about $550. Conveniently, I had enough in the bank for a down payment on a house, and I figured I could afford to pay a couple hundred more every month for a mortgage. I just didn’t want to throw that kind of money away on rent.

So I bought a house. There was a neighborhood about a mile away that reminded me a lot of the neighborhoods I grew up in. I found a house about the size of the house we lived in before we moved to St. Louis. It cost more than I had planned, but it was big enough that I could get married and have a family there and not have to move again. I hate moving. Plus, it was (and still is) in a good school district, all the schools are close by, and anything I could need was close. I didn’t know it right away, but in an emergency, the nearest grocery store AND the nearest car repair place are both walking distance.

For an extra $100 a month, it just made sense. I bought the house. And every night, I filled up that Dodge Neon with everything that would fit, drove to the house, and unpacked. Several friends with vans or pickup trucks helped me move the stuff that wouldn’t fit in my tiny car.

Even though my 1-bedroom apartment was stuffed to the gills, it wasn’t nearly enough to fill a 3-bedroom house with a living room, family room, a study, and a basement. But it didn’t take long for that problem to solve itself. Several people offered me some nice furniture. They were hand-me-downs, but there wasn’t anything really wrong with any of it. Before I knew it, the house was full.

A couple of years later, the right girl came along too. At first she wanted me to get nicer stuff. The problem was, even though I’d gotten promoted to a server administrator at work, they were still paying me my old desktop support salary. The house had wiped out my savings, and I couldn’t really take on another monthly payment on anything. We fought about it a little. I showed her how little was left at the end of every month, and I argued that everything in the house was nicer than anything my parents had at my age. For that matter, most of it was nicer than the stuff they had when I was a kid.

She relented. I don’t know how happy she was about it then. But she didn’t complain.

A few months after we got engaged, I lost my job. I was mad about it. I was convinced I would lose everything I’d worked for. I guess for a minute I thought I was like those neighbors.

But because I’d lived within my means, I survived and soon I ended up with a job with a competitive salary for the first time in my professional career.

Something else came out of it too. The day we got married, neither of us had a job. We started a small business out of necessity. Our final paychecks made the mortgage payments during that summer, and we used our wedding gift money to get the business going. Soon it was bringing in enough to make our utility payments and buy groceries. When I got a full-time job, she took the business over and I helped out at night and on weekends. It allowed her to not have to work outside the home. There are probably things she could do that would make more money, but she doesn’t have a lot of stress, and she enjoys the flexibility.

The odd thing is, we’ve been able to upgrade our lifestyle on the cheap. For example, there are three light fixtures we’ve been wanting to replace for a long time. This weekend I found two light fixtures at a yard sale for a buck apiece. My sister rolled her eyes when I told the story, but these fixtures don’t fit the yard sale stereotype. A sticker on them says they were made in February 2005. Home Depot still sells the same fixture (or something extremely similar) for about $30. That’s not terribly expensive, but $1 is a lot less than $30. The third fixture we need to replace is smaller. We can get something that will look fine with them, and look much better than what we have, for under $20. The result will be a significant upgrade in how the kitchen and living room look, at well under 1/3 the price.

That $60 savings may not sound like a lot, but we’re constantly finding ways to save a few bucks here and there like that. We’re never the first to have anything, but it seems like we always end up getting whatever it is we want or need, and meanwhile we’re socking money away and whittling down on that house payment.

Judged against the standards of my neighbors in 1988, one could argue I’m a failure. I drive a five-year-old car and most of the time I use a six-year-old computer, and the four shirts I bought in 1998 to comply with my then-employer’s dress code are still in my rotation today.

But let’s look at things another way. Not only do my wife and I have nicer stuff than my parents had when Dad was 32, we also have an easier time finding money for necessities like groceries. She can shop at the health-food stores even though they’re more expensive. As long as nothing unexpected happens, we’ll own everything outright and have absolutely no debt–no student loans, no car payments, no mortgage–well before I turn 40. I stress over some things, but money isn’t one of them.

In my early 20s, I watched some of my friends from high school rack up massive credit card debt. At least it seemed like massive debt at the time. I knew then I didn’t want to be like them, at least not in that regard. Now I know that the average American family has $9,900 in credit card debt. That’s about what one of those friends owed, and about twice what another one owed.

I know who I want to be like. I want to be like my wife’s parents. They paid off all their debt sometime in their late 30s or early 40s. Today, when my mother in law sees something she wants, she doesn’t think about it. She can just buy it. Not only that, she’s retired, and she’s nowhere near 73.

I’m not saying I want to buy anything and everything I see on a whim. But not having to think much at all about money seems really nice.

And I guess on some level I’ve known that for almost 20 years, since I was in my early teens.

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