The Simple Dollar (2 page)
Authors: Trent Hamm
Chapter 19. 11 O’Clock Tick Tock
The Single Most Important Part of Personal Finance Is Truly Knowing Yourself
The Second Most Important Part of Personal Finance Is Setting Clear, Concrete Goals
The Most Valuable Resource in the World Isn’t Money, It’s Time
The More Supportive People You Have in Your Life, the Better Off You Are
The Fewer Unsupportive People You Have in Your Life, the Better Off You Are
There Are Very Few Aspects of Your Life That Cannot Be Changed
Acknowledgments
A book like this doesn’t get written without a ton of help from a mountain of sources, both expected and unexpected. Here’s a big list of these people.
First of all, I’d like to thank Randy Byrn, my high school English teacher, for his constant insistence that I had the ability to write and his similarly dogged attitude that any writing can always be improved. Even more than a decade later, I still turn to a faithful grammar handbook when the correct usage escapes me, and the usage of a strong note-taking procedure was fundamental in making this book possible. Even after many, many revisions, I fully expect him to find at least twenty five huge errors I made in this book—in fact, he’ll probably send me a copy with them marked in red pen.
An enormous thanks to Kristen Cross, Daniel Koontz, Matthew Jabs, Catherine Krikorian, Victoria Rosin, Amanda Schuler, Kerry Taylor, and John Warfield, who all took time out of their busy schedules to share their personal experiences with me, answer my questions, and elaborate on even the simplest of points.
Ideas and suggestions came from countless wise sources: Philip Brewer, Erin Doland, Jonathan Fields, Seth Godin, Christopher Guillebeau, Brett McKay, J.D. Roth, Gretchen Rubin, Ramit Sethi, Pamela Slim, Glen Stansberry, and Gina Trapani.
This book was written while listening to a wide variety of music, but a few albums were played over and over again. Special thanks to Neko Case, Old Crow Medicine Show, The Duhks, Bruce Springsteen, Modest Mouse, Nellie McKay, Laura Cantrell, Johnny Cash, Apples in Stereo, Feist, AC/DC, The Sugarcubes, Bob Dylan, The Smiths, Morrissey, A Fine Frenzy, U2, Gillian Welch, Peter Gabriel, The Blind Boys of Alabama, The Decemberists, Belle & Sebastian, and The Roots. Time and again, your music was able to help me get in the right mindset for writing, even when it seemed like I was miles away from the right words.
A deep thanks to Jim Boyd of Pearson Education, who advocated powerfully for this book and made it possible to turn the ideas in my head into the printed words you now hold.
I would be remiss if I did not mention my abundantly humorous and insightful pastor, Heidi Williams. Faith and writing are both incredibly challenging struggles, and Heidi has an impeccable knack for giving me advice when I most need it. This book would have never been finished without some prayer, some meditation, and some long nights searching for guidance, and I’m lucky to have found the answers I needed along the way.
Last but not least, I’d like to thank my wife Sarah for her infinite patience and love during the process of writing this book, as well as Joseph and Kathryn for their constant ability to give Dad a big emotional boost right when he needed it the most. I love you guys.
Trent Hamm
transformed his life, escaping both massive consumer debt
and
work he couldn’t stand. He began sharing the lessons he learned through his website, The Simple Dollar (
www.thesimpledollar.com
), which has quickly grown into one of the nation’s most popular personal finance sites, attracting more than 600,000 visitors every month.
He is the author of
365 Ways to Live Cheap: Your Everyday Guide to Saving Money
, and writes articles that are regularly syndicated to hundreds of small newspapers and newsletters.
On April 20, 2006, when my son was roughly six months old, I realized that we didn’t have enough money to pay our bills. It was shocking and incredibly painful. Although I had come to some valuable realizations already, the fact that we didn’t have enough money to make ends meet, and we had tens of thousands of dollars in credit card debt, student loan debt, car loans, and a bunch of financed furniture and equipment in our home, meant that something had to change. Now.
I buried myself in personal finance books, coupling them with the philosophy and economics books I had already been reading. Over the next few months, I started to take some radical steps to fix our financial state.
More importantly, I began to realize that this entire experience was one that other people were struggling with. How can a person balance all the aspects of modern life on a limited income? How can we find personal
and professional happiness in an increasingly complex world where real wages for most of us haven’t changed in decades?
So, in October 2006, I started
TheSimpleDollar.com
on my own with no fanfare to share these experiences. Within two months, I had 100,000 visitors. Today, The Simple Dollar has nearly a million visitors a month and tens of thousands more who receive articles by email.
Along the way, I’ve had conversations with thousands of people who were struggling with questions like these in their own lives. I’ve heard countless stories of people digging through the challenging connections between their money, their happiness, their daily choices, and their mission in life.
I began to live my life as a laboratory for these ideas in many ways, and I shared these experiences with my readers. I tried countless methods of reducing my spending. I quit my job and devoted myself to writing full time, a truly scary endeavor. I bought a home, and then wondered if it was the right move after all. I had a second child.
And along the way, I learned some surprising lessons about our modern lives. Many of the rules that we use to live our lives are broken. They were written down many years ago to describe a way of living that no longer exists. Our grandparents couldn’t imagine the ability to share information via the Internet, the power of communication from nearly anywhere via cell phone, the ability to sell one’s ideas and products anywhere—and buy them from anywhere—thanks to globalization.
Those are the realities of life today, and they’re rewriting more than just the rules of how we make friends and do business.
The most valuable investment today is not in the form of a dollar, but in the form of a relationship. All the income we need can come from a large set of healthy relationships.
Debt is a prison of our own choosing, and we’re enticed to enter that prison by the availability of a variety and quality of goods unimaginable fifty years ago.
Life is far more unpredictable than most of us think, and it gets more unpredictable all the time—and almost all planning ignores that key fact.
Saving for your child’s undergraduate education is almost useless because the value of a bachelor’s degree—and the methods we are using to get there—are changing radically.
Being a reliable employee is a path to the unemployment line—we’ve entered a new era where an employee-employer relationship is an exchange of a new kind of value.
Overspecialization is a dangerous trap. The route to the top relies on a Swiss army knife of transferable skills, regardless of your career path.
The American dream of a nice home of your own is just one card in a rigged game of three-card monte—and you have to pay a desperate price to play. Instead, there’s a much smarter way to find a place to live.
If these ideas intrigue you, keep reading. I’ll touch upon these ideas and many others—and share in detail how they work in my own life and in the lives of many other people—as we talk about change.
I’m going to start, though, with an area that hits home to far too many people and keeps them from even thinking about moving on and fulfilling their dreams.
I sat at the kitchen table flipping through the mail, seeing bill after bill after bill. I tore open a couple of them immediately, wanting to see the terrible news in its full glory. I began to calculate what I could afford to pay and what I could not, I began to quickly realize that the pile of bills I just received not only wouldn’t be covered by the current balance of my checking account, but that my next paycheck would not cover them either—and that was if I spent absolutely nothing on food, gasoline, or anything else. I sat there completely stunned for a moment; then I got up and went into my son’s room, closed the door behind me, and sat down in the rocking chair across from his crib. He was so tiny lying there, less than six months old, and sleeping so peacefully there without a worry in the world. As I watched him lie there, gently breathing, emotions poured through me. Guilt. Shame. Embarrassment. Pain. I was failing this wonderful little boy, this child who had already brought incalculable joy into my life. He relied on me for everything, and because of my poor
decision-making and my selfishness, I was letting him down. I closed my eyes and didn’t realize at first that I was crying, almost uncontrollably. My wife came in and put her arm around me. Eventually my sobbing woke up my son, who also began to cry. Sarah held us both.April 2006
Let’s make no bones about it: High-interest debt is a prison of your own making. Financial writer Michael Mihalik puts it quite simply: “Debt is slavery.”
1
Debt increases your risk while at the same time decreasing your opportunities. If you accumulate debt, an unexpected negative event in your life has much more impact than if you were debt free. Similarly, debt often causes you to pass up positive opportunities in your life, such as a job offer or an incredible bargain on a car.
I believe deeply in a debt-free lifestyle. The only additional debt you should ever incur is a home mortgage and, if you do have a mortgage, it should be paid off as quickly as possible. The greatest personal freedom you can have occurs when your monthly bills are as low as possible, and there’s no better way to accomplish that goal than to get rid of your debts—all of them.
It sounds like an impossible goal. I know that when I was stuck in an overspending lifestyle, it seemed impossible for me, as well. When I finally realized that I needed to make a change, I still didn’t believe it was really possible.
Then, in the course of about three years, we paid off $21,000 in credit card debt, $2,600 in additional consumer debt, $6,600 in car loans, and $17,000 in student loans. Along the way, our financial status became so secure that I was able to walk away from my fulltime job and follow my dream of being a fulltime writer, giving me an incredibly flexible schedule and much more time to spend with my children.
To put it simply, three years of focused debt repayment
completely changed our lives.
I have a new career. I have a new home. I have a much more stable marriage. I’m no longer scared at night about our financial position. I no longer dread getting the mail.
Debt was a prison, and we escaped.
How exactly did we do this? Here’s a step-by-step guide describing exactly how we managed to extract ourselves from this precarious debt situation and put our lives in a whole new place.
We’ve all heard the horror stories. One spouse secretly racks up $20,000 in credit card debt, while the other one saves and scrimps. One partner talks about the large amount of money in the bank, while in truth there’s not much saved at all. Married couples fight—and even separate—because one partner spends with reckless abandon while the other partner is constantly cleaning up the mess and working to keep the couple above water.
In each of these cases, the same problem rears its ugly head: The people in the household are on different pages with regard to the plan for long-term financial security. To put it simply,
if you and your partner are not in agreement with your long-term plans, actions on behalf of those long-term plans are useless.
The best opening step in this journey is to simply sit down with your partner and do two things. First, identify the big goals that you have in common. Where do you want to be in five years? Do you want to have children? Do you want to have a nicer home? Do you want to have a different career? Figure out what you both want out of life. From there, look at your financial state—your debts and your income level. What needs to change for those dreams to come true? Don’t get bogged down in the specifics at this point—instead, the point is to recognize whether or not you’re both open to making changes in your life to achieve the dreams you share.
Remember,
actions speak louder than words.
Quite often, people will give lip service to the initiative of their partner, but won’t make any real change to their own behavior. If this happens, there is a much deeper trust issue in your relationship, one that will require a lot of communication—and perhaps some counseling—to solve. You will not find financial, personal, or career success until you address it.