The Simple Path to Wealth – by JL Collins

I try to read as regularly as I can, but it usually comes in spurts. The more I learn about finance, the more I am drawn to a simple approach. That is what I got in the JL Collins’ book: The Simple Path to Wealth.

Collins takes a lot of inspiration from one of my other favorite finance guys, Jack Bogle. In a world that tries so hard to convince us that investing and retirement savings are too difficult and complex to grasp for the average person, both Collins and Bogle point out that index funds are the vehicle with which you can bypass the BS and wisely save.

A lot of what Collins has to say in his book appeals to me, so I will share a few highlights that I enjoyed.

Take this as no offense if you are a financial advisor, stockbroker, or anything of the sort. But I despise fees. I can’t stand them. Money is hard enough to come by as it is. The last thing I want to do is give a chunk of my savings to someone else for “managing” it. One of the awesome things that Collins points out in his writing is that picking winning stocks is difficult. What is even more difficult is continuing to pick winning stocks. Over and over and over again. It is nearly impossible. The better choice, then, is simply to not try and pick winning stocks, but rather to buy all of them. It sounds funny, but that is basically what buying an index fund means. An index fund is essentially a wide swath of a given market. So if you buy a total market index fund, you are buying small pieces of hundreds or possibly even over a thousand different companies. By default, this approach helps you diversify, since you are investing in a bunch of companies instead of a handful. One company could tank, but in the meantime, you could have ten other companies that are holding steady or even making gains. It helps to balance things out.

Over the course of time, if you zoom out on a graph of the stock market over time, the trend is generally upward. The US economy, in particular, has an amazing track record of steady growth and expansion. By owning small amounts of a bunch of these different companies, you have the opportunity to take advantage of the growth they experience.

Another thing from this book that rang true for me, is Collins’ love for Vanguard as a good institution in which to buy, sell and trade for retirement and other account purposes. I have all of our investments in Vanguard, and the extremely low fees, high transparency, and the fact that they are owned by the people (like us!) that invest within their funds make it easy to love them. Fees over time erode wealth, so it is essential to pick investment vehicles and platforms that keep the drag of these fees to a minimum. Vanguard does a great job of doing just that.

Over the past few months, I have been drawn to the idea of simplicity. There is something beautiful about removing options, choices to be made, and complexity. Life is already complicated. If there are areas of our life that can be automated, it is worth looking at. The rich combination of automated contributions, Vanguard-held funds, and index funds (specifically target-date retirement funds, in my case) makes for a great way to simplify. There is beauty in simplicity. I am going to continue working on ways to make money easier to manage, maybe to a point where it manages itself! Here’s to hopeful thinking.

Don’t know how to invest? Make it easy.

For the longest time, I sat on the sidelines of investing. I was paralyzed by the choices out there, and afraid that I would choose the wrong stock, the wrong amount of stock, or the wrong timing. Perhaps all three! It was so intimidating and I felt like I didn’t have the time nor the energy to learn the details and intricacies of complicated markets and trends. There was so much to learn.

You are most likely just like me in that you do something completely unrelated to finance or investing as your day job. I am an IT Consultant, so while I do have to work with numbers to run my business, I couldn’t tell you what “alpha” is in terms of a stock. Could I sit down and learn a bunch about investing, read articles online hoping to glean great stock strategies and picks, and become a pseudo-expert over time? Perhaps. Perhaps not! You could continue sitting on the sidelines, unable to decide what to do. But then you would be spending more time out of the market, and as they say, time in in the market beats timing the market. The way to win is to play.

As I’ve mentioned in the past, I am no financial expert, this blog is simply an outward expression of the inward thought processes that I have worked through. It may be of help to you. Would you like to know what my investment strategy has been for the past year or so? I’ll lay it out for you, although you might be disappointed by the lack of pizzazz and complexity in my approach.

I started by creating an account for my wife and me (two separate accounts) at Vanguard.com. Once the accounts were created, I set up a Roth IRA account within each Vanguard account. With the accounts created, I had to choose what stocks and bonds to purchase within those accounts. I took the easy way out and I will explain my reasoning.

I chose the Vanguard Target Retirement 2060 Fund (VTTSX) to put all of our investments in. Some may scoff at this choice, but I wanted maximum ease. What a target date fund like this does are a few things. First, it is automatically diversified. When you buy a fund like this, you are not buying a handful of stocks. Rather, you are buying small amounts of a bunch of different stocks. You are buying a “slice of the market”. That way, if one stock is struggling, you’ve got a ton of other stocks that are chugging along either in a neutral or positive position. They balance each other out. The trade-off of this is that sure, there could be more aggressive funds out there that might make more money in the long term, but a fund like this offers a slightly more conservative, predictable growth strategy. The other thing I really like about these target-date funds is that they automatically adjust their makeup over time. As a general rule of thumb, when you are young in your working career, you probably want to hold all or almost all of your investments in stocks that will have more aggressive growth over time. While the stocks can have big swings up and down, it doesn’t matter much when you are young since you don’t need the money and aren’t expecting to tap into any of it until retirement age. As you get closer to retirement age, you would want to hold more stable assets like bonds, that are predictable and steady but give a much smaller rate of return. The beauty of a target-date fund is that it holds both stocks and bonds, and it reallocates the mix over time as you get closer to retirement. For example, today, as I am 30 years old, my investments are 90% stocks and 10% bonds. When I am maybe 50 years old, the mix could be 50% stocks and 50% bonds. When I am 70 and ready to retire, I’d likely be at 10% stocks and 90% bonds. What is so great about the target date fund is I don’t have to go in and adjust my investment mix manually. The fund’s contents of stocks and bonds shift over time as Vanguard’s team decides what should be in the fund, to slowly but steadily move the fund’s strategy from more aggressive to more conservative as I get closer to retirement age. I don’t have to lift a finger to make this happen.

The other piece that makes this strategy work so well for me is a thing called dollar-cost averaging. As I mentioned earlier, timing the market is a fool’s errand. It is basically impossible to know when to buy stocks at a low price in order to sell them at a higher price later. That trickery is for day traders as far as I am concerned. Instead, you can dollar cost average your money into the market by making regular stock purchases in your account. For our retirement accounts, we are not going to use any of the money until retirement age, so I really don’t even need to look at the account balances. I check in on them maybe once a month, just to observe the progress and to make sure things are on track.

So how do we do this dollar-cost averaging then? Vanguard comes in clutch again here as they make it easy. As a couple of independent contractors like my wife and I, our income is somewhat variable. For quite a while, I would make excuses for what our money could be better used for than a retirement account contribution. It is easy to convince yourself at the moment that your money is better used for something else. However, it takes a ton of discipline to sit down and say “hey, I’m going to move this chunk of money into my retirement account for when I need it in 40 years”. You’d have to have pretty dang good self-control to be able to do that consistently. I found I couldn’t do this, so I took the choice out of my own hands.

In the Roth IRA account, there is an option to make automatic contributions. They can be as often or infrequent as you’d like. With a Roth IRA account in 2021 for someone my age, my wife and I are each able to contribute $6,000 per year to each of our accounts. I wanted to max out contributions to each account, but like I said above, having the discipline to do that is almost impossible. So, what I did instead is I told Vanguard to pull a relatively small amount from our checking account each week to hit the max contribution by the end of the year. If you divide that $6,000 by 52 weeks in a year, it comes out to about $115.38 per week. For me, that is way more palatable than huge chunks of money I’d have to voluntarily contribute manually. Each week, I noticed my balance go down a bit, but over time it has become so natural that I notice it less and less. Meanwhile, contributions are continually being made, our retirement accounts are growing, rebalancing themselves, and will be ready for us when we go to retire in a few decades.

Some may think this is a huge oversimplification of retirement investing. And it is. But that is what I wanted. I don’t want to think about these things, but I do want to do them. You may be in the same boat. Perhaps $115 a week is way too much for you. Don’t be intimidated or held back by that. Once you have the minimum amount to start a Roth IRA account, you can make much, much smaller contributions. Start out with $5 or $10 a week just to get the hang of it. Once that automatic contribution starts coming out of your account, you’ll get used to it. If you get a raise or find a way to free up other funds in your budget, you could turn it up to $20 or $25 a week, and more from there.

Target date funds and automatic contributions are a great way to set and (mostly) forget your retirement savings strategy. This is particularly helpful if you are an independent contractor or your employer doesn’t offer a 401k or similar retirement account option.

I hope you have found this helpful! Thank you for reading.

A Time for All Things – Even Upheaval

Ecclesiastes 3 mentions that there is a time for a lot of things in life. Solomon tells us that there is a season for all things. Most recently, that change has been a shift to a world of unknowns and general upheaval.

In 2015, I moved to Missoula in the fall. One of my best buddies lived here and offered that I move in with him and his two roommates. That move changed my life in a lot of ways, but one of the things that were birthed during that time was the dream of owning my own business. After just turning 24, I created my own computer repair business and opened up an LLC for it. I had done quite a bit of computer work in the past, so I thought I would be able to make the jump to working for myself. At the time, I was quite wrong.

That phase did not last very long due to my poor planning, marketing, and sales skills. I didn’t know what I was doing, to be honest, and the lack of cash flow proved it. Instead of making money, I was sliding back financially as I started putting everyday expenses on a credit card. The issues came to a head when I realized one month that I wouldn’t be able to make rent if I didn’t do something different. What followed was wild, but I will give you the short version:

October 2015 – February 2016 – Broke down and got a $9/hr., part-time job working at a hotel front desk.

February 2016 – July 2017 – Promoted to General Manager of the same hotel when the former GM was canned. This is what I would count as my first real, full-time, benefits-included job. At 24 years old, I guess I was an adult?

July 2017 – Marry my wonderful wife and I have to leave the (almost) perfectly good General Manager position for us to move to Forest Grove, Oregon only three weeks after we said our vows. We blew off the idea of not making multiple major life changes all at the same time! This was a challenging season.

August 2017 – October 2017 – Wife starts grad school and I am jobless without knowing a soul in the new area of Oregon we call home. Living in an 800 sq. ft. apartment, I start to drive for Uber and Lyft to help us make ends meet, but we are mostly living off the generous wedding gifts of cash and gift cards we received from friends and family. I am seriously questioning my ability to provide a decent life and some sort of income for my new bride and our one cat.

October 2017 – The call finally comes… a Managed IT Services company out of San Francisco takes a huge chance on me and hires me without meeting me in person, for a fully remote position on their help desk. I thank God and simultaneously can’t believe my good fortune. Things start to turn around.

October 2017 – March 2020 – The new job is stressful and I am drinking out of a fire hose. I thought I knew a few things about IT but the job is proving in the first six months how little I know. Working from home 100% of the time also proves to be isolating. I use the time to pick up a few IT certifications and bust my butt to learn as much as I can. Since I am our single source of income, I redouble my efforts and also get a job with Pizza Hut delivering pizzas. Some days I work 8-5 and immediately hop in my car after work to drive pizzas, only to return around midnight. Safe to say this is the hardest I’ve worked in my life. We make tremendous strides as a result, allowing us to finish paying off my $23,000 worth of student loans, AND the $11,000+ in credit card debt we came into the marriage with.

Wifey is working hard at grad school and graduates with flying colors in the spring of 2019. She starts looking for new jobs in a few different places, but we both long to be back in Montana. She lands an incredible job back in Missoula, we are blessed to move home. Our first six months back in Missoula are in my in-law’s basement; they are generous to let us live rent-free while we save furiously for a down payment for a house with our newly-found dual income.

We make an offer on a house in December of 2019 and close and move into the house in mid-January of 2020. Only able to put 5% down on the house, we are beyond thankful for our finding a place to call home.

A short rabbit trail for a moment: in late 2019 I was in talks with a recruiting company about a great job opportunity in the greater Missoula area. All seems to go well with a few interviews, and what seems to be a certain offer. The offer never comes and I feel a little bit burned and miffed as I felt a bit led on by the whole process. But that wasn’t the last I had heard from the recruiting company. In early 2020 my phone rings and lo and behold it is the recruiter from before. I’ve emotionally moved on and still working the same remote IT job I had been for two and a half years. The recruiter asks if I’m still interested in the new job. Their first pick for the position had gone south only a few weeks in and they needed to fill the position again already. Miffed and a feeling a little bit insulted and being a second choice, I tell them I will only accept if the annual salary is $10,000 more per year than what we had originally talked about. Coming from a position of power (I had a job and didn’t need this new one, and this recruiter REALLY needed to fill this position), they reluctantly accept my counter offer. I begin a new IT job.

April 2020 – August 2021 – We all know what happened in March of 2020, but in case you had forgotten, this thing called COVID kicked up in the US and we all were dealt a new normal to deal with. The new job is going well and I am pleasantly surprised by the combination of having less stress, less work, and more pay all at the same time. The commute is a bit brutal however, at an hour one way on days I am in the office. The job proves to be less demanding than what I was expecting, and I admittedly grow restless.

For months I kick around the idea of revamping my IT business that I had started 6 years prior. The idea of trying to do something again that had originally failed is daunting. I can hear the voices of doubt and uncertainty tell me I can’t do it. I failed before, what makes this time any different? My lovely wife ends up being the deciding factor- she tells me to do the d*mn thing and “jump” already.

I quit my perfectly good, nice paying, cushy job.

I restart my IT business, but this time instead of computer repair, I am offering Managed IT Services. After working for the San Francisco-based MSP, I catch a vision for what I could and would want to do for potential clients: provide expertise, calm and confidence, answers to difficult technical issues, and honest, transparent communication. TechNellogic is reborn.

Today marks the 7th Monday since I (re)started my own business. It is scary, thrilling, discouraging, motivating, and so many other things all at once. I have signed a handful of clients, and I am enjoying doing projects here and there for other clients. While it doesn’t feel like much now, I am optimistic about what this endeavor will lead to long term.

A special thank you to one of my readers who was kind enough to send me a message asking for me to start writing again. Writing is a wonderful outlet for my soul, and it gives me life. All too often we don’t focus on those things that do give life to our eyes, our hearts, and our souls. Thank you to that reader for reaching out and motivating me to write this long-overdue post.

Extended Student Loan Relief

The 46th President of the Unites States was sworn in yesterday, and President Joe Biden is not wasting any time in getting relief to Americans. One of the flurry of executive orders that have been signed into law is another welcome extension to the federal student loan payment and interest freeze. This means that no payments are required and no interest will accrue on federally-backed student loans until September 30th, 2021.

If you are a student loan holder, this is obviously excellent news. I realize there is a large spectrum of borrowers out there. For some, you may be trying to just scrape by, even with the current deferment on these loans. Or perhaps you’ve been fortunate to keep your job and the loans are one less bill you have to pay, freeing up some of your cash flow each month. Because of the nature of different financial situations, I thought I would offer up a few suggestions that may be of help.

Emergency Savings – If you don’t have something saved up already, this would be a great opportunity to do so. A savings account is a good place to put away this money for a rainy day. If you were ready to start making monthly payments again at the end of January here, and now don’t have to, consider putting part (or all!) of that payment into an account and do that for a few months and watch the savings grow. We are still living in some pretty unprecedented times, and no one can claim to know what the future will hold. Having up to 3-6 months of financial cushion to cover your expenses in the event of a lost job is a great idea.

Hold off on paying the last $10,000 – There is still a lot of talk of talk floating around about some outright student loan forgiveness. While I doubt that ALL loans or $50,000 per borrower will be forgiven, I do think this $10,000 worth of forgiveness per borrower could be a possibility. This doesn’t mean going and spending the money that you would otherwise use to pay off the “last” $10,000 of your loans, but I would probably hold off until closer to September to do so. If you have $30,000 in loans, for example, paying off the first $20,000 would be a pretty safe bet at this point. If you get down to $10,000 left, just throw the money you would be using to make payments into a savings account in case forgiveness doesn’t end up happening.

Pay off high-interest debt (or debt with any interest for that matter) – Right now, these federal loans are costing you nothing. Take advantage of that! If you have a car loan, consider paying that down. If you have credit card debt, vanquish it to the far reaches of the universe. If you have any sort of outstanding debt, get rid of it. The no payments/no interest situation with federal loans is the perfect recipe for making serious progress on any other debt you might have.

Keep making payments on your loans – While continuing to make steady payments on your loans while they are frozen is not a sexy idea, it is prudent. We don’t know what tomorrow will bring. But being a step or two closer to being totally debt free will definitely not hurt you, and I’d be surprised if you ever regretted it! As we’ve already covered, 100% of any payment you make right now is going straight to principle. Payments during this time can shave weeks, months, and even years off of your payoff timeline. If you can do it, strongly consider what it could do for your future self.

In closing today, I would like to remind you as my valued reader that financial responsibility is our responsibility. It is not the job of your employer, your city or state, or the national government. Stimulus checks and loan forbearance are nice, but at the end of the day, your fiscal fitness is up to you. You can do this!

Review of DoorDash as a Side Hustle

I’ve always had a lot of curiosity about gig type jobs. When we lived in Oregon and I was looking for a full-time job after our move there, I drove for both Uber and Lyft. Later on, once I had a full-time IT job, I also drove pizzas around for Pizza Hut. That actually ended up being a pretty good gig. Despite the long hours into the evening (I usually worked ~5:30PM to close which was a little after 11PM), the money was decent. With tips I could walk away consistently making $20/hr. This was helped by the ridiculously high minimum wage in the Portland area, which was $12/hr.

Right now, I’ve got my solid IT job working in Hamilton full-time, and that job has been great. But I was curious about DoorDash as it has risen to the top and currently dominates the food delivery apps in the US. Why not drive for the company that is delivering the most food?

The sign up process was simple, here are the steps directly on DoorDash’s site:

Not very complicated to get started. Once you’ve cleared the background check and gotten your Red Card and DoorDash bag(s), you are ready to go. Here are a few things that I’ve learned in that process. As a note, I hate reviews that don’t give cold, hard facts about the actual income potential of gig apps like this. “Make up to $30/hr.!!!” “Be your own boss!!!” “Make your own schedule!” Sure these things all sound enticing. I did the hard work for you here and I’ll give you some very real numbers to consider.

I have driven DoorDash for nine weeks, on and off. With DoorDash, you have two options to drive: you can schedule “shifts” within the app, and then go online when your shift starts. For instance, last night I snagged a 5PM-9PM shift, and it was a good time to be out there since folks are hungry and ordering dinner. The other other option is to “Dash Now” which basically allows you to go online on demand. However, you can only do this if there are not already too many Dashers out and about. You will only be able to go online on demand if there is higher demand for delivery than the number of drivers currently on the road. During busy meal times, I have usually been able to go online at will. I believe that pre-scheduled drivers get order priority over those that Dash Now. So if you want the best case scenario for getting orders, schedule your Dash ahead of time.

During these nine weeks, here are my cold, hard, fast, and honest numbers:

Total Deliveries: 132

Total Hours Worked: 60.15

Total DoorDash Pay: $535.75

Total Tips: $515.59

Total Income: $1,051.34

Average Total Hourly Income: $17.48

Okay, a few things to unpack here. First, let’s just get to the number you care about. With tips, I have been able to make almost $17.50 an hour. That’s fine. Not life changing, but it is better than a kick in the pants. And it’s less than what the gig apps will promise that you can make working for them.

Secondly, you’ll notice that a TON of the income relies on people’s generosity (read: mercy) by offering tips. 51% of my income has been from the base pay, while 49% has been from tips alone. Crazy. If you don’t consider tips, I am in the range of Montana minimum wage ($8.75 starting Jan. 1st) at $8.91 an hour. Not great. The point is, if you don’t get decent tips, this is a crappy gig. Another side note here: if you order from these food delivery apps, try not to be cheap. The person delivering your food is not getting rich doing what they are doing. And a good tip goes a long way in making a driver’s night.

Things I Like – There are a lot of things I like about driving for DoorDash. I don’t have to do it if I don’t want to, and I can if I do. When you work a regular second job, you have shifts and expectations. With a gig job, you do it when you want. This flexibility is actually quite nice. I don’t have to haul people around in my car. This is my introvert side coming out. Driving for Uber or Lyft is filled with making small talk with strangers, trying to play the right music in your car, blah blah blah. I don’t have to impress the food I am delivering, it doesn’t judge.

Getting direct deposit payment once a week is nice to. Every Tuesday morning after I work, even a little bit the week before, I’ve got some extra cash in my account. Nice!

The DoorDash app is actually really well done. It is easy to use, makes finding restaurants and delivery spots pretty easy, and generally just does what it is supposed to do pretty well.

Being able to know how much you are going to make before you take a delivery is nice, too. If an order comes in for a 10 mile drive for $3, I’m not doing it. $6 for a mile drive? Sure, why not. You have some autonomy in which orders you decide to take.

Things I Do Not Like – While I have been fortunate to get tips at a good, consistent rate, it stinks that you have to rely on people’s generosity to make this a gig worth your time. It would be nice if the base pay was higher, making tips what they should be, which is icing on the cake. Tip culture… ughh I could write about how messed up it is in our country but I will refrain for the time being.

Finding houses and apartments at night can be a real hassle. The orders to well-lit, well-labeled neighborhoods usually go smoothly. But rolling into a maze of huge apartment buildings that all look the same and don’t have street addresses on them… don’t even get me started. Frustrating and a big waste of time.

This is neither a positive or negative, but hustling helps your bottom line. If you take your time going into a restaurant, driving, or finding the door to deliver to, you are wasting your own time and money. Having pep in your step improves your bottom line since you get to the next order faster. More orders = more base pay + more tips = more money.

You are at the mercy of restaurants being efficient and ready with your order. Most are great. I run in, the order is sitting there waiting for me, and I’m on my way. The not so good ones, I show up and have to wait 10 minutes for it to finish, or there is a long line at the drive through window I have to wait in. You don’t get paid for this wasted time. The faster you move, the better.

Some Basic Tips – Use a phone holder. I have one mounted to my car’s windshield, and it is perfect. Having your phone/maps app at road level is both convenient and much safer than holding your phone while you drive. This is actually against the law almost everywhere, so just go ahead and get a phone mount.

Having a phone charger is another must. There is nothing more stressful than having good success with orders and then your phone starts indicating low battery! Keep yourself charged too. Bring some snacks or even a small meal if you are going to be out ad about for a longer shift. Bring a water bottle too, it’s important to stay hydrated.

You will also want to hone your judgement in accepting the “right” orders. As I said earlier, you can get some pretty ridiculously cheap payouts for super long deliveries. Don’t take them! Decline them and wait for a better one to come in, they usually do. It’s also good to take into consideration the restaurant you are picking up for. Some do a good job of having orders ready for gig workers to pick up, but others drag their feet or consistently have long drive through lines. The worst! The only way to know these things is to practice by doing. You’ll soon find a good balance of which orders are worth your time and effort.

Other Considerations – The vehicle you use to drive for food delivery is important, in my opinion. We have three cars right now (trying to get rid of one soon). I only ever drive the ’94 Honda Accord (probably worth about $2,000) or our ’08 Toyota Prius (probably about $5,000). You do not want to put a lot of miles on a newer, more expensive vehicle. With the miles you put on and the inevitable potholes you hit, you are draining the resale value of your car. If you drive an older car, like the Honda, for example, most of the depreciation on it has already occurred. I bought it for $2,200 with 174,000 miles I think. It’s got 182,000 on it now. I could drive it to 200,000 and still sell it for around $2k. If you drove a nice $20,000 car around and put a lot of miles on it, you won’t be able to sell it for even close to that. In the Ovenell family, we call low priced cars that won’t lose much value cars that are in the “compression zone”. Thanks Dad and Grandpa for that one…

Don’t forget your other expenses of driving around. Besided the depreciation, you will go through tires faster, you will have to perform repairs more often, and will need to change your oil more frequently. You don’t want to neglect vehicle maintenance since the car is your main money making tool doing this. When you subtract out that maintenance and gas for driving around, that $17.50 an hour shrinks considerably. Something to consider.

I haven’t done this, but you may want to track your mileage with an app like Everlance. When tax time comes around, you can write off the mileage you’ve driven for the gig apps. This can help you reduce your taxable income at the end of the year, which will in turn lower your tax bill.

Best Application of Gig Jobs – A job like this has its place. I would not do it full time. You are going to drive your car into the ground, making just okay money in the process. In my opinion, you are better off trying to find a lower-end job doing something that doesn’t involve driving your personal car around. If you do go for a near minimum wage job, try to get one that involves receiving tips. In my example, you can see that tips can change the game.

For me, driving for DoorDash allows me to drive which I love, puts a couple bucks in my pocket, and lets us send an extra payment toward debt every now and again. I don’t rely on it for reliable or must-have income, and I don’t think it should be used as such.

If you are trying to make progress on paying off credit cards or student loans, heck, I’d say go for it! It can be a good financial shot in the arm, and can give you an extra edge if you don’t have overtime or other ways to make more money at your main job.

The Struggle Is Real

I took this during a recent walk through Greenough Park here in Missoula.

Perhaps I am the only one, but I am hoping I am not. I have no motivation. None.

I’ve let two to three days pass sometimes in between taking a shower (eww!), spend a lot of time moping around the house, and generally it seems I am unable to do anything that resembles productivity.

I am over this virus. We’ve had to stay home on and off for almost a month now due to exposure at work and within our families. We’ve each had a couple of tests each, always negative. But man, this thing has really run its course. I am sick and tired of it.

I’ve been uninspired with work, underperforming and not being my usual go-getter self. I don’t know what it is, but I struggle to get myself to do much of anything constructive.

Our finances have been equally lethargic. We are making some progress, but not at a very impressive rate. Christmas time brings with it some added expenses, which is always to be expected. I am hoping that the spring and summer will prove more fruitful in 2021. I have a goal of having our student loan and consumer debt paid off by my 30th birthday in June (holy smokes I am getting old), but this seems unlikely at this point.

I would be surprised if student loan debt forbearance didn’t get extended past its current end date of January 31st. Until the new vaccines are able to take hold in a good part of the population, I think ongoing relief in that regard will be necessary. COVID has continued to take bites out of Jos’ income, which I know has been frustrating for her. We are very fortunate though, I know, and for that I need to be thankful.

We have been in our house for 11 months now. While it seemed too soon to do so, I have been keeping an eye on refinance rates, and despite our 3.625% fixed rate on a 30 year being pretty darn good (especially historically), I have continued to see even lower rates, and the temptation was too great. Right now we have a 2.625% fixed on a 30 year locked in, and we are working on getting all our paperwork submitted for that. I am hoping to have that process complete by the end of December. At that point, I will do a write up and review of the company I chose to do the refinance. I think that will be a helpful article when the time comes.

This has been an exceedingly challenging season for many here in 2020, I know. Between transitioning jobs, losing my Dad to leukemia, dealing with the challenges of social isolation due to COVID, and a host of other hurdles and bumps along the way, I will not be sad to see this year close. Despite my not posting hardly at all for the past few months, I appreciate those of you who have continued to check in and read, I see that and appreciate it. Seeing that folks are checking in was my only motivation for making this post in the first place today.

Hang in there, folks. Although I don’t know when, I do know things will improve.

Net Positive

A quick iPhone shot I took during a recent fire hangout with some friends!

For years and years, I have been what is called “net negative” financially. Basically, I owe more than I own.

Sometimes you may here about people talking about “net worth”. This may sound like a complicated concept, but it really is a simple principle. Your net worth is a simple equation of all of your assets – everything you own – minus all of your liabilities – everything you owe.

With student loans and credit card debt, I have been in the net negative since I was about 18 years old. As soon as I took out that first college loan, the total amount that I owed in life surpassed all of what I owned. It has been that way for a decade. Until just recently.

I tend to push myself pretty hard, and I rarely allow myself to enjoy a good victory when they do come along in life. Instead I often keep my head down and try to keep pushing toward the next goal or challenge. But, I need to be better about this! So today I am going to celebrate that Jos and I are finally net positive for the first time just recently.

A few things definitely helped us get to net positive. We were fortunate in buying our house when we did in late December/early January this year. As a result of the house continuing to go up in value, that has added some equity that counts towards this net positive.

We have also cut loose some of the things that were dragging us down. We were able to pay off most of the credit card deb that we had accumulated during the first few months of being in the new house. I finally unloaded the electric car that I had. We are now once again both driving used, paid-for cars which helps a lot. The only debt left is the mortgage and student loans.

Today, we celebrate being net positive and we look forward to continuing to make smarter decisions financially. As I’ve continued to write this blog, it really has been a case of truly Figuring Out Finances. It is a work in progress. We are learning. We will still make mistakes. And we will have other victories to celebrate. The important thing is that we strive to be good stewards (or managers) of the resources that God has entrusted us with. May that always be the core of what we do and the core of this blog.

As a final note, I have had a couple of friends and readers reach out to me with questions or stories from their own financial journey. I will say again that I LOVE to talk finances and would love to hear from you, whether is a question for me, or a tip you have learned along the way that might be beneficial to me or other readers. Have a blessed day!

Why Now is a Great Time to Pay Down Student Loans

A view from St. Mary’s peak in the Bitterroot Valley.

If you have Federal student loans, you’ve been enjoying the temporary 0% interest and the option to not make payments at least until the end of September. Due to a controversial mandate from President Trump, there is a good chance that those benefits will be further extended through the end of 2020. This would be great news for those of us carrying Federal student loan debt.

The temptation during this time is to forgo making the payments you’d typically have to make and instead use it for something else. For us, we did hit the pause button on making loan payments for a few months. We took that time and extra cash to pay off our 0% interest credit card that our new house purchases landed on. Thankfully all our credit cards are paid in full now, and I also just sold the Chevy Spark EV this past week. That leaves us looking at our solitary consumer debt: the grad student loans.

Now that our other debts are out of the way, it would be easy to skate along and not worry about the student loans until 2021. But there are serious advantages to taking them seriously here in the last third of 2020.

Interest is the biggest thing to pay attention to. I will use our current, real numbers to paint this picture. Here are the terms for our outstanding loan debt:

Loan 1: $20,971.88 @ 5.75%

Loan 2: $8,361.93 @ 6.75%

Loan 3: $21,631.93 @ 6.35%

Under normal circumstances, this amounts to us owing $262.00 in interest alone each month. It is a significant chunk of change, and it is nice to not have to pay that now. But we can better our situation in a significant way if we continue to take action with interest paused.

If we made a $500 payment towards loans with interest, only about 47% (or $238) would go toward paying down principle, or the actual money we owe. The other $262 would get eaten up by that nasty interest. Not a good deal.

Without interest in play right now, however, your payment dollars go MUCH farther now than they usually do. A $500 payment right now goes all to principle. It lowers the total amount you owe by that full $500, not the smaller $238 if interest was involved. Making payments now can significantly lower your principle, skirting interest payments for the next few months. This is a huge advantage!

With things being relatively uncertain economically and with job security on the rocks, I will note here that keeping some kind of emergency fund in place right now is as important now as it ever has been. If you can save up at least a month’s worth of expenses (3-6 months’ worth would be ideal), you will be in a more secure position to make moves like these all-principle payments we’ve been discussing. Losing a job or having income cut right now are real threats, so it is important to make sure you have good financial footing before continuing to make progress on debt repayment.

If you have questions about your specific situation and would like a second opinion or just some friendly, free advice, drop me a line through the Contact Me page. Stay safe, my friends!

Settling Back In

With my Dad being sick and recently passing, I’ve spent a lot of time back in my hometown of Churchill, MT recently. Here is a crop field right next to where I did a lot of my growing up.

When I started this blog, I was pretty on fire to cast debt to the side and move on with life. Jos and I lived a modest life during our two years in Oregon, and with our more frugal lifestyle and my solid job (as well as some pizza delivery on the side, you’ll recall), the debt seemed to melt off pretty quick.

Life happens though, as they say, and late last year we made a few steps financially – some forward, and some backward. We saved a down payment for our house and put 5% down to get into it. We are seven months into home ownership and we couldn’t be happier. That said, the whole process ended up being much more expensive than we had anticipated. Our down payment wiped us out financially, so the things we “needed” to get for the new house ended up on a 0% intro APR credit card. Our credit card debt had been zero going into buying the home – but in just a few short months at the beginning of 2020 we were back to over $8,000 in credit card debt. Ouch!

Well, we were finally able to get in front of that debt and get it paid off without accruing any interest on any of it. I’d call that a win, except for the fact that I had sworn off credit cards long before that, and there we were using them again. But I never claim to be an expert on this blog. My writing will hopefully always document the mistakes alongside the wins. The other thing that set us back for the past year was a dumb mistake that was all my own, and that was buying my first electric car, the 2016 Chevrolet Spark EV.

The Spark was a mixed bag for us. It was incredibly economical when we drove it, not using a drop of gas. We loved how it didn’t need oil changes or any other maintenance other than tires and windshield washer fluid. It was quick and fun to drive, very nimble. It basically was a trial run, in my mind, for us to eventually get a long rang electric car. I felt I needed to convince Jos that having an electric car was a good idea before we put a bunch of money towards one.

We had the car for a year. Here are some stats about it for you numbers folks:

Purchase Price: $8,800 + $450 in dealer fees

Terms: $9,250 borrowed for 60 months @ 4.49%

Monthly Payment: $174/month + $80/month for insurance

Miles driven: ~5,000 in one year

Sell Price: $7,000

I had a heck of a time selling the Spark. Electric cars are already not popular here in Montana, and short-range electrics even less so. And for good reason. I found out quickly that the Spark’s strengths were short drives around time for groceries and social outings downtown. It was great for that, but trips outside of town were not possible due to the limited range and lack of charging stations in our geographic area. As you can see, we didn’t put nearly enough miles on the car to justify the cost.

I posted the car for sale on May 2nd, and just closed the deal on it yesterday. It took three months to sell the car, which is pretty rough!

I had some interest and low-ball offers on the car over that time, but nothing that I was interested in parting with the car for. I looked into either trading in or selling the car to Carvana for $7,800, but I quickly learned that I would need to trailer the car myself down to Denver, CO, which is a 13 hour drive for me. Hardly worth it with needing to rent a car trailer and the gas, not to mention all the time, and likely expenses like lodging and food along the way.

I did some more research and found Vroom, another online car dealer that buys used cars. I found that they DO pickup used cars, which was a huge plus. I plugged in my numbers for the car and it spit back an offer of $6,000. I was disappointed with the lower offer, and once again was not willing to part with the car for that.

Much to my surprise, a few days later, I got a follow up email from Vroom saying that my appraisal value had gone up! The new offer was $7,000. This I could do. I sat down and collected all the documentation needed, and filled out some information online to get the sale process rolling. They were very responsive and the process has been easy so far. My paperwork is submitted, and I made a $595 payment to cover the remaining balance of my car loan in addition to the $7,000 sale price. All in all, a very good experience so far, and awesome that they will schedule and pickup the car here at my house.

I am glad to be done with that car experience. I learned a lot. Having a car loan is stressful: making payments, budgeting for it, having to pay higher insurance rates on a newer vehicle. It didn’t help our debt pay down progress, and in fact it really hindered it in significant ways. If we hadn’t gotten the car, we could have used the nearly $255 per month in car payment money and insurance to go towards the student loans. But I am a sucker for cars, and I justified it. I am hoping I will be able to be content at least for the next year so we can finish paying off these remaining student loans.

I must say that I feel a bit foolish writing posts like this. But I didn’t set out to be an expert, just to learn by doing, and analyzing my mistakes along the way. I am looking forward to having a more lean budget again, and making progress toward becoming debt free except for our mortgage.

A Brief Life Update

Dad and I joking around recently out to dinner. I didn’t have any jeans to wear so I borrowed a pair of his. I tucked in my shirt for the photo for comic effect. Love this guy!

Finances are fun, and they are important. But there are times when life throws you a curve ball, and adjustments must be made.

Our curve ball came in February when my Dad began to not feel well. Something was off, and he spent the next weeks and months trying to get a handle on why he was having low energy, nausea, and other difficult symtoms. There is a lot to the story, but I am not sure I want to get into detail about it here. It will suffice to say that in mid-May, we were finally given a diagnosis for Dad’s condition, and a timeline as well: 2 – 4 months.

This came as a total shock.

I am certainly in the middle of actively processing this brutal news. On the positive side of things: my work has been extremely gracious and flexible, allowing me to spend time with Dad while working remotely from his place. My immediate family has been able to spend a lot of time with him, doing many of the things that he loves. Spending time with him is a huge gift, and I do my best to not take the time for granted. Most days, he is in high spirits and generally pain free which I am so grateful for.

If you as a reader think of it, please pray for my Dad. For strength, peace, and a miracle, as I do believe that God still works through miracles. Thanks for your patience as the blog takes a pause during this challenging and heartbreaking time.