I originally wrote this on a 4.5 hour flight but that wasn’t even enough time, below is pretty much a buttoned up summation of what I’ve learned on my PF journey. (This will be long with no TL;DR)
Lessons Learned
I intend to be honest with sharing my experience and paint a story that (hopefully) many can relate to.
(Actual financial journey broken down will follow)
1) A healthy PF lifestyle will stay with you, even out of debt.
I’ve always been a person of routine and sticking with what works for me. I get up early to workout, make my meals for the week, know I have to get groceries on Sunday at 9am or else I’m a wreck. When I discovered PF, it was so addicting because of the sheer amount of information. Seeing what people have done, how they’ve done it, learning how to comb through all that is finance and pulling out only what’s important was amazing.
So once I learned how much to save for retirement, why you only need so much cash and how saving/investing is important (even if it’s small) while you also pay off debt, I was hooked.
I kept within my range and boom, all of a sudden I’m debt free. But what’s important is how I’m still following those habits, now I simply put more into retirement, plan to save for larger things or experiences and still know the value of money. I did not get out of debt and completely forget everything.
2) Use your time in debt to learn what’s important to you.
This may sound like a surprise but this may be the most important thing I learned. We all want to get out of debt as quickly as possible and go through that door that is “debt free.” The problem is, you don’t want to walk through that door and look back and regret missing out on anything, especially in your 20s.
This is also the most controversial/unsettled topic on this sub. “How much can I spend on social?” “Am I allowed to travel?” “What should I allocate to personal expenses?”
In my experience, you have to LIVE. This in and of itself is subjective but I’d argue the fundamental question is “What gives me fulfillment?”
No-one can answer this except yourself and there is NO wrong answer. If living in a nice place is important - FINE. If traveling is important - FINE. If playing golf every weekend is important — FINE. If having nice clothes is important — FINE.
What YOU need to decipher is WHICH thing is MOST important. You cannot have it all, you can’t. But you CAN live in a shithole and travel. You can live in a nice place and stay in more often. You can indulge in nights out while sacrificing a decent car.
I’d argue that this sub expects everyone to cut back on EVERYTHING. We can’t all live at our parent’s home, bike to work, not go out/travel and just casually get through debt. (I know that’s a massive generalization, but you get the point).
Which gets to the next point…
3) You are human.
I’m sure I’m not the only one here who cooks their meals for the week, keeps a budget, brews their own coffee, watches tracks every penny and gets anxiety when they go over their budget. This is no way to live. First of all, you should be proud to be so cognizant of your financial situation, most people aren’t. Secondly, life is messy, random. We have moments that are unexpected, we have desires that come out of nowhere, we discover wants that speak to us. None of this is bad, it’s what makes us human and I’ll be the first to admit how much anxiety this has caused me in the past 5 years.
I live in Chicago and work in the creative industry — the least friendly financial space with spending. I can’t even count how many weeks I was doing so well following my budget and the weekend would hit and a night out or brunch would take me over $20, $40 or $100. Just in time for Sunday with all other worries washing over me, I was a mess. Frustrated and full of regret, I’d be so mad to fall off track. I look back now on how dumb that was to waste all that mental capacity on worrying and plus, those were the nights with friends that I’ll remember Chicago for. Well, the nights where I didn’t drink too much… : )
You need to have a life and you cannot remove the moments from life that make it so interesting. Use your budget BUT I’d argue you should allow it to flex/bend/adapt, we are not perfect.
4) Consider PF a Training Ground
This subreddit is fantastic as I’ve already mentioned but I’d caution against treating it as a regular destination once you’ve gotten your PF situation in order. A lot of finance is simply being aware of income vs costs/wants and it gets to a point where you have to use your own judgement as you move forward. I see a lot of people here so quickly reprimand others for not putting enough away for retirement or paying too much for a home. While these comments can be valid, remember that individuals and their stories are wildly different. A salary of $85,000 is vastly different for an individual with no debt as opposed to a parent with three kids and a mortgage. Neither person is right or wrong per se in their endeavors, it’s simply where they are in life. The last thing we need to do on this sub is criticize people for the situations they’re already in.
Financial Breakdown
I will try to be as concise as possible but I really do not have every detail from Day 1 of paying off my loans so I’ll do my best. I work in the creative industry in Chicago, 30/M. I also have a doc that I developed but will share that in another post as that requires a lot of explaining.
Background
Spring 2009 (22): Graduated undergrad with a bachelors in Video Production, a minor in Business and a Sales Certificate. I was fortunate to have no debt, thanks to my parents paying the way.
Spring 2009 - Fall 2010: Work at a small production agency making $10/hour. Live at home, leasing a car. Decide I need to attend a portfolio school (small art school focusing on either art direction/design/photography/interactive and building a book of “fake” work) to have a better career with more visual skills. I focus on design and art direction to pair with my video background.
Fall 2010 - Fall 2012: Begin portfolio school. About $10K saved but have to take out government loans and borrow from parents. I occasionally freelance as well while in school. School is 2 years straight though, no breaks. Live in some shitholes and really don’t spend any money except one night a week at a shitty local bar everyone goes to.
Total after graduating: ~ $43K in loans ($33k/gov at 5% | $10K/parents at 0%)
Fall 2012 - Spring 2013: Intern in San Francisco making $10/hour with overtime and double time opportunities. Barely make it by, not paying any loans back currently. Rent is $750/month and I’m splitting a bedroom.
Spring 2013 - July2014: Get a job in Chicago making $55K (no raise while there). Start paying minimum back in loans (around $300/month I think). Rack up about $800 in CC debt buying furniture. Found a cheap studio ($615/month). Expenses are going out, concerts, social, gym, occasional small trip travel. No car, health insurance through job. Contributing a small amount to 401K. Not saving much in cash.
July 2014 - September 2015: Get a new job making $60K, slight title bump. No 401K option so I move my previous 401K to a Roth IRA, take a hit with not paying taxes until tax time but better in the long run. Move to another apartment at $750/month. Occasionally pay more on loans, minimal savings. No car, expenses are traveling, social, etc.
September 2015 - March 2016: Get a raise to $70K. Move to new studio at $1,050/month. Similar financial situation, find out about r/personalfinance.
March 2016 - June 2017: Get a new job making $85K with a title bump. Move back to first building to a studio at $875/month. Now able to pay more on loans occasionally ($1,000 here, $500 there). Around this time I’m done paying parents loans. Contribute about 5% to 401K, save more in cash as I wanted a particular surgery (did not get it). Refinance with Sofi but it drops the APR down only 1% point.
June 2017 - August 2017: Rent goes to $895/month. I quit my job to freelance. Find a 2 month gig freelancing at $2,300/week ($118K/year roughly). I travel, have weddings so I hold a lot of cash. Stop contributing to my Roth and throw a lot of money at loans.
September 2017 - Today: Got a new gig freelancing at another agency (6 month term) making $100/hour ($150K roughly) with a title bump. Throw about $2K from savings and one week paycheck to pay the last loan off (~$,4000 total).
Things to note:
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I spend an average (over a year) of $450/week on groceries/travel/clothes/random things needed/appointments/wants.~$200/week of this is on alcohol and eating out, critique if you’d like but this is why I work so hard.
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I pack my lunch nearly 4 days a week. Cook meals for the week on Sunday.
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I work in the advertising industry, it can be volatile and I’d say my path is a bit expedited but others have moved even faster. I worked my ass off at every agency and left each job on my own terms.
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I got the freelance gigs through connections. I’ve built my own network in Chicago, no relatives or friends. Slight help through portfolio school starting off.
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When looking for jobs in Cleveland after undergrad and Chicago, I’d make a list of places I’d like to work. I’d then find names on LinkedIn of recruiters, creative directors or anyone I could speak with. I’d walk into the agency and ask to speak with said person or anyone in charge of hiring. Every place loved this and it’s what got me my job in Cleveland and built my network in Chicago. I’ve found jobs for about five friends through connections. I bring this up to not just emphasize my work ethic but to speak to all creatives who think there are no jobs out there. Emailing or just randomly connecting with people on LinkedIn will get you nowhere. There are a ton of jobs, not just in Chicago but in every market, the problem is they aren’t always listed or they go to those with an immediate connection. Meet people, cold call, take a risk. You may not get a job today but you are now a real person who (if qualified) will be remembered when something does open up.
Ending Note You will get out of debt — this needs to be said more often. We think our current PF situation is forever, it’s not. Jerry Seinfeld has a great quote (this isn’t exact) “No payments until March. When people buy a car or couch, they think March will never come.” The same is true for debt. We think it will never end but we need to live with the same mindset now that it IS gone. Having more money obviously makes you happy but a switch does not flip when you’re debt free. You are still the same person with the same wants/needs — it’s up to you how you act on them.
(Edit: Formatting, typos)
Submitted October 06, 2017 at 01:35PM by Rant86 http://ift.tt/2yvQ0II
