A few weeks ago the missionaries texted me and asked if I could find out why a section of neighborhood was roped off by the police. Upon a google search of the address we found out that the police had solved a 20 year old murder case. A man who was living a mile away from us and who the missionaries had run into at some point was convicted of killing two women and throwing their remains in the canal. Apparently he wasn't too receptive to the missionaries.
My parents went on a two week cruise down to the Panama canal. We dropped them off at the airport and they let us use their car for two weeks. Emily and I work only a couple miles away from each other and so we make it work with one car, but having two cars was nice. Our radiator has been leaking and we used this as a chance to be able to get some repairs done. We got the thermostat and radiator hoses replaced as well. It came out to about 700 dollars, but thankfully we have a large emergency fund in place, we barely even noticed. Although I would rather not spend 700 dollars. Just a personal preference.
There was some Super Bowl craziness happening in the latter part of the month, which we missed for the most part except for the occasional blimp flying around. We stayed indoors most of Super Bowl weekend because we didn't want to deal with the traffic. We had a fun Super Bowl not watching it but we instead played board games and had a rather wonderful time.
This month was a little uneventful, but we've spent a lot of it planning and doing a lot of boring stuff. We nearly doubled our income and we had to figure out where the money is going to go. In our society, talking about personal finances is taboo. I don't like that, and I'm going to talk about our finances.
I took out about $18,000 dollars of students loans. I really didn't need to take out that much to pay for college but I used it to pay for online trading classes and mentorships. Was that stupid? Well yeah, debt is never a good idea, but I received a valuable education while I was simultaneously going to school. While I was at school I learned about some other crazy people who were interested in options trading, and we ended up splitting the costs of a bunch of classes and we met together weekly to discuss the things we were learning. All that was a valuable experience and I feel fortunate because before I ever placed my first trade, I had received enough training to keep myself from blowing out my account like most new traders do at least a couple times.
Maybe there was a better way to fund everything, but the question is, where do we go from here?
Schools teach nothing about finances and so it's up to individuals to study it for themselves. Our money philosophy tends to be a intersection of Dave Ramsey and Robert Kiyosaki, with a little Millionaire Next Door thrown in (I say we've because we've both read the same books and we talk about it often). I'll briefly summarize:
- The Kiyosakian definition of assets and liabilities are as follows: it's an asset if it puts money in your pocket and a liability if it takes money out of your pocket. By this definition, a house is not an asset and shouldn't be treated as such. A house is good to own but you need to balance out the liability with assets.
- Ramsey says debt is bad in any form. This is where Ramsey is different from Kiyosaki who would say that debt is good as long as it puts money in your pocket. Ramsey says debt is always bad, and that's the philosophy that we're more inclined to.
There's lots more of that, but those two principles are enough to understand why we're making the decisions we're making. Due to these principles we've adopted we have decided the following:
- We will pay off all student loans within the year so that we can be 100% debt free. This means that we won't increase our standard of living very much and we will use surplus money (about $1,500 dollars a month) to pay off student loans. In order to do this we will continue to keep our expenses low (around $2,000 dollars a month).
- In terms of a house, the options we're willing to accept anywhere from a 100% down payment to a 15 year mortgage.
In order to do something difficult, you need to have a "why". Our "why" is this:
We want to obtain as much freedom as possible. We want to be able to give money generously. We want to pay for kids dance lessons or whatever they're interested in. We want to be able to take vacations without stress.
Debt and lack of education are the two biggest obstacle to building wealth. If we follow the bare minimum "safe plan" and have a 15 year mortgage and only make the minimum payments, we will still have a completely paid off home by our late 30's/early 40's.
I'm currently making $35,000 a year which I will expect to go up, seeing as the average computer/nerd/programmer makes $90,000. Even $50,000 or $60,000 dollars goes a long way without car or house payments.
