Amidst the whirlwind of change occurring right now, it is easy to allow the doubt to creep up and cover everything with a cloud of negativity. Of course that is the opposite of what is needed to plow through the change. Motivation and optimism are essential at a time like this. So I take a moment to ponder the progress I have made, rather than how much further I wish to go.
I have more than doubled my emergency fund savings. And for the first time ever, I no longer live from one paycheck to the next. Simply sitting and reflecting on this accomplishment renews my motivation. Reaching those goals provides me with more happiness and security than owning a house ever could.
For today I will enjoy what I have achieved. Perhaps tomorrow I will focus on tackling the next goal.
Sunday, October 21, 2012
Wednesday, October 10, 2012
Freedom from Debt
One major goal of mine for improving my life is to get out of debt. Obviously, the first step was to take an honest look at my personal net worth. How much debt do I really have? I put that off for quite some time because I was embarassed to admit it to myself. But, you can't face down a demon if you don't look at it head on. So I prepared something similar to the worksheet attached to this link.
Personal Net WorthWorksheet. My debt to asset ratio, 3:1. Yeah, extremely depressing. Currently I owe over $300,000 but my assets are worth maybe $100,000. That includes this house, which comprises 2/3 of that debt. And (this is really embarassing), I had absolutely NOTHING in savings. No emergency fund whatsoever.
One day I considered what would happen if I had a financial emergency. Most likely, I would end up losing this house and have nothing saved to take care of my kids. The best decision I've made in quite some time, was to stop paying the mortgage. Let the bank have the house. It's their fault it's such a shitty investment now, why should I carry the burden? And why should I make myself vulnerable to economic turmoil caused by these greedy corporate bastards who are never held accountable for the chaos they create? Simply put: get out of debt, provide security for yourself in case of an emergency, and you won't have issues the next time our economy goes down the drain.
Honestly though, it wasn't an easy decision. My pride and insistence on following through on obligations created quite some stress. But I was able to turn it around by realizing that my kids are my number one obligation and I'm not doing them any favors by holding on to this albatross.
Once I stopped paying the mortgage, I gained motivation to purge what we don't need. We have been cleaning out closets and the garage and finding that we don't use 75% of this crap! Letting go feels amazing, and it resets your priorities. We are selling off all sorts of stuff on Craigslist and garage sales. All that money goes towards my emergency fund. As of now, I've stashed away $1,500. We found an apartment and will move the end of October. I'm excited to think about the money we will save and how it will accelerate my ability to pay off the remainder of my debt.
So I'm tracking my progress here. I encourage everyone to take a good look at your net worth. It's a scary feat at first, but use that to motivate you to go after your dreams. Use the worksheet I posted above, or just search for "personal net worth worksheets."
Personal Net WorthWorksheet. My debt to asset ratio, 3:1. Yeah, extremely depressing. Currently I owe over $300,000 but my assets are worth maybe $100,000. That includes this house, which comprises 2/3 of that debt. And (this is really embarassing), I had absolutely NOTHING in savings. No emergency fund whatsoever.
One day I considered what would happen if I had a financial emergency. Most likely, I would end up losing this house and have nothing saved to take care of my kids. The best decision I've made in quite some time, was to stop paying the mortgage. Let the bank have the house. It's their fault it's such a shitty investment now, why should I carry the burden? And why should I make myself vulnerable to economic turmoil caused by these greedy corporate bastards who are never held accountable for the chaos they create? Simply put: get out of debt, provide security for yourself in case of an emergency, and you won't have issues the next time our economy goes down the drain.
Honestly though, it wasn't an easy decision. My pride and insistence on following through on obligations created quite some stress. But I was able to turn it around by realizing that my kids are my number one obligation and I'm not doing them any favors by holding on to this albatross.
Once I stopped paying the mortgage, I gained motivation to purge what we don't need. We have been cleaning out closets and the garage and finding that we don't use 75% of this crap! Letting go feels amazing, and it resets your priorities. We are selling off all sorts of stuff on Craigslist and garage sales. All that money goes towards my emergency fund. As of now, I've stashed away $1,500. We found an apartment and will move the end of October. I'm excited to think about the money we will save and how it will accelerate my ability to pay off the remainder of my debt.
So I'm tracking my progress here. I encourage everyone to take a good look at your net worth. It's a scary feat at first, but use that to motivate you to go after your dreams. Use the worksheet I posted above, or just search for "personal net worth worksheets."
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