This success story is about how I have managed to live debt free in 2007. Sure, the year’s not over yet, but barring any kind of nuclear meltdown, I’m going to come out of the year looking pretty sharp. So far this year, I’ve contributed 44% of my take home pay to a taxable retirement account, used my 2006 tax refund to fully fund my 2007 Roth IRA, and in January, I will have 15% of my gross salary put in a SEP retirement account along with having my 2007 tax return applied to 2008 Roth IRA.
So….I’m happy about that.
2007 was full of a lot of temptations and pitfalls. I was saddled with an unexpected fixed monthly cost in January that still hasn’t been resolved and came very close in July to purchasing a motorcycle that I didn’t need, but I used the techniques listed below to keep myself on the right path. 1. Stay independent.
For me, this meant to have as few responsibilities as possible. Any kind of obligation or contract should be viewed with extreme skepticism. This includes, marraige, children, & live-in partners. I've heard far more stories about people who have had loved ones screw up their finances than those who have bailed them out. We all seem to accept the premise that you shouldn't loan money to friends or relatives, but there is a failure to recognize that as much as certain other people may matter to us, they are very likely to hurt our bottom line.
One little screw up like a careless encounter with a new partner, or allowing myself to project feelings of affection on a new partner without really evaluating how they impact all aspects of my life would be enough to disrupt years of careful planning.
Sure, it doesn’t sound romantic and a lot of people may think it is being overly cautious or may even say I have ‘trust issues’ (wouldn’t be the first time), but the bottom line is that it works VERY well.2. Don’t be proud.
When I was young, my mother told me that I should never deny a gift when it is offered because it would take away that persons blessing they received for giving the gift. This was good advice at the time, since we weren't all that well off and if I didn't take hand-me-down clothes or eat meals prepared from food-drive donations, life would have been more difficult. Now, I just apply the same premise in a different ways. If someone is giving something away for free, thank them for it and be extra appreciative because of the bonus you receive.
Some people are too proud to accept gifts or charity, just as they are too proud to wear ‘cheap’ clothes, get their hands dirty fixing repair issues, or appear ‘cheap’ when in the company of others.
I'm supposed to pay $15 to the music studios for a CD in a store when there are people who want to share with me for free online? Pay $20 to Hollywood for a new DVD when I can download a hundred new DVD-rip months in advance for the cost of a high speed internet account?
I don't pay for entertainment unless I want to, and this includes software, books, movies, music, games, etc... You name it, I've looked into getting it for free online. 3. Be street smart.
You probably wouldn't engage in a game of chance with a person in some back alley, and neither would I. But scams aren’t always so easy to recognize and avoid. Sometimes they are deeply ingrained in our psyche and full of all kinds of plausible excuses or socially accepted foibles.
Marketing is a great example. A truly street smart person wouldn’t be taken in for a second by the glitz and glamour of advertisements.
More than a few religions dictate that the devout donate a portion of their income so the followers will benefit either in corporeal form or in an after-life. IMHO, this is one of the longest running and proliferate scams in human history. I choose not to be a victim.
Gambling is a tax on the ignorant. From the office superbowl pool to the craps table and state lottery, the problem isn't losing, it's not getting paid enough when you win. Too many people fall in the pit of compulsive behavoir when it comes to games of chance. I went to the dog track with coworkers this week and had a great time. I spent the entire time soaking up the experience and socializing. It was amuzing to watch the others bet, and I never felt the urge to throw money away on the greyhounds.4. Keep the main thing the main thing.
Financial responsibility is a life long pursuit. You can’t do it for a week and then take the next month off. You can’t do it most of the year, and then go crazy for Christmas. Like a heroine chipper, it will bite you in the long run, even if you are good ‘most of the time’.
I’m doing this for me. I’m selfish, and I’m honest about it. I have no delusions about being a great philanthropist or easing human suffering. The goal here is to keep my financial house in order, not saving the manatees. If I wanted some kind of utopian communal life, I would take a different route. The plan here is to get rich slowly and these are three of the useful methods I employ. I’m not going to go out and club baby seals to sell their pelts for money, but I’m also not going to put my future at risk for any perceived greater societal good.
I'm aware that these may be controversial topics, so if you're easily offended, please realize that I'm just one loon on the intarweb who is voicing an opinion. Hatemail can be directed via PM, but I value any comments.