My Quarter End: Q1 2012

Now I know I was bullish to start this quarter…but wow! That had to have been one of the best quarters I think I’ve seen as an investor since we climbed out of the freefall in 2008. Fiscally and personally I’ve crossed some huge milestones during the start of 2012 and found that I’ve got plenty of fight and gazelle intensity left in me for one last debt snowball fight.

Passing the quarter of a million mark in net worth still puts a smile on my face and lifts my spirit. Our overall net worth at quarter stands at $254,382.29! My favorite part of the equation is that I’m following God’s ways of handling money and it’s working, probably because He’s a lot smarter than me. Apart from that the start of the year has been fun and went by way too fast. I have a new niece, the first in close to 20 years! Here’s the little cutie so you can see for yourself:

Yes she’s adorable and I can’t wait to start influencing her with lessons of frugality and old school ways of handling personal finances, yup, this is one proud and excited uncle. My wife and I have also been green-lighted to facilitate Dave Ramsey’s Financial Peace University at our home church. So now I’m on the mission of filling seats and generating interest, so your thoughts of well wishes and luck will be much appreciated J Official kick off is within a month, so I’m a bit nervous and excited about leading this class. But as my wife continues to remind me, “If you host it, they will come.” So I’m doing my best to temper my anxiety with her confidence!

But through all of the ups from this past quarter, I am most proud of my wife. She just about knocked me unconscious when she came to me earlier this year and said, “I want to snowball my student loan and be done with it this year.” I was and still am ecstatic. When I shifted into the latter baby steps and emerged from my personal debt snowball, I shifted gears, putting my psyche in line with the marathon mentality and spirit of wealth building, having previously been in the sprint of debt destroying. So when she said that she wanted to commit to this, she awoke her resting lion, her refreshed knight, her frugal fury fighting husband and was given one last reason to get gazelle intense.

So needless to say I’ve grabbed and continue to grab extra overtime when I can and together we still find ways to take a scalpel to our monthly budget. We have our goal in sight, and our deadline date for crossing this finish line will be July 4^th. By Independence Day, my wife and I, for the first time in our marriage, will be debt free – TOGETHER!- I fully expect to have two trips on my calendar on the horizon, (1) to see my niece for the first time and (2) head to Nashville to make a debt free call to Mr. Dave Ramsey.

So now that I’ve left you in suspense long enough, onto the meat and potatoes of my quarterly update, the overall market:

DUHN DUHN DUHN!!

Whammy! Pow! Wow! Those are just some of the phrases from the old Batman TV series starring one of my favorite celebrities, Adam West that perfectly describes this past dynamic quarter. Frankly speaking, in a year when we have a Presidential election, I was (and still am) expecting this kind of a run up in the 4^th quarter, but to get what we got in the 1^st quarter, we’ll I’m sitting here licking my chops just waiting to see where we’ll be come the Santa Claus rally!

Historically though regardless of cycles, summer trading periods have always been just about flat. Trading gets thin, business have executed their spending and growth plans for the year, and there’s not a lot of news flowing thru our friends at, “The Street.” Given that we had a great run-up in the 1^st quarter, I expect to see a bit of a drawback during the 2^nd quarter (after of course what I expect to be stellar Q1 earnings report) just to balance things out, and then the rest of the summer should be flat, if not marginally negative. I’m looking forward and expecting some great things for Q3 & Q4.

But again, I’m not about market timing. Choose your investments wisely and always for the long term. Circle around anything you invest in like a vulture before you put a penny of your hard earned money into ANYTHING. Even my favorite mutual funds, I studied their prospectus, looked at their long term returns and did as much homework as I could on the Portfolio Manager. And even then, I did some more homework. So yes in the short term there are trends and patterns that play themselves out time and time again, but with a well researched and historically proven investment, after 20 years of executing a buy and hold strategy, whether you bought in the bounce of Y2K, the aftermath of September 11^th, the drop in ’08, the rise of ’09 or the double dip in ’11, or you bought during each of these periods, over a long period of time in a proven and sound investment, you will beat inflation and taxes. Happy Q2 to all of you!

My First Milestone

When you live below your means you learn to appreciate all of the smaller things in life that you never notice when going full board into hyper-consumption. I love quiet evenings at home chatting with my wife, getting a great work out in, Sundays at church and monthly book club. Sure a couple of weeks ago we splurged and went to a concert with Collin Hay headlining, but what I remember most vividly and happily was thinking back to the night, hearing incredibly awesome music, and looking over at my wife smiling, and enjoying the experience with her, together. Quality time together, it’s something that’s engulfed my life Post-Ramsey and I’m pretty damn proud of it.

So when something huge happens that’s outside of the quality time category, it kind of smacks me in the face. What I’m referring to is the first of four accomplishments on my path to have a net worth of $1 million dollars. Because I’m a nerd and crunch numbers (it’s what we do I’m sorry) I semi-actively follow my net worth number during the course of a quarter leading up to the quarter end. And in my most recent tally, we’ve hit milestone one of four: Our net worth is OVER a quarter of a million dollars!

Man, that felt great to type and feels even better to say and know. We are living like no one else, and while our mascot is a tortoise and not a hare, it feels amazing to see our progress and know that we are heading in our shared direction. We buy groceries at Wal-Mart and Aldi, we buy our clothes at Salvation Army, we prioritize retirement and being debt free and we give 10% of our net income every month to various charities and causes (my thinking is, if God wants my “tithe” to go up, he’ll lower my taxes). Seeing this is like my stamp of approval saying, “It’s working.”

To help mark these occasions along the way I’ve been generating questions that my “old self” would like to ask current self as the four milestones are crossed. It may sound crazy, but for me it’s like a way to talk to myself and see if there have been any changes in who I am and who I am becoming, and whether these changes are good or bad. So without further adieu, here’s my first Q&A in my march to $1 million.

What does it feel like to achieve your first milestone?

It feels absolutely amazing and incredible. For me it’s the living proof that living below my means, staying away from debt and that the old school investing style of buy and hold in sound investments, all work together in building wealth. It hasn’t been easy, but man it’s been worth it. My wife and I have lived on a zero based budget before every month begins and for three years have told our money where to go rather than wonder where it went. Apart from my quarterly reviews here I rarely take the aerial view to see, in a larger picture, exactly what the fruits of our labor are.

I think we have secured something greater than just protection against immediate loss of income. In the day to day I’ve discovered that you don’t have to spend money or go on huge trips to love and enjoy your life. And that information alone is the best weapon to have when you’re a frugal fury fighter. We’ve also found that quality time spent together is a priority in our marriage. This value is reflected in our short, medium and long term goals.

We’re going to continue hitting and hustling so that when we pay cash for our house we can take a 3 month sabbatical travelling the world together to celebrate. And when we start our family, we can have the option for one of us to be a stay at home parent or both take part-time jobs so that we can spend as much time together as possible! And as these milestones come and go, there will certainly be cause to celebrate, because it means we are seeing concrete results that our dreams are becoming reality.

Do you still feel like you have a long way to go?

I do but since this journey began I’ve developed a magical thing called patience. I think when I hit the fourth and final milestone, I’ll look back on this 1^st one, as the most important phase in the journey to $1 million. This is the foundation we’re not only laying for our finances, but in how we live our lives and what is important to us.

When we hit the pinnacle point, when our investments make more money in one year than we make for us, I can’t imagine our cost of living exceeding more than $40,000 a year. The splurges we make would be on missions trips to Africa and cross country road trips here in the U.S. Material possessions really don’t mean anything to me anymore, especially compared to my Pre-Ramsey life. The foundation I’m talking about has led me to build patience and embrace, love and enjoy the small things in day to day life that I spent the first two decades of my life missing. So yes, I do feel like I have a long way to go before I reach $1 million dollars in net worth. But it doesn’t make me sad, in fact it makes me feel the exact opposite of dejected. It makes me excited to see what else I will learn, who I will meet and what kind of experiences I will get to share with my beautiful wife along the way. Deep down I kind of hope it takes a while, I wouldn’t want life to pass before me in the blink of an eye J

How long did it take you to get to this point?

Well I was first introduced to and began implementing the “Dave Ramsey” principles in January of 2009. So I guess the official tally puts me at 3 years, 2 months and 22 days, if you want to be precise.

What are your average annualized investment returns?

We’ve had a nice run up in the market this quarter leading into my personal landmark day. I’ll get more into it when I post my quarterly review, but at this point in time my portfolio as a whole has average annualized returns at 9.31%. And considering that at my super fund annual checkup in early in February these guys stood at around 7%, and we’re only in March of a presidential election year, I’m grinning happily for the remainder of the year!

Which Rocky Balboa do you see yourself as?

For me this is quite the loaded question. The answer delves into how I measure success and how the progress of success has impacted me. But since past me asked this I guess I am obliged to answer it. If I had to pick one Rocky Balboa that I currently see myself as, it would be the Rocky from Rocky I the night before Super Fight I with Apollo Creed.

Rocky trained like he never had before and was a fully functioning fighting machine operating on all cylinders. The clincher on why I feel this Rocky best represents me at this current point, is that the night before the fight with Apollo, he knew that he could go toe to toe with Creed and stand his ground. I believe that if Rocky didn’t think he had the guts to stand toe to toe with the champion of the world, he never would have stepped foot into the Philadelphia Spectrum to fight.

By comparison over the last 3 years I’ve fine tuned my frugality to a point that it is second nature and almost a thing of art. There’s lots of noise from the world around me, saying to finance everything out of my ears, that I’m really the 99%, that the little man just can’t get ahead and that upward social mobility is lost in America. I don’t believe one God damn word of it. Building wealth is possible, we can move up the ladder, old school techniques of handling money works and one day I will reach my fourth and final milestone. My style (like Rocky’s) is sure as hell not flashy or stylish. In fact in some regards (especially those “educated” in finance) my style is raw and not sophisticated. But guess what, it works! And I am going to continue using these techniques and strategies to pursue all of my hopes and dreams and make them happen.

How did you manage growth in equities given the backdrop of the recessions in 2008 and 2011?

Three simple words: Buy and Hold. I did my research according to Dave Ramsey. Any money invested in the stock market I plan to leave alone for at least five years. I spread my investments across four types of mutual funds: Growth, Aggressive Growth, International, Growth & Income. I only invest in mutual funds that have been around for at least 10 years, have average annualized returns of at least 12% since inception and have a fund manager that has been with the firm for at least 5 years. That’s it, plain and simple. Some are way up, and some are way down. But as a group they give me excellent diversification and peace of mind to always beat taxes and inflation. My best fund currently is returning 52.32% since I bought the thing! My worst, -14.04%. But collectively I’m currently flirting with 10% return on my money invested and couldn’t be happier with my choices.

What were your key components in growing your net worth in this amount of time?

The first thing that jumps to mind is the budget. I could not have drastically cut my expenses nor lived below my means if it weren’t for a zero based budget that my wife and I agree upon before the start of every month, oh yea, and we ACTUALLY FOLLOW IT! When I started the budgeting process it was eye opening and scary to see how much I was bleeding myself broke every month. Now it’s exciting and inspiring to see our plans come to life and not to have money worries.

I also stopped caring what other people thought. Yes I have friends from high school and college buying houses and who never left college. Yes I have friends driving nice cars and living in well to do neighborhoods. The difference maker is when I stopped comparing myself to other people. I know what I want out of life, I know what I value and I’m going to do everything within my power to build my dreams and make them reality. At the onset of living frugally I thought my wife and I would be perceived as weird to everyone we came into contact with and that we’d be living a lonely, twosome existence until we had children. What has amazed me is that the friends I have in my life currently, are the best I’ve ever had in my life. We meet for monthly book club, we see each other weekly at church, we discuss our expectations for starting families, we work together, and we celebrate each other’s joys and successes, and we are there for each other when life punches us in the gut. I like to think that the amazing group of friends that I find myself surrounded by is the direct result of being weird J

What is your combined household income?

Well, I won’t lay out exact numbers because I have been informed that a few of our work colleagues read this (thank you btw, I assume you enjoy reading the musings of a madman, and Lord knows I’m not going to tell you to stop) so I’ll just say that for the 2012 tax year, according to the IRS, we are somewhere around the middle of the 25% tax bracket. You can do the legwork and estimate if you so choose, but that’s a pretty good ball park figure by my book.

So there you have it! My first Q&A for my first milestone. Everyday has been a blessing and I can’t wait to see what comes in the pipeline next.

My Minimum Wage Project

My outrageous assertion is this: anyone at any income level can work Dave Ramsey’s baby steps and build wealth. I firmly believe in true capitalism and that anyone from any walk of life can change their behavior and coupled with a little head knowledge of money, can build wealth and be prosperous. It’s not easy. In my personal transformation there has been a complete re-alignment in my values, attitudes toward debt and overall way of thinking. Compared to how I used to live this newer way of life has been hard. But it’s worth it!

To the Occupiers, and for good measure for anyone that knows somebody plagued by the Occupy rhetoric I’ll say this. Jealousy is simply wanting something that someone else has. Envy is the spiritually deadly combination of wanting something that someone has, not believing that you can attain the same AND not wanting that person to have it either. You are the forefront display of envy. You are dead wrong in your accusations and assertions that demonize corporations and “The 1%.” Even in the face of government intervention that slows our economy, capitalism has still curb stomped faux socialism to provide economic opportunity for anybody across this great country to be able to climb the socioeconomic ladder. You are either poor heading towards rich, rich heading towards poor, poor going to stay poor, or rich going to stay rich. Take a wild guess at where I KNOW you occupiers are heading and are going to stay at for as long as you hold dear your socialist rhetoric! With the right head knowledge, behaviors, spirit and will power, anyone from any economic situation can win with money and build wealth, here’s how:

The Set-up

·         I am a high school graduate and did not attend college

·         I work full-time earning the California state minimum wage

·          I live with my parents and pay them a Dave Ramsey approved rent of 25% of my take home pay

·         I ride public transit and do not own a car

·         State minimum wage when I graduated high school was $6.75 an hour

The best example I can draw from is my own personal life. For the ongoing scenario I draw upon my own personal life and to the best of my abilities forecast how life would have panned out if I had never gone to college and worked a minimum wage job from the time I graduated high school until now. Some events I paint as I imagine they would have realistically happened, and others I draw a parallel to how they actually have occurred. So without further adieu, here is what my budget would have looked like the year I graduated high school working a minimum wage job in California.

Net Monthly Income	$994.50
Bus Fare	($75.00)
Ramsey Rent Rules	($248.00)
Groceries	($150.00)
Clothing/Laundry	($60.00)
Term life Insurance	($25.00)
Utilities	($50.00)
Entertainment	($100.00)
Amount leftover	$286.50

The first thing that strikes me is the lack of wiggle room. In paying just basic expenses there’s a pretty thin needle at work. I did find it odd that I could not back track what METRO bus fares have been over the last decade in Los Angeles, so I took the monthly fare as it currently stands and charged it forward. After all, when was the last time your city LOWERED a fee? Which is why I think it would be even more important to have 6 months worth of expenses sitting in the bank and brown bag my lunch every day. Things like drinks after work and hitting the town on the weekend are suddenly very ugly and detrimental options, the same for vacations. It would take me pretty much an entire year to build a 6 month liquid emergency fund, but to me and under the circumstances it becomes that much more important to be prepared for anything that life could throw my way.

In technical terms Dave Ramsey recommends paying no more than 25% of your net income towards housing. Short of finding a co-op living space, this would be pretty much slim pickings even in my hometown, so I work out a deal with mom and dad. I continue to live with them after high school and pay them a monthly rent stipend of 25% of my take home pay. I also make contributions for groceries and utility bills.

Two huge positives in this scenario are that I do not have student loan debt AND I do not have credit card debt (which actually was true when I graduated from high school and has been true for the last 3 years). Now let’s assume I do a few smart Ramsey things, but not everything. I make it a priority to spend a year building up a 6 month emergency fund, but I’m not setting any money aside for retirement. All I do with my disposable income once the 6 month emergency fund is done is keep it in a separate and liquid savings account. The mantra that I keep telling myself is that if I live like no one else, later I get to live like no one else.

Pay raises come in 2007 and 2008 when the California state minimum wage is raised to $7.25, and then $8.00 an hour, respectively. For 7 years I work like an animal and live below my means. At best on my own the highest point my disposable income reaches is a little over $400 a month. The result of my efforts is that by 2010 I would have saved $24,600 just in a simple low-interest savings account. In 2010 I get married. According to the US Census Bureau the median household income for that year was $50,000 so let’s play with the averages and assume that “scenario me” marries someone that brings an income that levels us out with the national average. Our budget looks now like this:

Net Monthly Income	$3,125.00
Bus Fare	($150.00)
Ramsey Rent Rules	($781.25)
Groceries	($300.00)
Clothing/Laundry	($120.00)
Term life Insurance	($50.00)
Utilities	($100.00)
Entertainment	($200.00)
Amount leftover	$1,423.75

Now let’s say my new bride and I continue to live like no one else so that we can live like no one else. We get married on the cheap with just a civil ceremony. We also continue to follow Ramsey Rules for rent. While it’s true this doesn’t help snag a “great” apartment, but in a town literally a few miles from where I grew it, this amount finds you a studio apartment that is actually UNDER the Ramsey recommended amount, see the “as of today” real life example below:

With our newly boosted disposable income it now takes us 4 months to put together a beefed up 6 month emergency fund thanks to a few jump in expenses. All the way through February of 2012 we continue to work like animals and live like no one else. We live on our own as a couple and cut every expense imaginable, all the while saving our disposable income in a simple low-yielding savings account. By March of 2012, from what I saved since high school and what we’ve saved since our marriage began, we have saved, EXCLUDING the emergency fund, $55,900 in cash.

Sure I’ve made some assumptions like: together we take public transit to work, my spouse brings no debt to the relationship but also brings 0 existing savings to the relationship. So many variables, so little time, and at the end of the day it’s my blog so this is the way I’ll frame it J

So what do we do with $55,900 in cash you might ask? We follow the Ramsey rules and use this for 20% down on a home while finding a 15 year fixed rate mortgage where the monthly payment doesn’t exceed 25% of our take home pay…aka…what we’ve already been paying on rent. For those of you quick with a calculator $55,900 as 20% of a down payment will buy you a home at roughly $279,500 or something that looks like this 3BR place WITH A POOL near my hometown:

But wait! There’s more! With spending under control and a responsible home mortgage, let’s say we maintain the national average for household income for 2010 and neither I nor my spouse ever get a raise. We have a monthly disposable income of over $1,400 that we can use to: save for our kids’ college, save for a car, pay extra on the mortgage, save for vacations, buy homeowner’s and title insurance, and the list goes on and on. And now we decide to save 15% of our gross income towards a ROTH IRA, investing according to Dave Ramsey: in growth, aggressive growth, growth & income and international mutual funds that have been around for at least 10 years and have average annualized returns of over 12% since inception. We save for retirement this way for the next 30 years, otherwise known as our working lifetimes, and now, I am close to 60 years-old and together we have $2,206,197.06 JUST IN OUR RETIREMENT ACCOUNTS! I would have worked my entire life earning minimum wage and can retire not just a millionaire, but a multi-millionaire!

Suddenly those first seven years of living with my parents at the start, paying 15% income taxes when I was single, getting married and living below my means with my wife and paying 25% income tax along the way, taking public transit, never leasing or financing a car, never borrowing money and taking whatever work I can find by scratching and clawing, well it sure panned out didn’t it? What if I’m half wrong because I projected some costs to be too low, or my wife doesn’t make as much to bring us to the national average, or “scenario me” encounters the same unexpected health costs that “real me” has faced to the tune of a few thousand dollars out of pocket? Then I’m still a millionaire!

Collectively we’ve got to wake up and start implementing behaviors and money practices that look out for our own personal and individual greater good. We need to think for ourselves. Debt is stupid and investing and making interest is greater than borrowing and paying interest. This country truly is the land of opportunity. I just painted a verbal picture that someone who earns minimum wage their entire working lifetime can still retire with dignity, change their family tree and leave a legacy. I’ll conclude this unbelievably long assertion with a quote (loosely paraphrased) from my sage, Dave Ramsey.

“Money is not like cake, it’s more like a candle. If you slice a cake and give yourself a bigger piece there’s less for me. But if you light a candle and use it to light other candles no candle is diminished, there is even more light. Communists and socialists believe money is like a cake and if you get some, there’s less left for me. But capitalism is like candles. It doesn’t mean you lose just because I win.”

My Unfrugal Origin Story

“I haven’t always been a straight edge.” My recent response to a friend asking if I’ve always handled money the way I do now.

I grew up in a family environment that is way too familiar in America: we did not talk about money. I did not grow up learning about retirement vehicles, insurance plans, saving for a rainy day or saving for college. I learned nothing on these topics from home nor school.

I firmly believe though that the frugal nature that I later found as an adult, imbedded within me, came from watching my father. He worked in a blue collar job from high school all the way until he retired and became a stay at home dad. I have never once seen him use a credit card, in fact I’m pretty sure he’s never owned one J. Cash and checks still are his payment methods of choice and the only debt he owed in his life has been his home, which has been paid off now for over twenty years. I can count on half a hand the number of cars he has owned since I’ve been alive. The first was an old broken in Datsun, the other a Dodge Caravan. But we never talked about personal finance.

My mother is a career driven woman from a generation that didn’t consider it fashionable. She provided for me in a much different way than the traditional American family. Her income paid for me to go to private school, go on vacations, participate in extra-curricular activities, and sadly, eventually as a teenager and college student, have a social life. I still remember clear as day the weekly “meal plan” as it occurred in my parents’ house that kind of summarizes everything. During the week my father would make breakfast for my brother and I, prepare our brown-bagged lunches for school and in the evening have a home-made dinner prepared for us. Weekends were my mother’s responsibility. And weekends consisted of McDonald’s, TGI Friday’s, Burger King, Chili’s, pizza places, all the household brands.

I lived in a house divided and didn’t even know it. They kept finances separate from each other. His checking account. Her checking account. His bill. Her bill. My parents have had a very successful joint venture for almost thirty years.

My mother gave my brother and I “age appropriate” weekly allowances. My dad wanted us to ride the yellow-bus to public school. When I became a teenager and started developing a social life, my weekly allowance was “never enough.” Thinking back on it even now, I’m disgusted with teenage self. I treated my mother like an ATM. Instead of bagging groceries, delivering pizzas or wiping restaurant tables, I “expected” my mother to fork over gas and entertainment money whenever I wanted to go out… and she gave it to me. Today I interpret my father’s silence as acceptance of the situation.

So how did I evolve into the frugal warrior writing before you today? My drive for self-dependence was something that developed over time. It started with little things like wanting to cook for myself and do my own laundry (imagine that, a 17 year-old being told he is not allowed to cook because he’ll burn the house down). And as I got closer to high school graduation I wanted to live on my own and see where life could take me beyond Southern California, I knew there was more out there beyond my parents’ protective bubble.

Still not thoroughly independent I chose an inexpensive college that was a good five hour plane ride from California. I continued to “live on my own” which translated to taking on student loans, living off mommy’s credit card and working a few jobs that did nothing to advance my career. When college was finished I had no desire whatsoever to start looking for a career in California. Although having taken very small steps that included accumulating stupid tax, I knew I was closer to true independence than when I was in high school and did not want to go backwards.

My first full year of employment was an exemplary display of wasted resources. “I owe, I owe, so off to work I go,” was my mantra. I paid minimum payments on my student loans, charged my way through life and reconciled on payday and didn’t save for retirement or live on a budget.

What woke me up? The first bit was finally, after just about a quarter of a century of life, wanting to grow up. I looked at consumer reports on the estimated costs of weddings and homes, and was “nowhere close” to being able to afford any of it. That alone opened me up to be receptive to developing, honing and following smart personal finance practices. And when my future in-laws gave me a copy of Dave Ramsey’s “The Total Money Makeover,” I took a figurative “keg-sized swig of Kool-Aid” and have never looked back.

My Q&A Guest Celebrity Post: My Wife

First and foremost I would like to thank each and every one of you helping make this blog somewhat kinda sorta mildly successful! J I appreciate and thoroughly enjoy reading all of your comments and feedback. To me, generating discussion on personal finance is just about the best compliment I can get, so genuinely, thank you all! With that said there have been a few recurring requests come across my inbox, one of which inspired this Q&A for today’s post! Presenting a woman that is beautiful, lovely, stunning, an inspiration, the reason for all of my success, and contrary to what seems to be popular belief, a woman that is in fact- REAL, my wife. So without further adieu, here are some of her insights into some of your most pressing questions.

Q: Are you real? 

A: Of course I’m real – what kind of a question is that?

Q: No, really, are you real?

A: Ok ok perhaps a little background will convince you. I’m 5’8” with brown hair and blue eyes – no no wait – that is just a bad way to start anything out.  Yes I’m real and contrary to popular belief – I AM a woman and I CAN and DO comfortably live on a zero based budget. I think the biggest contradiction society has taught us ladies is 1) to work to be independent and self-sufficient women while 2) simultaneously waiting on our Prince Charming’s to swoop in and rescue us because we all need saving. Probably the hardest thing when we first started this process out was accepting that as a woman I can be in control on my future and don’t need rescuing – instead we really need open communication and to learn to compromise and prioritize our dreams.  When a woman hears the word “budget,” we interpret it as “handcuffs.” We see treacherous scenes play out in our heads – we’ll never be able to go shoe shopping again, say goodbye to the nail salons and drinks out – and we shy away with a look of contempt for the husband or friend that dares utter such a word in our presence. Our reaction is really one that comes from fear of losing some of the things we have come to love. But I am living proof that if you take the time to sit down and discuss what you want – not just needs – but what you really value, need and want – you CAN live on a budget and enjoy life! Yes we’ve cut back on excesses – why you might ask? Because we’ve both done extensive soul searching and come to the conclusion that getting our time back with each other is more important to both of us than say me getting my hair done every week or being the proud owners of a brand new Mercedes. Once you take the time to really have that internal conversation with yourself about your true priorities and then take the next step to share that with you partner and commit to a plan to attain your goals and live accordingly – things become incredibly motivating.  For me there are so many things that matter – paying cash for our first home, giving regularly to worthwhile charities, taking a year off to travel the globe – the list goes on and on and is updated regularly but to answer the first question, yes I’m real and I’m really happy living on a budget.

Q: Does buying groceries at Wal-Mart and Aldi bother you?

A: Hmmm – well it used to. What cracks me up is that since we’ve been living below our means for so long now I could easily throw in the argument that we bump up the grocery budget and shop at only Whole Foods but I really have never had a taste for pretention. I’m a foodie and while you have to be cautious of the quality of meats at Aldi – pretty much everything is perfect for my uses. I used to be slightly embarrassed with the mindset that “poor people shop at Aldi” but did you know that your lush, organic, hipster Trader Joe’s is owned by my Aldi’s? True story! Anytime anyone gives me the look (and you know the look - that pitying disgusted I feel bad for you, look) I can honestly say well if you shop Trader Joe’s you’re buying the same products just at twice the price and well I’m sorry for you that you can’t add! No in all fairness, I’ve never been more than slightly embarrassed and I love Wal-Mart! As a business woman does it bother me that they put pressure on their suppliers? No not the least! I have a small foods company and we’d never in a million years think of selling to Wal-Mart – they simply couldn’t afford to carry us and we don’t flex on our bottom line regardless of your name or distribution! Trust me people, if a company is selling to Wal-Mart they are making enough of a margin to make ends meet and their sub suppliers are doing fine as well. Personally I believe people have been getting their backs up over Wal-Mart out of sheer jealousy for far too long – if you don’t like them – vote with something that matters – your dollars! I for one though, love the customer service I get from my local Wal-Mart and that I am supporting my local community as we’ve gained access to a number of jobs as well as reasonably priced fresh fruits and vegetables.

Q: Between you and your husband, who is more frugal and why? 

A: I would say I am but based on the fact that I grew up on a farm and know how to garden, raise my own animals for meat, and have honed other Little House on the Prairie skills that he unfortunately did not learn having grown up in LA

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Q: Since you’re the free spirit, when you guys reach $1 million net worth, how do you plan to celebrate? 

A: Good question – I’ve always thought I’d want to take a big trip but I’m leaning more towards a big trip with a big impact – we have two girls in Africa we sponsor that I would love to go visit in person but I’d also want to do some serious volunteer work there as well – probably a big month long trip to Africa (specifically Ghana, Tanzania, and Sudan) with some site-seeing, day labor helping build a hospital, school or library and a visit to my girls. J

What does living a scaled down lifestyle mean to you? 

A: It means letting go of what other people think and being true to your heart’s desires. Can I afford to live downtown in a high rise? Yep. Is that my top priority these days? Nope. I can honestly say living in line with your priorities will make you immensely happier than any apartment or amount of stuff ever will.

Q: What is the budgeting process like from your perspective? 

A: At this point it’s kind of on auto-pilot as we’ve got the year pretty well sketched out at the moment. And as bizarre as this may sound – it’s immensely exciting! Hear that ladies – I said EXCITING!!! And you want to know why?  Because once my last debt is paid off (which will happen this year) the world is our oyster and we just have to pick the pearls! What would you do with an extra $5000 a month? Anything you want!!! We’ve been dreaming and adding more goals and dreams to the list and it’s so exciting and inspiring to dream together and to build a life into exactly what you want it to be!

Q: What are the hardest and easiest things about living with a nerd? 

A: Hardest thing: being completely honest about my wants and needs – even when he asks why I need my sanity budget…

Easiest thing: not worrying about retirement because believe you me, he’s got it covered

Funniest thing: messing with the budget and watching his little nose wrinkle up in frustration – tee hee…

Q: Any advice to single and/or married women about to start baby step I? 

A: Quit procrastinating and DO NOT go back to grad school! Avoiding a problem, I repeat, AVOIDING A PROBLEM, does NOT under any circumstances make it go away!

Quit waiting for your “knight/husband/economy/student loan forgiveness program/insert random BS excuse” to solve your problems! Disney was fun but it was for kids and it’s time to take care of you and put yourself first like the entirely capable adult that you are! Don’t wait another minute – seek advice, draft your first budget and take care of yourself!!! I’ll leave you with a quote from one of my personal heroes (this is actually printed out and hanging on a wall in the living room at home) -

“Our deepest fear is not that we are inadequate. Our deepest fear is that we are powerful beyond measure. It is our light, not our darkness that most frightens us. We ask ourselves, Who am I to be brilliant, gorgeous, talented, fabulous? Actually, who are you not to be? You are a child of God. Your playing small does not serve the world. There is nothing enlightened about shrinking so that other people won't feel insecure around you. We are all meant to shine, as children do. We were born to make manifest the glory of God that is within us. It's not just in some of us; it's in everyone. And as we let our own light shine, we unconsciously give other people permission to do the same. As we are liberated from our own fear, our presence automatically liberates others.” – Nelson Mandela

My Power Over Purchase

Over the weekend my wife and I had a pleasant staycation in downtown Chicago. An even more unpleasant surprise is that my power over purchase was tested. At the onset I felt incredibly confident that I had mastered power over purchase. I mean I equate Wal-Mart and Aldi with grocery shopping, think Salvation Army for clothes shopping and can run a zero based budget with the best of them.

But once we got settled into our temporary base, something unknowingly and unintentionally entered my frame of thinking. Maybe it was the combination of: a gorgeous view of the downtown skyline, new(er) residential furnishings, amenities that come with high-rise living and an unspoken attitude about living in a downtown urban setting. I felt an urge and compulsion to flash back to my previously dead (but now I think in a coma) hyper-consuming self. Two thoughts I had over the weekend were: which restaurants we could eat out at rather than making the food we brought to make, and if we budgeted 25% of our take home pay we could afford to live downtown (currently we budget 15% of our take home pay towards rent).

To kill the suspense we stuck to the plan and ate in and opted for the beautiful skyline views from the glass windows inside our accommodations as opposed to going out and painting the town. But I am left thinking, why is it in my nature and instinct to spend? Back at our home on the north side we do not have an operating television, do not have a laptop and have no newspaper subscriptions. I like to think we have substantially cut back on our exposure to advertisements that push for hyper-consumption. But still, encased in a downtown environment I instinctively wanted to spend, and I’m dying to know why?

I find studies in human behavior quite intriguing and am even more enamored with this since I was my own subject. I mean I literally had to pull myself back and say to myself, “WHOA!!! Hold on, you live on a budget and below your means, now stop it!” But if a soldier trained in the Ramsey and Yeager ways could fall victim just to the thoughts, I can very easily see how our culture and “American way” breeds hyper-consumption.

Now I don’t believe that the concept of having nice things is evil. Personally, I just never want those nice things to have me. I’d rather dumpster dive or hop on freecycle to furnish my house one day rather than buy brand new from a mega-store national chain. With the difference in price I’d rather invest and build wealth to: retire with dignity, build a college scholarship fund, travel the world with my wife, etc. This is a personal choice and I definitely don’t look down or condemn anyone who chooses to have nice things. I mean, if you’re net worth is over $1 million dollars and you want to buy (in cash) a brand new car, dude, go ahead and do it! And I’ll be rooting for you all the way the home.

Ultimately I’m just not into stuff. After all, my favorite part of the weekend was lying on the couch in the “fancy digs” with my wife wrapped around my arms. Stuff will come and go and technically speaking one can never have enough. I am enjoying the journey. From being pre-Ramsey all the way up to now, looking back on everything, I love my scaled down lifestyle and would not change it for anything in the world, in fact I can’t even picture living differently. Though tempting knowing that our household could afford “downtown” living, I’ll take a pass. Living below our means and financial peace is more important to me.