How to Act Like a Human Being During the Holidays

1. Holiday traffic is a nightmare. Plan ahead.

It’s 2013 and we’re an advanced civilization, yet 99% of travelers tend to hit the highways and airports at the exact same time. There has to be a better way. Why not try an alternate mode of transportation this year like a Greyhound Bus, or the Amtrak? One is a traffic reducer, and the other is traffic-evader.

If you choose to drive your POV across the country, state or county, try to time your driving against the other 100 million drivers. Depart a couple days earlier? Take the trip home a couple days later? I highly recommend using the Waze app on your Android/iPhone. It will get you to your destination in the fastest manner possible.

2. Don’t fight over electronics in Walmart (no matter how inexpensive they are).

There isn’t a TV on this planet priced low enough that it would be worth a night in jail.

3. Avoid shopping during big sales.

Obviously, being a frugal-minded individual, you prefer to buy stuff on the cheap — BUT — big sales lead to bigger than anticipated purchases. You might walk into Best Buy looking for a cheap TV and walk out with a new cell phone, some Blu-Rays, and a new oven.

This time of year EVERYTHING is on sale, so it’s hard to avoid the temptation to buy all new stuff. How about blocking yourself from visiting, and limiting mall and department store trips down to zero as well. Sales are intended to get you to spend more money.

The super-low priced products are used as bait to get you into the door. Choose to not bite.

4. Stay away from crowded areas.

With crowds comes stress. With crowds also comes enormous lines (which are even more stressful). When you’re forced to stand in a line for any long period of time you’re prolonging your exposure to the goods and products that surround you.

The crowded mall food court starts to smell delicious, and before you know if you’re spending $20 on lunch which only adds to the spending you’re at the mall for in the first place.

5. DIY gifts can be super affordable and totally awesome.

Unfortunately, the masses have been conditioned to purchase all of their gifts pre-assembled. It can be a huge time saver to hit the mall, grab a few things, and be done shopping for the year like it’s some kind of chore. Or you can create stuff for your friends and family that is completely badass and insanely inexpensive.

Check out this photo pin-board my wife made recently for less than $20. Yeah it took a little bit longer to physically make it, but she didn’t have to battle her way through the mall to purchase it either.

6. Remember books?! They, too, make great presents.

When I was a kid I loved getting books as gifts. Then, when I was a angsty teenager I hated it. Then, I became an adult and I began loving books again. They make the perfect gift, because they’re fairly inexpensive and they can be entertaining, educational, or spiritual. Whatever the recipient is into.

You can pick up used books at thrift stores for $1 or less. Sometimes you’ll find a gem of a book, and it will be in GREAT condition, and it will come to $1.06 after tax. How’s that for a great, cost-efficient gift?

You could even print out every Johnny Moneyseed article ever. Bind them. Put a sweet cover on it. And give it as a gift. Holy shit — that’s nearly a free gift and it’s amazing.

7. Less is more when decorating your house.

You may have recently watched National Lampoon’s Christmas Vacation, but hopefully you weren’t inspired to have the brightest Griswold-style house on the block this year.

There are many reasons to keep your holiday decor to a minimum:

  • The more lights you have the more electricity you will use which will lead to a bigger than normal energy bill.
  • The more things you have plugged, the higher the risk that you’ll burn your house down.
  • It costs a lot of money to buy a ton of decorations.
  • AND, your house probably just looks tacky if you load it with tons of lights and giant blow-up characters.

8. Keep drinking to a minimum (level of intoxication).

95% of the people that read Johnny Moneyseed love to drink alcohol — in moderation. Personally, I love a great craft beer or 5. But, when you’re hanging out with people you haven’t seen in a while a few drinks could end up in an impromptu wrestling match, or countless other bad decisions.

While we all love a good excuse to throw a few back, leave it at a few and don’t end up in jail for the New Year.

9. Don’t buy people shit unless they asked for it specifically.

Starting on December 26th, millions of people will be heading back to the malls with gift receipts in hand, for the purpose of getting rid of the crap they didn’t want.

Why enable this behavior? You’re going to avoid the mall in the first place, so it would be fair if no one else had to head to the mall to return stuff either. This is pretty easily avoided by getting people stuff that they actually want.

10. Gift cards are garbage.

I need to set the record straight on this. Why the hell would you ever buy someone a gift card? It’s like giving them money that they can only spend in one place.

It doesn’t mean that you want them to be able to pick out whatever they want, or even that you understand where they like to shop. It means that you’re lazy, have absolutely no creativity, and you just feel bad giving someone cash for whatever reason. Just give them the damn cash!

11. Set a limit on gift buying. and DON’T buy yourself ANYTHING.

I’ve seen it on Twitter and Facebook multiple times already “I went to the mall to buy gifts and ended up buying myself a few things. That’s okay right?” NO, IT’S NOT! Well, it is if you absolutely NEED something, but unplanned purchases typically fall into the ‘want’ category and should be avoided at all costs.

Without creating an upper-limit for holiday spending, gift buying can add up very quickly. With $200 you should be able to buy gifts for 10-20 people easily.

12. Great deals and saving are NOT the same thing.

Keep in mind that if you spend money of any kind, you essentially aren’t saving any money. You’re spending less than you normally would typically, but in no way are you saving anything.

Marketers have done their best over the years to make you feel like a good sale is extra money in your pocket, but this idea is complete lunacy.

13. Craigslist will be loaded with actual deals starting on December 26th.

Something magical happens right after a few hundred million Americans exchange gifts with each other. Tons of those people need to make room for the new stuff by getting rid of the old stuff.

You can find cheap appliances of all kinds, TVs, electronics, cell phones, games, etc. Pretty much everything you actually want is going to be on an instant fire sale, so set your Craigslist alerts and make sure you have a friend with a truck on standby.

14. Be grateful for what you do have.

Thanksgiving isn’t the only time of year that you need to be thankful of what you have. It should be an ongoing process, and shouldn’t be influenced by what you don’t have.

If you don’t receive the thing you really want, reflect on all of the things in your life that you do have. Think about the kids in Third World countries that have absolutely nothing. Think about your family. And, just think about how great the holidays really are.

17 Things That Will Push You From Middle Class To First Class

1. Learn the ins and outs of the US tax system.

The tax code may be one of the most boring and complex collections of documents in the history of the world. But — hidden under all of the Washingtonian lawyer jargon is some extremely valuable information. Information that could shave years off of your working career.

Have you ever heard of tax hacking? Traditional to Roth conversions? The fact that if you make less than $19,500 a year you don’t have to pay taxes whatsoever?? A tax-free life sounds pretty First Class to me.

Luckily there are actual human beings out there that have translated the cryptic tax hieroglyphs into human-readable format.

2. Own vs. Rent doesn’t matter. Size and function do.

There are advantages and disadvantages to owning AND renting. Equity vs. Mobility. DIY vs. Landlords. I know wealthy people that love being homeowners and others that have chosen to never settle in one place. Semantics!

What does matter is the size of your dwelling, and it’s intended purpose. Generally, the more space you require, the more it’s going to cost and the more it’s going to cost to insure. The bigger the place, the more you’ll feel inclined to fill it with unnecessary stuff.

Only buy/rent as much as you actually need and feel the added benefit of an increased positive cash flow. For example, we downsized our house which saves us around $16,500 every year.

3. Eat food that’s good AND good for you.

Food that’s actually good for you never tastes good, right? Once upon a time this might have been true, but the Internet tells us otherwise.

Vegan food can be delicious. Carb-free diets can be delicious. Healthy snacks like fruit, nuts and avocados ARE delicious naturally.

There are entire websites dedicated to providing healthy eating tips and recipes for creating amazing, delicious, good-for-your-body food. Feel free to leave other great health food blogs in the comments.

4. Do something about those love handles.

The most exercise that the average person gets on a daily basis is the walk to and from their car. It’s insanity! What are you doing in line for the elevator when it only takes about 2 minutes to climb 20 flights of stairs!? Exercise whenever the opportunity arises.

Make walking, biking, swimming, and general aerobic exercise a staple in your day-to-day life. Got a few minutes? Do some pushups, lunges, sit-ups or planks. Staying physically healthy significantly reduces the chances of medical treatment, ie. reduced health-care costs.

The easiest way to a long, happy, hip-replacement-free life is staying in shape.

5. Challenge yourself. Set goals. Plan.

When I started this site my intention was to be able to retire within a 7 year period, by age 35. As time went on my cash flow has significantly increased, and my plans have been accelerated more than I could have imagined.

What type of voodoo sorcery pushed me toward success? The simple application of goal-setting.

Create a plan for the next year, next 5 years, 10 years, 20 years. Once you write out a finite list of things that you want to accomplish, and make those goals a priority, you’ll find that you’ll become unstoppable.

6. Stop watching, start reading.

At what point in human history did “unwinding” turn into watching TV for 4-5 hours every night?

Call your telecomm company and remove cable from your account. You have better things to do with your time that are going to empower you in ways that the CBS Fall Lineup can’t. Plus, you’ll save about $900/year — so let them charge you a damn cancellation fee — who cares!

Figure out what your passions are, and start reading about them. There are self-help books about everything from sewing to learning how to master your finances.

7. Avoid small thinking AKA excuses and complaints.

I can’t tell you how many times I’ve heard people talking about the “Government Shutdown”, the “Fiscal Cliff”, “Obamacare”, or countless other Capital Hill talking points. These people have been trained to think that it helps to be informed about the latest crisis-of-the-day in Washington.

They complain about new policies that may or may not be in effect. And they stress out about the “what-ifs”.  They also think that their paychecks are under attack by taxes, but don’t realize that we currently paying the lowest taxes in US history!

Choosing to ignore political chatter will put you on the fast track to a First Class lifestyle. No one likes hearing other people complain. Especially about politics, so why join the conversation in the first place?

8. Mock convenience. The hard road is much more satisfying.

America is the convenience capital of the world. From the fact that almost everyone in the country has the following items: A cell phone, a car, access to clean water and toilets, and at least one convenience store or Wal-Mart within a 5-mile radius.

Why are we so obsessed with convenience? It’s because we’re fuckin’ lazy!

Your mission here is simple: Never step foot inside another convenience store, for any reason, ever. That includes Wal-Mart.

9. Optimize constantly.

No matter how hard you try, you will NEVER have the perfect budget. That doesn’t mean we shouldn’t strive for perfection though.

I try to optimize my family’s spending every single month. There’s always at least one category that needs our immediate attention. Anything from eating out to electricity usage to grocery spending is fair game. Not once have I ever had a perfect month, but we continuously try to improve where we lack.

Pare down your spending in all major categories, then focus on the categories that fluctuate the most from month-to-month. They’ll be easy to spot, and when you’re constantly thinking about optimization, your spending in these categories will nearly disappear.

10. Keep job related costs to a minimum.

Here’s the logic: You go to work to get paid, so any money that you spend on/at work reduces your pay by exactly that much. A $10 lunch 5 days a week isn’t just a $50 credit card payment, it’s $50 you had to spend when you were supposed to be EARNING money.

Thankfully, it’s really easy to counter this type of blatant wasteful spending. Here are a few ways to reduce the cost of being employed:

  • Bring your own lunch to work. No seriously, this saves so much money it isn’t even funny.
  • Bring a coffee pot to work and use it. Why tempt yourself into buying coffee on the way to work?
  • Keep a bunch of snacks in a cabinet at work. Peanuts, cans of tuna fish, whatever.
  • Carpool. Ride a bike. Rideshare. Public transportation. Stop driving a 2-ton vehicle to move your less than 300 pound body.

11. Buy used, refurbished, or last year’s model.

A great way to avoid the typical Middle Class lifestyle is to stop allowing advertisers to fill your heads with wants and desires that you don’t actually care about (this is another reason why ditching cable is a great thing).

I buy everything used or refurbished. Last year we were able to score a brand-new-to-us yet refurbished vacuum cleaner from Amazon, and we paid half-price. It works exactly like a brand-new product should.

Everything from furniture to electronics to books can be purchased second hand or refurbished. Why would you ever spend more money on something you could get cheaper? If you’re in the market for “new” stuff try typing in “refurbished” after your search term at Amazon. Or just go to Google and type “yard sales”.

12. Upgrade your cell service by “downgrading”.

For the past 15 years cell phones’ services and capabilities have increased at a logarithmic rate. Which means that newer cell phones really aren’t all that impressive anymore. Even Apple, the frontrunner, hasn’t done very much with its flagship iPhone over the past couple years.

So what happens when consumers are satisfied with the current array of top-tier devices? Anyone!?

This is when the cell phone providers have to do something different to attract customers — ie, drop the month-to-month cost of the standard bill.

Companies like Republic Wireless have taken this model to a whole different level. They’re offering a no-contract top-tier phone with unlimited everything for HALF-PRICE with plans starting at $5 that range up to $40 per month depending on features. While you might be leaving your big name provider, you’ll be able to keep up to $80/month every month by “downgrading”.

13. Embrace frugality.

It’s cool to be frugal these days. Seriously. Try posting the words “I just saved $50 at the grocery store” to Facebook and see how many ‘likes’ you get.

My mom (a Baby Boomer) got a lot of her clothes from Goodwill when she was younger and it was horribly embarrassing for her. Second hand clothes used to be ugly, but now they’re awesome.

And saving money is cool again, so you can show off your “new” threads and brag about the price you bought them for. It’s a best time ever to be a consumer!

14. Collect memories instead of stuff/things/junk.

One easy way to live a First Class life is to shift your value system — from caring about having stuff to caring about having experiences.

Oftentimes, people dream about travelling during retirement. Yet they spend their entire working careers buying more and more stuff. Wasteful spending is the reason why many people have to work into their 70s, and the reason they don’t get to travel while they’re still working.

When you’re on your deathbed, you’ll think about all of the things you DID in your life rather than the things you HAD. A significant reduction in spending can help to pad your “vacation savings” enough to be able to travel at least once per year. Internationally, if you do well enough!

15. Buy for life, not for the moment.

When my wife and I got married we bought a house and some basic tools…at Target. Needless to say, the tools didn’t last more than 6 months. At which point, we were forced to buy replacements.

They sell power drills at Target for $25 and at Home Depot for $100. You can imagine the dilemma. Do I spend less money for something that I know won’t last another 6 months OR do I spend the big money ONCE?

This question needs to be asked whenever you’re about to make ANY purchase. Do you want something kinda shitty for less, or something that’s a little more expensive but could possibly last forever?

16. Keep your car running for 200,000 miles (at least).

Financed vehicles cost as much (if not more) annually than the places we live. Yet, when our vehicles start to “get old” and have “high mileage” we trade them in for a new car payment and more insurance.

Your car is a 2009 with 85k miles on it?? That’s practically BRAND NEW!

Have you ever heard of a Haynes Manual? They teach you how to fix ANYTHING on a car. They make them for every make and model vehicle from Chevy to Ford to Qingpi. They’re like $20 and will pay for themselves a million times over if you can keep your car running for the next decade.

17. Build and maintain relationships that make you happy.

If you asked a million people what they wanted in life the most common answer would be “to be happy”. While happiness can only be achieved by individuals, it’s always nice to have a little bit of help from our friends.

Surrounding yourself with people that have a positive impact on your life and distancing yourself from those that drag you down can be very empowering.

It doesn’t take any money whatsoever to be happy. Achieving happiness is the only thing you need to live a First Class life.

How to be a foodie on $75 a week

Today I’d like to introduce a friend of mine named Anne. She’s a foodie blogger who currently lives in the Windy City of Chicago.

Since this site is about saving money and retiring early I challenged Anne to maintain her foodie status, but in the confines of $75/week.

If you have ever read my blog, you will know that food– both the restaurant and homemade varieties– is a big part of my life. You may even call it a passion.

I consider myself to be pretty money-conscious, as a general rule. I was raised by hardworking parents that started their married life (and our family) without a whole lot of money, so the principles of budgeting, saving, and worth vs. value have been instilled in me from a young age. My husband and I have both been laid off (twice each) over the past 5 years. We have since bounced back and are frantically trying to save up enough money to buy our first home so that we can start a family– not an easy task on two modest incomes in downtown Chicago. Living in a city known for its amazing restaurant scene and its amazingly high taxes, we do all that we can to keep our cost of living on the low side: limit our dining out, cutting coupons, cooking at home…

Even so, when Johnny Moneyseed challenged me to be a foodie on $75/week I realized I had no idea what a REAL food budget actually looked like. This challenge was a big wake up call for me and a really great exercise in learning how to budget, plan, and cook effectively– and to still be able to enjoy what we are eating!

Today I want to share a few of the biggest takeaways that I learned in this challenge. But before I do that, here’s how the whole thing transpired:

I first got to work on meticulously planning out a menu for the week with a corresponding shopping list. Staying within JM’s budget constraints was tricky, but I did make it work. In total, I spent $87.61 on groceries for the week. However, a lot of of the items that I purchased weren’t used in full during that week and could be frozen or used in meals the next week. After doing some nerdy calculations about how much of each item I actually used during the challenge week, the grand total came out to be $69.82 spent.

One other caveat to mention: I did not include what I consider to be pantry staples in my budget. These are items that I think most home cooks have on hand to use on a regular basis: oils, vinegars, butter, salt, pepper, and dry herbs. I didn’t use anything too out of the ordinary in terms of seasonings this week– just the basics like garlic, oregano, basil, parsley. If I were to have used something a little more obscure that you’re not likely to have on hand then I would have included that in the budget.

I’ll be posting some of the dinner recipes from this challenge week on my blog!

How to be a Foodie on $75/Week:

  1. Plan, plan, plan! Even before this challenge, I have always planned out a weekly menu and shopping list before heading to the grocery store on the weekends. It’s a great way to keep yourself from buying too many items that you won’t need or that will go bad before you can use them. It will also keep you sane at the store and when you come home from work– you already know what you’re making that night, so there is no guesswork involved.

I also recommend using your grocery store’s circular as the basis for planning your meals. For the challenge week, I found my store’s circular online and noted that chicken breasts were buy one get one free and that pork chops, potatoes, tomatoes, broccoli, and a few other items were on sale that week. I added them to my list and started creating meals around those ingredients. It’s a great way to keep your costs down and because sales change each week, it will also add some variety to your dinners week to week.

  1. Shop with coupons and look for unexpected deals. I’m not suggesting extreme couponing, but coupons are a great way to shred a few dollars off of your grocery bill without a lot of extra work. My store, for example, sends a $5 off purchases of $50+ coupon to me in the mail each week. That’s a big deal– especially when you’re working with $75/week! Additionally, about every other week I go to and check for new coupons on products I use. You just print them off and take them to store and it’s an easy way to score some additional savings.

This challenge also taught me to look for deals where a foodie like myself may not always be looking. Buying generic products when possible, for example, is a great way to save some money. I’ll be honest that I don’t do it for everything, but for staple items like milk and cheese, I bought the store brand this week, saved some money, and didn’t notice a difference. And don’t forget the day old bread shelf! I’m a bit of a bread snob, and I found some great discounted (and still good) take-and-bake Telera deli rolls there.

  1. Find multiple uses for the same ingredient. This step is key for avoiding food (and money) waste– and boredom. Nobody wants to eat the same thing for dinner every night, no matter how much money it saves you. This week I made a big batch of BBQ chicken in my slow cooker, which became sandwiches one night and then a topping for Irish Nachos later in the week. And I only needed a little bit of heavy cream for theFried Eggs with Rajas recipe, but knew I would have some left over so it was incorporated into the tomato cream sauce for our spaghetti and then whisked into the omelets we had on Sunday morning.
  2. Meatless Monday may be cliche, but it works. It doesn’t have to be Monday, but it is true– going meatless is good for your body and for your wallet too. Even the cheapest cuts of meat can be expensive (and then they can be difficult to cook). Instead, use other ingredients like cheese, eggs, legumes, or squash to add some heartiness to your meal. You’ll notice in our meal plan that we enjoyed a few meatless dinners like Fried Eggs with Rajas and a Baked Spaghetti Squash. I could go meatless everyday, but my husband would disagree. I have to say, however, that he cleaned his plate after both meals so I think we are on to something with these recipes!
  3. Buy seasonal ingredients — or grow your own (if possible). Cooking with seasonal ingredients is a great way to save money because produce that is in season is abundant and doesn’t have to travel as far to get to your store. These items are easy to spot when you’re shopping because they are typically on sale and prominently displayed in the front or center of your produce section. The other huge benefit of using seasonal produce is that food tastes best when it is in season.

And if you have the space, patience, and the green thumb then growing your own fruits and veggies is about the cheapest and most convenient way to enjoy fresh produce. I live in a downtown loft and don’t have the luxury of growing a full garden. However, I love to cook with fresh herbs (and that’s some of the priciest produce of all!) so I have planted a few window boxes on my little deck and just snip and cook with them whenever I need them. I don’t have to buy an entire bunch of parsley when I only need 2 tablespoons for a recipe and I don’t have to worry about a $4 package of herbs going bad in my fridge before I can use them all. At the end of the season before it started to get really cold, I picked all my herbs, chopped them up, and then froze them in an ice cube tray filled with olive oil so that I can cook with fresh herbs all winter too.

  1. Use online deals and loyalty programs when dining out. If we are being completely realistic here I can tell you that dining out is something that I can curb, but not give up completely in the name of budgeting. However, I have learned a few tricks to make it more budget-friendly. One option is using online deal sites like Groupon or Gilt City to get discounted deals on new or favorite restaurants. Another great way to save money when dining out is to join restaurant mailing lists and loyalty programs. It’s a great way to earn points toward freebies or receive coupons or deals from your favorite places. There is a Chicago-based group called Lettuce Entertain You and they own/operate over 30 restaurants in our area. They also have a great loyalty program where every time we dine at one of their restaurants, we earn points. Between the points we had banked and the $15 birthday gift certificate they sent me, we were able to enjoy a free dinner out at one of our favorite LEYE spots during the $75/week challenge. Not bad!

I’m no financial expert, but this experience certainly opened my eyes to ways that I can balance being a foodie, while still being frugal. I hope you found it helpful too!

How to Become Debt Free Now

You’re reading this because somewhere along the lines, you failed.  You may have failed to control your impulses. You spent MORE than all of your money.

Or maybe you were unprepared for the unexpected and ended up with so much debt from medical expenses that you’re struggling to get by. Whatever the case may be, you have debt, and it needs to be eliminated.

Since this blog started 8 months ago, I haven’t written about how to get out of debt. I had imagined that every reader of this blog was well on their way toward Early Retirement, and just read my articles to stay motivated in their quest. But, thousands of people realize every day that they want to leave the Rat Race, and most of them are still in debt, so they need the tools to get out of the red so they can get way into the black.

As you may remember, I used to suck with money. It wasn’t until I was about 25 years old when I started giving a shit about my finances. My wife and I had made some poor financial decisions — who hasn’t? — all before we were officially deemed The Moneyseeds, of course. We ended up with a mountain of debt, big enough to warrant its own ski lodge, and if it sold us season passes we probably would have just added that to the pile as well.

Shortly after we decided to spend our lives together, we realized that our debt was a big, ugly problem and it needed to go. We began to look at our debt, not as a monthly bill, but as financial shackles that were holding us down from making any progress in our new life.

Now, we are debt free* and well on our way to Financial Independence. How did we get there? We followed what would eventually become “Johnny Moneyseed’s Guide to becoming really, really, ridiculously debt free“. We didn’t have a fancy name for it at the time, but the concepts were cemented into our thoughts and actions, and it became clear that things were working when our debt started disappearing at an incredible rate.

Have you ever heard anyone say any of the following ridiculous statements?

“Having more money would fix all of my problems. I would be out of debt so quickly!”

“This new iPhone is great, and thanks to my credit card it only costs me $20/month.”

“I don’t think getting out of debt is even possible. Where do you want to get dinner from tonight?”

These people are in debt denial. It’s a serious case that affects around 50% of North American consumers. Basically, people think it’s OK to carry debt. That it’s OK to buy something now that costs $300+ and only pay the bare minimum every month to pay it off. Then, there are people that know that having debt isn’t OK, but they have it anyway and spend most of their debt repayment money on shit they absolutely don’t need.

50% of U.S. households have credit card balances that are, on average, in the $14k range! Those same people are in front of you in line at Starbucks, they’re browsing for new TVs at Best Buy, and they’re getting box upon box delivered to their house through Amazon. They don’t treat debt like a priority. For you, reckless spending ends today. Follow this guide, and you won’t just get out of debt, but you’ll get out of debt way faster than you had ever imagined.

Step One: List all of your debts, their balances and interest rates.

This should be a pretty obvious first move, but don’t let the simplicity of it get the best of you. Get a piece of paper, a Google Spreadsheet, or open Notepad on your computer. Go to the website of every financial institution to which you owe money. Then, copy down all balances with their respective APRs (interest rate) exactly as they appear. It’s also very beneficial to know what your minimum payments are for every account.

After tracking down all of your debts, you’ll have a decent idea of how much is owed. Let it sink in, but don’t worry, in a few more steps we’re going to start getting rid of it.

Step Two: Set periodic goals.

Becoming a goal-oriented person is one of the most powerful things you can do for yourself, in finances and pretty much every other area of life. Goals allow us to break really hard things into manageable chunks that we can feel good about after we complete them.

When you set a goal to pay off your debt you first assess how much money you can contribute toward debt repayment every month. Then you can do a rough estimate of how long it will take you to get out of debt. (Debt / Monthly repayment = Amount of months until you’re debt free) Just understand it could take longer than this to repay your debt, but this is a good way to understand roughly how much longer you have to bare this burden.

The big goal, the final goal, is to pay off all of your debt. That should be the end point of your timeline. Then, it’s up to you what other goals you’d like to set. You could make every $5,000 mark a goal. Or every $10,000 for those with student loans.

Once your goals are in place, they’ll be almost impossible to ignore. This will push you toward accomplishing your goals way faster than you would have originally anticipated.

Step Three: Start paying off balances from highest to lowest APR.

There are a few trains of thought when it comes to the actual debt repayment portion. The first being: Pay balances low to high. This is dumb, because it doesn’t take interest rates into consideration. The second, and more logical: Pay off the debt with the highest interest rate first, then work your way down.

Make the minimum payment possible for every account, besides the one that you’re trying to eliminate first. This allows you to focus on it, and to lose the least to interest.

I’ve heard of people going to debt consolidation counselors, and also of people who transfer all of their balances to new credit cards that have 0% APR for an introductory period. While in theory these ideas could work for you, they aren’t the best ideas. Just imagine for a second: Why would anybody want to give you an unsecured loan to consolidate your debt? Or a 0% rate?

Step 3.14: Every time you pay off a debt, you have more money to throw at the next one.

This concept is known as “snowballing”. I think “avalanching” sounds cooler, so let’s call it that instead. Now, when you’ve paid off a debt, you’ll have freed up some money that you can now use in conjunction with the minimum payment that was already being made on the next debt down the list. Then when the next debt is paid off you keep the avalanche going.

Here’s where you become whiny.

Step Four: Trade in big ticket items.

Do you have a shiny new-ish car or two in the driveway? You can significantly reduce your total debt by trading in your car for something cheap. If you can get $18,000 for a trade-in, and you can find a $10,000 car on the lot then you just came into $8,000 to help you pay off debt. If you can trade-in two cars and concede to just having one you could double or triple this amount.

You can further apply this to boats, yachts, jet-skis, snowmobiles, Segways, or any other ridiculous self-balancing modes of transportation. Now isn’t the time to have toys. You can have toys when you’re debt free.

Step Five: Sell almost everything.

Now that ALL of your big ticket items have been either sold or traded in for less expensive versions, you can start becoming a professional Stuff seller. American houses and apartments are filled with crap we don’t need. A good way to figure out what you do need: Carry around a notebook and write down every item that you use over the course of a given week. It’s going to be a lot less stuff than you imagine. The rest — the crap that added to the debt problem — has to go. It’s unnecessary and dragging down your recovery efforts. Get rid of the stuff. There’s always time for stuff when you’re debt free.

Step Six: Work, work, work.

This one is going to blow your mind: To pay off debt faster you can work more. Overtime, second jobs, babysitting, etc. Check out this article I wrote about how to make more money.

Pretty obvious, right? More money, more debt repayment.

Step Seven: Reward yourself.

Achieving your goals, no matter how big or small should be celebrated. Don’t take this to mean that you should go out and spend hundreds of a dollars at the Mall for paying off $100 of your debt. Instead, buy yourself a cup of coffee. For a free alternative you could guilt people into congratulating you by posting your achievements on Facebook.

Step Eight: How to use windfall money.

My definition of windfall money is: Any money that you receive that didn’t directly come from your employment. Tax returns, bonuses, inheritances, birthday money, wedding gifts, whatever. If you are in debt then windfall money isn’t fair game. You should apply it directly to your debt. In most cases you’re getting free money to pay your debt. You couldn’t ask for a better gift, so don’t blow it.

Step Nine: This isn’t a step, it’s what you shouldn’t do when you have debt.

I talk to people who are in debt, or behind on their bills all the time who:

  • Continue to go out to eat on a regular basis
  • Go on vacations, elaborate or otherwise
  • Buy new model electronics
  • Purchase coffee drinks at coffee shops
  • Add to the mountain of debt
  • Don’t bring a homemade lunch to work
  • Go to concerts, the movies, or out drinking
  • Browse online retailers or hang out at the Mall
  • Trade in their vehicles for newer, prettier ones with more cup holders
  • ….And the worst kind of person: One who doesn’t read Johnny Moneyseed

Step Ten: Breakdance party.

You’ve made it.

All of your debt is completely paid off, so you officially earn the right to have a breakdance party. Turn on some old school Run DMC, have a friend flick the lights on and off, throw down a cardboard box and start busting out your best Suicide Rubberbands (learn how to do that move from a 12 year old).

If anybody has any other sweet tips for people in debt, please leave them in the comments below!

*Somebody is going to point out that I’m not debt free because I have two mortgages. Those readers can hold their comments and check out the posts I’ve written about not giving a fuck about paying off my mortgage early. Part 1 and Part 2.

You need more money? Do something about it.

“Johnny, I need more money!”

It’s a daily occurrence for me to either receive an email from a reader, or to hear from a friend or co-worker in real life, about how they don’t make enough money.

Normally, I take these conversations with a grain of salt, because most of the time I know exactly how much money these people make since a majority of these people work for the government (government employees pay charts are available publicly).

To find out exactly why they need more money I need to dig a little bit into their financial houses to determine whether: Yes, they do need more money or more commonly that No, they make plenty, but they could always make more (if they really wanted to).

There are a few questions that need to be answered whenever someone mysteriously “doesn’t make enough money”, because I usually won’t believe anyone that says they don’t make enough.

  • Have you already tried decreasing your expenses? Do you have a $90 iPhone plan or a $19 non-iPhone one? Have you created the most efficient system for your monthly expenses?
  • Are you making sufficient use of your time? Do you live close enough to work?
  • Have you started creating passive income streams? Do you have plans to purchase a rental property to increase your monthly income?
  • What do you do when you get home from work? If you work a 9-5 or 8-4, how do you spend your evenings? The average American family watches 30+ hours of television every week. That equates to more hours than a part time job. Try cancelling cable and stick to watching a couple episodes a week of your favorite shows on Netflix.

Do something about it.

First it’s important to know exactly how much more money is needed per month. Then, create a plan using ONE or ALL of the following suggestions.

— Sell a few things on Craiglist, eBay, or open a seller account on Amazon. Everyone has stuff laying around that they don’t need, so why not turn it into cash and add $100 (or more) to your monthly income?

— Get a second job! If your lazy ass is sitting on the couch every night getting fat and watching football or some crappy rehash of a 1970s detective show you’re wasting precious time that you could be out earning more money. Waiting tables at a restaurant for 5 hours 4 nights a week could net you an extra $300 take home. That’s a little over $1300/month on average.

— Start your own blog. Although it may take a while, all of your hard work could pay off in the end by increasing your income by $500 or more every month. Bloggers work for themselves, and have no employees to pay at the end of the day. Blogging won’t make you rich overnight (or ever), but it can be an enjoyable experience that could prove to be a new stream of revenue.

— Turn a hobby into a cash cow. It doesn’t matter what your hobby is, there’s probably money in it. You like playing video games, board games, or card games? Guess what! Human beings create those things. Design, or conceive the idea for a game and you could pull in some big money. Do you like widdling wood blocks into duck-calling whistles? I’m pretty sure that’s how the dudes from Duck Dynasty earned their claim to fame.

— Refinishing furniture to sell, Creating clothes for kids to wear, even Hairdressing can all be done within the comforts of your own home and help you rake in extra money every month. You can even do this type of stuff while being lazy and watching 30 hours a week of television.

— Babysit. Make yourself more available to family and friends. If you normally stay in on Friday and Saturday nights, you might be a perfect candidate for watching someone else’s children for money (as long as you aren’t a registered sex offender, and if you are please leave my blog!). And guess what dudes, it’s 2013 and we’ve been breaking down gender stereotypes for some time now and you too can be a babysitter. Or a “manny” if you do it professionally.

— Stay at home mom/dad? How about watching a few other children as well? Each child could be worth $500+ every single month. There are some legalities involved with this, but if you’re interested in earning more while staying at home then it’s worth the extra bit of work to get started.

— Become an available freelance writer. There is a huge network of people on the internet looking to create content for other people for cash. I don’t know the exact way into this business, but my good friend Erin from Red Debted is a master freelancer who could answer any questions on the topic. You might start out making $5 per post/article, but the deeper you get into this world the more you could make.

This year-to-date I have personally worked my ass off to increase my income and decrease my family’s monthly obligations. I started this blog, of course. I’ve also bought a less expensive house to live in and successfully rented out our first home for over 10% more than the monthly mortgage payment. I’ve invested money across the spectrum: Peer-to-Peer lending, Betterment, and standard index funds through Vanguard. I’m even thinking about getting a second job after our home renovation is complete.

If you aren’t doing any of these things to increase your income, you can only blame yourself for not making enough money. There is money to be made everywhere you look, all it takes is a little bit of know-how and a little bit of time.