Homelessness As A Debt-Strategy
The author of this interesting article had maxed out 11 credit cards in college. She paid off her debt, saved a rainy-day fund, and set herself up with seed investments on the path to retirement, by getting a second job, living out of her car for three months, and getting a cheap gym membership so she could shower.
It's surprising how few problems I can see with that idea, given that I have round-the-clock internet access at work. And as for a bed, I sleep in the back seat of my car all the time. It's the only place to take a lunch nap.
Don't worry, I'm not in any sort of financial crisis. I could go on just as I am going on, and change nothing. It's just that lately I've been thinking about more than just getting by. I've been considering a little stability and foresight, and a big rock candy mountain some people talk about called "retirement". I keep meeting people who really believe retirement exists. Maybe they're right.
I already live within my means. Ninety percent of the contents of my little room was either made myself, a gift, or bought used. I pay in volunteer effort to attend conventions and go on trips. I live on frozen pizza and ramen. You should see my bed-- it sucks and I don't care, and honestly, I'd rather sleep in other people's beds anyway. ;)
I didn't say all that to complain. I'm really content with it-- proud, even, of how much people show me love by giving me stuff, and of how stoic I am. (And why shouldn't I be?) I said it to illustrate that the problem is not materialism, or expensive tastes, or too much pride to mooch. My problem is laziness, pure and simple. I hate having a hundred different expenses and I get a feeling of nausea thinking about the complexity of shuffling and juggling all those numbers and remembering to pay them.
This personality flaw has gotten much better with age. Believe me, my progress, while slower than that of my parents' generation, has been measurable. And that encourages me.
I don't want to go homeless, not because I care about not having stuff, but because it involves changing the status quo, which implies planning my financial future. Whereas the nice thing about the homelessness-as-a-debt-relief strategy is that it won't involve actually tracking money very much.
I'd like to #1 pay down the $1,500 that is left of my debt and not end up paying so much interest. I want to switch to a lower rate than my current %28, but even if I do, I'd still be paying all my spare money toward the debt. So, a lower rate in and of itself won't allow me to #2 save a $1,000 rainy-day fund so I don't get into debt during emergencies and #3 afford a more reliable low-mileage low-maintenance car so I don't have as many emergencies. The math says my current expenditures, sparse as they are, just aren't sparse enough to leave any for that in the balance column. I just have to lower my expenses even more, long enough to surmount these three humps. After that, the money with which I would otherwise be paying down the debt can go to saving for my next car.
Any alternative suggestions to deliberate temporary homelessness as a strategy?
Comments
paranthropus on Nov. 8, 2006 1:35 AM
What about addressing the income side of the equation? Those nice folks at Doner must be swimming in ill-gotten gains. How about a raise?
When was the last time you looked at your resume, assessed your skills, and compared them with your current position at work? You have TONS of skills and knowledge acquired outside of work. Can you apply any of them to your job, or to a better job in your organization? If so, is your supervisor aware?
Not that you should march in with a list of demands, or anything, but perhaps you can set the gears in motion.
matt-arnold on Nov. 8, 2006 2:02 AM
I appreciate the reply!
Every time I look at my skill set and interests, from the standpoint of a businessman acting as my own talent agent, I don't see a way to make enough money with it to live on.
I have few skills that apply to my current income, other than the on-the-job training. My position is just an redundant layer of pencil-pushing middle management, long overdue to be replaced by software. In fact, I'm rather slow and passive at doing my job and I really hope I don't get promoted, because I'd get more work. If anything, I worry about getting fired. My boss told me a couple of months ago they skipped my performance review and raise last year, and warned me my first one would be in a few months. He said they needed to see a %110 improvement if I was to see any raise, and gave me a bunch of new paper-pushing responsibilities with which to try to earn it. He noticed that I don't seem to be interested in my job. But he didn't say what behaviors I need to fake to simulate interest. I can't tell by watching him or my co-workers because I don't know if anyone is interested in our job.
If my performance review goes badly, I'll ask him if I can switch to being a prepress operator. It's just too bad they're desperate for more print producers (despite that position's aforementioned redundancy) and don't need any prepress operators. I might also talk to him about the new system of metadata tags on art elements. Metadata interests me. Also, all our user interfaces suck in ways that I can describe with precision. That interests me.
I've been supplementing my income with freelance graphic work for cheap clients who will only pay hobbyist rates and keep calling me on the phone for free consulting. I fear that I'm undercutting the ability of others to make their living doing graphics. I fear I'm reducing my skills to the equivalent of ketchup packets that fast food places hand out for free. But if that's what graphics are worth, then I have to adjust to that economic reality.
paranthropus on Nov. 8, 2006 4:25 AM
Well, I can read a number of positives in your reply. First of all, if you can describe ways to fix their user interfaces, perhaps it would be worth your while to design a new UI for them. I don't know if it's Flash, HTML, Java, or whatever but it does not have to be 100% functional. Just a mock-up which you can walk them through would be impressive. Same goes for the metadata. How could that be improved? In any organization, it's a big deal to fire and hire a replacement. Much easier and more preferable to move someone to a situation that better suits their temperament and abilities, a place where they can show eagerness and initiative. The human resources people LOVE it when they can do that.
Don't wait until after your performance review to ask for a transfer, or to show interest / initiative in a new job position. If you can show something positive before the review, you will give them something positive to write about. Nobody likes to write an unfavorable review. In a way, you are doing them a favor.
If your freelance work is that much in demand, then you should eventually demand a fair price. Same goes for consulting. Don't fear undercutting everyone else. Graphic design is a skill worth paying for, and undercutting the competition is a legitimate business tactic. Eventually, you will want to raise rates and seek out better paying clients so that you can make a living off of it.
twoofdtm on Nov. 8, 2006 1:45 AM
A part time job for the holidays? Yes, it cuts into the social life, but it could solve the financial stress and then it'll be all gone. And you'll probably be out of the job by Fusion, easy.
rmeidaking on Nov. 8, 2006 3:26 AM
I don't know enough about your income level or expenses to really speak to specifics, so I'll speak to generalities.
The number one thing you need to do, you already know about: Get out of debt. There is one acceptable debt these days: a mortgage. There is a mild argument for acquiring student debt, but once you have it, you should get rid of it ASAP. Pay off the highest interest debt first. If you have credit card debt, the thing to do is to shop for a different card, and transfer the balance. Even a few months at a lower interest rate can help a lot.
Next comes reducing ordinary expenses. Can you take a sack lunch? Can you eliminate eating at restaurants all together? What else do you spend on a regular basis that could be cut back?
Next comes "Saving by hiding the money." If you have direct deposit at work, have $50 a pay period put into an account *and never look at it*. This will get you your $1000 rainy day fund in less than one year.
As you say, you're already living fairly frugally. There may not be much left to cut. But there's always *something*.
On the revenue side, you should consider finding a job that you *do* like. It doesn't sound like you're in a wage category that makes finding another job impossible. I know the economy sucks, but it's something to think about, especially if you can do middle management. Where do you *want* to work? What do you *want* to do?
And there is that perennial budget balancer: get a job as night re-stocker at your favorite Big Box store. They all need more of them this time of year. At $10 per hour, you'd need 150 hours to pay it off (okay, 180, given taxes), which translates to thirty hours a week for six weeks. What do you mean, you need sleep and a social life? ;-)
The big thing is to *really* live within your income. Eat ramen and rice if you have to; shop at Salvation Army; have friends visit you rather than driving your car; cancel the cellphone; cancel the cable; whatever it takes. You can get it back when your financial situation improves.
(Been here, done this, like my current situation better.)
matt-arnold on Nov. 8, 2006 4:22 AM
The Big Box store is a good idea.
Where do you *want* to work? What do you *want* to do?
I want to organize all-volunteer not-for-profit science fiction conventions with people who I don't have to babysit because they love it as much as I do. I want to record podcasts, draw webcomics, design games, build glittery themed attractions, animate, sculpt, and puppeteer. I want to get up on a soapbox. I want to breathlessly enthuse to everybody about awesome things they will love.
I already do most things I want to do, and give it away for free or cheap. It's difficult to get paid for it unless it's to sell toothpaste, or toward some other end that I don't really believe in. For the purposes I do believe in, I'd have to work 70 hours a week and not have a life, just to keep ahead of the hundreds of thousands of equally talented competitors beating down the door for my job.
I hope very much to find an exception to this. I also like designing publications in Photoshop, Illustrator and InDesign, which used to be an income source I enjoyed, but the world thinks they can do that for themselves just because they have the programs. I'll start looking again for a job doing that. The last one I applied for had so many applicants, and insider at the company told me they threw away most of them at random before even looking at them.
Eat ramen and rice if you have to;
I eat lots of it. That's my typical sack lunch.
shop at Salvation Army;
I don't get clothes anywhere else, other than gifts.
have friends visit you rather than driving your car;
This is a big expense, but surprisingly few of them are willing. I drive a lot, to see people who I need to see. I would seriously rather be homeless than not see them. Even my own parents and grandfather have never seen where I live, and never saw the last place I lived. I had to hardly talk to my parents for months, before they finally admitted last week that maybe they could take the initiative to come out to me. I haven't seen my grandfather all year, just to test and see if he'd EVER take the initiative to contact me and suggest that I drive out there and see him.
cancel the cellphone;
It's the only phone.
cancel the cable;
I've never had cable, and don't want it.
I was serious about the fact that I have almost no fat to trim. One thing I'm going to do is eat at home before my weekly gathering at Denny's, and not eat when I get there.
matt-arnold on Nov. 8, 2006 2:46 PM
By the way, I understand that the only acceptable form of debt is a mortgage. I have no credit cards. I have no credit of any kind.
Unfortunately, since check companies only take credit to pay for checks, I have no checkbook either.
flutterby68 on Nov. 8, 2006 2:29 PM
1. First things first when it comes to employment. How good is your resume? How long has it been since you have updated it? If you truly want to get a higher income, you may have to start looking for alternative employment, and the first step to that is a GOOD resume.
2. What expenses do you have that you can pare down? Examine your cellular phone plan to see if you can change it to one that suits you better and costs less. Can you combine services on anything? If you have any loans (student or otherwise) can they be consolidated or refinanced at a lower interest rate to save you money?
3. Do you have any large monthly payments that you could pay every two weeks instead? That actually cuts your interest dramatically and pays things off faster. I used to do it with my mortgage and it helped a lot.\
4. How frequently do you eat out? When you go to MOFO or something like that, eat dinner at home before you go, and just order a beverage (if anything). Budget yourself a certain amount for eating out, and don't go over it. If you end up not using it, save it, don't spend it elsewhere.
5. Open a savings account... NOT at the same bank where you have your checking account. Do NOT get an ATM card for it. That way, it's much more difficult to have access to those funds and you have to actually think about it and make effort to take money out. Of course, same goes with deposits but somehow it's easier for me to make time to go make a deposit because it's a faster process :)
6. Stop spending coins. Whenever you buy ANYTHING, put the change in a jar or other container. Do not TOUCH the coins in it until the end of the month, at which time you count it, roll it and take it to the bank to deposit into that difficult little savings account.
7. Start coupon shopping and comparison shopping. For me, the sale papers that come in the mail arrive on Tuesday and Saturday. Actually LOOK at the sale papers and plan your shopping around them. Start getting the coupons in the Sunday paper and USE them. Refuse to buy something JUST because you have a coupon. When you shop, always do so with a list and don't add things unless they are TRULY necessary. Be willing to make changes if it is a good idea financially (if you were planning on purchasing peas but green beans are on sale, switch!). Buy store brands instead of name brands, but be careful - sometimes a coupon on a name brand will end up being less expensive than the store brand. Also check the per-serving or per-ounce cost on items - sometimes that large economy size is not a good value.
8. When you cook at home, start planning meals in advance and do so with those sale papers in hand. Plan your meals and your grocery shopping based on what is on sale at the store, and check your coupons.
9. Returnable bottles/cans - don't return them when you shop. Instead, return them separately and add the money to your savings account. Every little bit adds up.
Hope this helps.
paranthropus on Nov. 8, 2006 4:55 PM
All very good suggestions. Here's a variation on the "coin jar" plan which I came up with earlier this year:
I realized that I was spending a little too freely, and wanted to apply a little discipline. Looking over my bank statements, I calculated a weekly average for my ATM withdrawals over the past 6 months (shockingly high). Instead of just hitting the ATM whenever I needed cash, the plan was to withdraw that fixed amount once each week. No belt-tightening so far, just a little discipline.
My goal for each week was to cut my spending in half. At the end of the week, I would take whatever was left in my wallet and put it in a jar on my desk at home. If I met my goal, I would treat myself with something simple, like going out for a coffee and an expensive bakery item at the local Barnes and Noble. If I failed to meet the 50% savings goal, oh well. Expenses vary week by week, after all. Without fail, though, that wad of cash on my desk kept growing, providing very tangible positive reinforcement.
To fit this plan into your life, Matt, you might make Tuesday your "ATM withdrawal" day. On Monday night you would know if you met your savings goal for the week. If so, you could treat yourself to something to eat at MOFO.
I've heard Buddhists refer to taking care of the needs of our physical bodies as "animal husbandry", as if there were a spiritual side to our minds which did all the care-taking. While I do not believe in this duality, I think that the metaphor is useful. Like all animals, we respond well to positive reinforcement, even when we consciously impose that reinforcement on ourselves. This is all that financial discipline is: finding a method of positive reinforcement which will work well with your lifestyle.
matt-arnold on Nov. 8, 2006 5:16 PM
Heh heh. I'm glad you mentioned that. I'm already doing it. I don't have an ATM card. Because it was also a VISA, my credit union took it away when I was laid off for six months about three years ago. I go to my credit union bank branch in Oak Park and withdraw a budgeted amount of money every week. When the cash runs out, I stop spending. That's my budget. But the savings goal is a good idea.
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