John Oliver Makes Debt Buying Interesting

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This may speak more to the lack of excitement in my life, but one of my favorite parts of the week is watching John Oliver. He's funny (though sometimes his analogies are too over the top) and he covers important things. It's surprising how many things just seem wrong with the world. (When I'm the ruler of all mankind, I'll fix them. You're welcome.)

For example, it becomes a lot easier to write that you shouldn't be wasting money on supplements after you watch this:

And you'll want to watch it, because it's funny. I'm hoping he'll cover MLM Scams someday.

In the meantime, his most recent exposé is about the debt buying industry. With more than 3 million views Here it is:

Much of this is stuff that I kind of knew, but I learned a few things as well. It can be important because you never know if you'll get harassed by debt collectors. I have a theory that everyone has some hidden debt whether it was an overdue library book or Blockbuster video rental fee. I don't know of a place where you can search for your name and see if you have any outstanding debt, but that would be interesting (if not for all the privacy issues of maintaining such a database.) I didn't say it was a good theory, just that it is a theory.

If nothing else, perhaps file this away for when you need it?

Finally, I don't want to give away the ending, but it is really good and worth watching.

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Posted on June 8, 2016.

“Are You *IN* Debt or Do You *HAVE* Debt?”

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This weekend my wife and I had a date night while the kids slept over their grandparents house. We used the opportunity to go to Foxwoods casino for a special dinner and to see comedian Chris D'Elia. He was a co-star in NBC's Whitney and Undateable, two shows that I thought were fantastic. I didn't particularly like them due to D'Elia, but he was the common theme.

I'll get back to Chris D'Elia and the dinner in a bit, but I found the opening comedian somewhat interesting. I think his name was Mike Lomborg. I wish I could find out for sure, but he wasn't mentioned in writing anywhere I could find. My best attempts to dig through Google came up empty.

Comedy usually doesn't pay good money for people at this level. And that's a point that Mike grabbed onto and ran with. Comedy also works best when it's a little self-deprecating. Mike explained that having a scooter instead of a car significant diminishes his dating prospects. He also said this (paraphrased) about one of his break-ups:

"She said that she loves me, but she's not in love with me... That's like me saying that I have debt, but that I'm not IN debt. So I went to the bank and told them that while I have debt with them, I'm not IN debt with them, so I'm not going to be making any more payments."

Obviously, that wouldn't work out very well for Mike's personal finance situation. I found it funny, so I had to share it.

He had another personal finance joke. This one was about student loans. He mentioned how he wrote a $300 check and somehow still owes the same amount of money (it's a comedy show, not math, but let's presume that the interest rate is the reason). He goes on to ask if they are the mafia, because it would be easier if they just broke his legs and called it even.

He warned that this is what happens when you go to college and don't use the degree. That's some sage advice from a guy who started out his act with about 25 pointless swears in the first 2 minutes.

Ever see the movie Memento where the movie's scenes are in reverse and then returns to the present day at the end of the movie? I'm going to steal that idea for this article.

A couple of hours before Mike took the stage, my wife and I sat down for dinner at David Burke's Prime Steakhouse at Foxwoods. This was not going to be a cheap dinner. However, I hoped to have a steak that I wouldn't forget. In a way, they delivered on that promise, just not the way I had hoped. I'll start by saying the service and the table-side Caesar salad were very good. Unfortunately, the 75-day dry aged ribeye was very ordinary... and certainly not of the worth the premium price in my opinion.

Continuing the Memento backwards theme, we were a half-hour early for our reservation. We decided to have a drink at the bar.

The price of wine at David Burke's Prime was shocking. The cheapest bottle on the menu was $82. I'd say only 20% of the bottles were in two digits. I'd say the median was probably around $125. With four glasses of wine per a bottle, that's anywhere from $20-$30 a glass. They had good wine, but having been to several of the vineyards, they weren't extremely premium-priced ones. The interesting thing to me is that if you bought wine by the glass, there were many selections between $18-22. That seems to be the best way to go... if you want wine.

I went with the beer myself. At $7-$8 for most of the drafts, you can have 2-3 before you get to the price of a glass of wine... or around 15-18 drafts for the price of (my estimated) median bottle of wine. (Note: Please don't try to drink 15-18 beers.)

I don't think I'll be back. It's not because it was bad, but I found David Burke's Prime Steakhouse was a slightly above average experience for an extreme price.

Before we went to David Burke's, we stopped to play some craps. I'm a big fan of craps, probably because I know many of the odds. That helps you minimize the house's advantage... which is the best that most people can hope for.

We proceeded to lose $50 fairly quickly. What are the odds of three straight rolls of 3 on the come out roll? Well, it's 3/36 for one roll. My math skills are very, very rusty, but I think it's something like 27 in 46,656... or about 1 in 1725. That's exactly what happened to us.

We figured that we might as well move on to dinner. Though it was early for our reservation, maybe they'd be able to seat us early. Worse case, we could pass the time to dinner with a drink at the bar.

Now we jump to ten minutes before the Chris D'Elia show starts. I decide to hop on Twitter and see if people in the audience are Tweeting about him. I do a search and see tweets saying that his show Undateable was cancelled by NBC hours before. I figured that this could be very interesting...

... it didn't get interesting as he didn't mention it until near the end of his act when someone in the audience brought up Whitney. He said something about his stand-up routine being different from his television stuff. So that was disappointing. He also seemed to be so tired that he'd laugh at his own jokes before he told them. One time he told a joke and ad-libbed something and said, "Hey someone Tweet me that so I remember that."

This is nitpicky stuff as most of his act was very good. He had two financial jokes (that I remember).

The first was about Wells Fargo greeters. It was funny, but I couldn't related because: 1) Wells Fargo is barely in New England and 2) Who actually goes in banks? I've been inside a bank about 3 times in 5 years... and they were for fairly unusual circumstances such as getting a HELOC for solar power and opening a business account.

The second joke, and I'm not sure this was supposed to be a joke, was D'Elia admitting that he has no idea how to switch banks. He thought that perhaps they give you bags of money with money signs on them when you leave the bank.

I wonder, is this really a problem that people can relate to? I understand that it's a joke, but it seems like the joke would be funnier if there was basis of truth that people could laugh as if to say, "It's funny, because it's true."

My favorite joke of D'Elia's was about how we are the stars of our own movies. While we might all agree that he's the star right now with the literal spotlight on him addressing a large crowd, there's an entirely different perspective to consider. For some couples, such as ones on a date, he's just a small part of their evening... he might as well be "Comedian #2."

Let's end this rambling article on that sage thought from "Comedian #2."

P.S. If you are still reading, I'm going to be releasing a special deal exclusively on my mailing list tomorrow. It's free, so you might want to sign up if you aren't a member already.

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Posted on May 16, 2016.

Dig Yourself Out of Debt in 2016

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The following is a guest post by Holly Trillo

If you’ve started off the New Year with a worrying debt, you’re not alone. According to NerdWallet, the average U.S. household with debt carries a balance of $129,579 in total debt, with almost $16,000 of that attributed to credit card debt. If you’re ready to begin ridding yourself of heavy debt and its devastating consequences. Start 2016 off with a bang and use these tips to start eradicating your debt as quickly and as easily as possible.

Establish a Budget Immediately

The first thing you need to do is sit down and create a budget using something like Plan out all your future expenses by using a guide made up from your past few months of spending habits (this is when saving receipts comes in handy). Write down your projected monthly income, and factor in money for an emergency savings fund. Having a budget in mind and established guidelines will help you make better monetary decisions—you’ll definitely need to scale back on spending if you want to make any sort of headway with your debt issues.

Options for Debt Payment

The first hint for paying off your debt is to pay more than the minimum each month, especially if you’re only dealing with a few accounts. Creditors and banks capitalize with each extra month you spend taking to pay them back, and minimum payments will merely prolong your debt struggles, not get you out of them.

If you’re dealing with a multitude of debt accounts, you’ll want to consider the snowball or avalanche methods of making payments. Should you choose to use the avalanche method, your focus will be on paying off the accounts with the highest interest rates first, so as to avoid overpaying as time drags on. If you are feeling overwhelmed with the sheer number of accounts you’re paying off, you might benefit more from the snowball method, in which debtors pay off the smallest account first, checking off account by account. There’s no right way, and you’ll have advice telling you to do both—it’s simply a matter of choosing the method that works for you.

Put the Credit Card Away

Start the year off with a resolution to leave your card at home. It’s easy to use your card for everything, especially if you have a rewards card that gives you points or cash back. This habit can easily plummet you further into debt, and may in fact be the original cause of your current predicament. You’ve likely racked up a hefty amount of bills after the holidays, and your first goal should be to pay these off before even considering using your card in 2016. While you should keep up with any automated payments you have on the card, avoid taking it out on shopping outings. Instead of taking a credit card with you to grocery shop or buy clothing, pull out a sum of cash—when it runs out, your shopping is done.

Luxury Purchases

If you’re in debt, then halt all luxury purchases. Whether its unnecessary travel plans, tickets to events, or new wardrobe purchases, avoid temptation; your top priority must shift to getting rid of your debt. Adding to what you already owe will do you no favors, and the longer it takes to pay it off, the more you will pay in hefty interest rates—meaning your credit card is costing you much more in the long run.

Hire a Professional

If you’re in dire need of financial assistance, or you’re just not sure what the best route for you, consider hiring professional help from a company like Community Tax services. Those trained in finance can help you save on taxes, keep you from digging a bigger hole, and get your debts settled as quickly as possible. As we draw closer to tax season, professionals may also be able to find hidden tax deductions and aid you in getting out of hot water with the IRS.

Debt can be terrifying, and beginning a New Year saddled with payments can make a fresh start seem almost impossible. Incorporating these techniques and tactics into your monetary decisions for the next 12 months can see you greeting January 2017 with open arms.

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Posted on December 29, 2015.

Some Simple Debt Solutions

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It isn't often that I write about debt... I'm mostly interested in growing my net worth. I've also never been in debt (though I've been pretty close). However, a well-rounded personal finance website covers should cover getting out of debt. Also, it is good to get out of your comfort zone every now and again.

So let's pretend that you are in debt. What are you going to do about it?

Typically people are in debt for one of two reasons: they spend too much or they don't make enough money. If you spend too much that can usually be broken down into two sub categories. I like to call them "big one-time" and "lots of dimes":

  • Big One-Time - If you have McMansion, a Mercedes, or a marine vehicle, you might be in debt because of big one-time purchases. The solution could be as simple as moving to a smaller house in a cheaper neighborhood, selling the Mercedes and buying a Mazda Mazda2, or selling your boat. None of that is fun, but being is debt is also not fun.
  • Lots of Dimes - This is the spending of money on many items consistently. These small purchase over a long time add up.
    If you spend $10 a day at lunch, that is something to consider. Some may call it The Latte Factor. If you have Netflix, Hulu,, HBOGo, Showtime, and every other subscription service known to man, you might be spending too many dimes.

The one wild-card that I don't mention here is medical bills. They can be tough, and you really can't do too much about them, except try to prevent them with good health practices and insurance. Actually that's not entirely true. You may be able to negotiate them down.

If spending doesn't appear to be problem, maybe it is your income. If you aren't making much money, any spending is going to be a problem. You may need to switch jobs, ask for a raise, or start a side gig. I'd love to give you good ideas on side gigs, but my own dog sitting service from DogVacay is doing zilch. I haven't had one request yet. (Update: I had one request, but it was during a time that I had blacked out as I am going out town. Can't catch a break.)

There are a few other things you can do that might help:

  • Lending Club - If you have decent credit, you may be able to get a loan on Lending Club. You'll want to make sure that you get a good rate.
  • Enlist Some Tools - Ready for Zero is a great tool to get out of debt, but they take their awesomeness to another level by providing a list of competing debt reduction tools.
  • Look into Debt Consolidation - You want to look for two things in debt consolidation (such as Trust Deed Scotland). One is to get a better interest rate than what you are currently paying. The other thing is to make sure that you aren't moving unsecured debt to secured debt. These fancy terms mean that you don't want to put your house on the line because you overspent on credit cards.

Do you have experience in getting out of debt? Let me know how you did it in the comments below.

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Posted on July 16, 2015.

Skint to Mint: How We Messed Up Our Finances and Came Out on Top

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[The following is a guest post from Maria Nedeva, owner of The Money Principle. I met her at Fincon a couple of years ago and we just hit it off. She's the proverbial smartest person in the room, so I knew she was going to deliver an awesome guest post. When I read it, I thought, "This is exactly how we've been able to save hundreds of thousands of dollars over the last decade."]

I have a story to tell.

But first I want to say ‘respect’ to Lazy Man. I’ve long admired the honesty, passion and moral stance of Lazy Man and Money: love the blog and like chatting to the man behind it. Oh, and I have wanted to guest post on it for about a year: I just never got the guts to ask. This is why I jumped at the opportunity when Lazy Man asked me to guest post. Of course I wasn’t going to miss talking to you.

And as I said, I have a story to tell.

In January 2010 we were approximately $160,000 (£100,000) worth in consumer debt. At the end of January 2015 we have approximately $160,000 (£100,000) worth of liquid savings and investments.

We went from financial ‘suck’ to ‘rock’ in five years.

People ask me how we did it and expect a story of epic struggle and sacrifice.

What they get is the story of a university professor who researched, learned, analysed and worked out hacks.

What they also get is the story of a woman who had had enough of debt and acted on every single hack she worked out.

That’s me!

Maria Nedeva, Owner and Mistress Supreme of The Money Principle.

Now you have to make a choice.

You can either go on The Money Principle and try to find your way around the nearly 800 blog posts I’ve written and published on paying off debt, money management, saving and investing, making money and retirement;


... You can stick around and learn about the three things that helped us turn our finances around.

It’s your call but I’d stay put if I were you.

What paying off debt fast is really about?

People will tell you that paying off your debt, and more generally building wealth, is about living below your means.

Hard to argue with something as obvious.

Still, important as it is, living below your means is not enough. Here are four hacks you’d do well to remember:

Hack 1: To pay off your debt - and to pay it off in record time – you should watch your cash flow as a hawk. Oh, and your single point of focus should be how to increase your cash flow, not your debt.

Hack 2: Don’t strip spending down to bare necessities. Allow yourself some of the things you love and learn how to do them differently and much cheaper.

Hack 3: Learn how to make more money. Don’t wait for your big break. Just start doing something. Check out some ideas about how to make money enough to fill your fridge or to pay your monthly bills on The Money Principle. Trust me; babysitting is not even on the list.

Hack 4: Put every penny of your increased cash flow on your debt. Open a beer and watch it crumble.

That’s it. You have to do a lot of other things as well but these four hacks are what matters; the rest follows.

We paid off $160,000 (£100,000) worth of consumer debt in three years. You can do it too!

What does it mean to be a ‘frugal artist’?

Quite a few of my blogger friends are on the frugality side.

So is much of personal finance in the United Kingdom – frugality is respected and admired while making money and investing is seen by some as an expression of greed.

I never bought into the frugality mind set.

Don’t misunderstand me. I like to make my money go further just as much as the next woman; or man, for that matter. It is just that I like to stretch my dollar without losing quality of life.

And I like to make more dollars so that my money stretches even further.

I know, I’m weird like that.

I came up with the idea of ‘frugal artistry’ and have even written a manifesto for frugal artists.

In a nutshell, ordinary frugality and frugal artistry are different in the following:

Frugality as an art form Ordinary frugality
Thinking Complex thinking accounting for a number of factors. Absolute thinking considering very limited factors.
Concerns Broad concerns including quality of life and relationships. Narrow financial concerns.
Time horizon Long term prospects. Short term gains.

Put another way, making our bread saves us close to $50 per month. If it were only for the saving, though, I won’t do it. I do most of our baking because, apart from saving money, it helps me relax and is much healthier than buying bread with a ton of additives. This is what being a frugal artist is about.

Buying a cheap suit can be part of ordinary frugality. It saves you money in the short run but is very wasteful long term. One, cheap suits need to be replaced sooner and you may find that ultimately you spend more. And two, wearing cheap suits can jeopardise a promotion at work.

Becoming a frugal artist is worth it. This way, you can make your money go further without loss of quality of life.

What is the ERR strategy for money management?

The ERR strategy for money management is about three things:

  • Eliminate (waste);
  • Replace (what you do and/or how you do it); and
  • Reduce (consumption).

Using this strategy assumes you already have a budget. If you don’t have one, you should.

I came up with this strategy for money management to bring together three very important sides of keeping your budget as lean as a Hollywood starlet without depriving yourself. It was featured on LifeHacker’s blog Two Cents as a way to practice frugality.

I suppose it is.

Eliminating waste is about two things: not wasting food and not paying for things you no longer use or you can get cheaper without loss of quality. We, for example, cut over $3,000 of monthly spending by buying only what we cook, finding competitively priced insurance and planning our entertainment carefully.

Replacing activities and routines is about becoming a frugal artist. Can you impress your friends by cooking a three course French dinner rather than going to a restaurant? Do you have friends who have a summer house and can you borrow it for couple of weeks? Can you barter for some of the services you need (for example, do the neighbours garden if they babysit your kids twice a week)?

Reducing consumption is easy to understand. We all over-consume. We drive to the gym. We have rooms full of clothes we wear couple of times and discard. We over-eat, over-drink and over-indulge. Do you really need 30 pairs of shoes?

Go try the ERR strategy. You’ll shave off 20%or more of your monthly budget, I guarantee.


Now you know my secrets.

Turning your finances around is not hard if:

  • You watch your cash flow and increase it continuously.
  • Teach yourself to be a frugal artist.
  • Apply the ERR strategy for money management twice per year.

You know what is the best part of all this?

Once you make the three things I was telling you about into habits while you are paying off debt these are easy to keep when you finish with the debt. And the wealth just keeps growing.

This is our story.

Care to share yours?

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Posted on February 3, 2015.

So You Have a Huge Student Loan (Like Me), Here Are Your Options

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[Editor's Note: I'm still shoveling out of two feet of snow, so today we have a guest post from Grant Biles, the co-founder of Gradible. The company helps people on how to eliminate student loan debt. The following is his guide on what students can do to pay off their loans. I'm often offered guest posts that are very self-serving, so it is refreshing that some of the suggestions don't require the use of his company's services. Hopefully tomorrow, we'll get back to our regularly articles.]


I’m one of the more than 40 million Americans who holds student loan debt, and if you’re reading this, I imagine you or someone you love does, too. Two out of 3 undergraduates leaves school with student debt these days, and the average graduate has more than $30,000 in student loan debt.

In my role as a co-founder of Gradible, a platform that helps people with student loan debt pay it back faster, I have talked to thousands of graduates across the country about their different situations and needs regarding student debt. The two biggest takeaways from these conversations are that student loan debt situations are varied and most people want to manage the repayment of their debt in a balanced way: they want to continue to have a fulfilling life, while also eliminating the debt as quickly as possible.

My team and I have done extensive research and found many of the most effective and helpful options for the variety of different situations that student loans present their holders. If you’re staring down a huge monthly student loan payment and wondering how you’re going to afford all your necessities, or just want to eliminate the small amount of debt you took on as quickly as possible, we’ve found answers and options for you.

Options for Managing and Repaying Your Student Loans

  • Modifying Repayment Terms

    The direct impact of student loans is not the total balance, it’s the monthly obligation that must be balanced with all of life’s other necessities and nice-to-haves. We have found that, especially for recent graduates still working their way up the salary ladder, Income Based Repayment is a very helpful tool. This pegs your monthly payment at 10% of your take-home pay. You can file for it at the link above. The downside of this program is that by reducing the monthly payment, you naturally are extending the repayment lifetime and therefore the total amount of interest you will pay. If you are unemployed, have had trouble finding a job, or been very ill, you can also work with your student loan servicer to enter forbearance or deferment. These programs stop the repayment of your loan for a fixed amount of time, if you qualify. Again, the catch here is that your repayment lifecycle increases, because interest continues to accrue in almost all situations.

  • Student Loan Repayment Services

    My company, Gradible, offers a variety of flexible ways to earn your way out of debt faster and manage your monthly payments. We source offers from businesses such as cashback deals on shopping, surveys and studies, short freelance projects, and more, that you earn credits for completing. We then redeem these for you directly to your student debt. We’ve helped graduates pay off more than $200,000 in student loans in the past year, and we’d love to help you, too. Another service that offers cash back to your student loans is SmarterBucks. Check out these two websites to begin accelerating your rate of repayment.

  • Part-time work

    When you think of part-time jobs, your mind likely goes to the old standards: manual labor, restaurant and bar work, or retail. All of these options can provide you with extra cash to meet liabilities like student loans. Additionally though, in our modern, smartphone-driven age, there are a variety of more flexible opportunities that could be more appealing to earn the extra cash you seek. Here are just a handful of the most popular:
    You can drive an Uber or a Lyft.
    You can deliver packages as a Postmate.
    You can do odd jobs as a TaskRabbit.
    You can pick up and deliver groceries for Instacart.

  • Refinance your loans or get them forgiven

    If you qualify (and full disclosure this is last because so few people do) for the following programs, they can significantly reduce your monthly payment and total amount you repay.CommonBond and SoFi offer refinancing for graduate degrees, but have stringent criteria for income, occupation, and degree type. LendKey also offers consolidation and refinancing products. If you qualify, these are a great way to reduce your interest rates and monthly payments, but the reality is that very few people will qualify for this, due to income and debt levels. Credible is a great site if you want to compare all of your refinancing options in one place.

    If you are currently working in a public service capacity, the Public Student Loan Forgiveness Program is something you definitely should consider. This program helps teachers, firefighters, police, public defenders, and other civil servants reduce monthly payments in a similar manner to Income Based Repayment (10% of monthly take-home pay), and it qualifies you to have your loans completely forgiven after 120 consecutive on-time monthly payments.

This list is not exhaustive, but it does present you with most of the options we’ve found. I’m obviously biased, but I think Gradible makes the most sense for the most borrowers, so give us a shot, and I hope this guide is helpful. Good luck getting to zero.

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Last updated on January 27, 2016.

Debt is Done!

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It's toast. It never stood a chance. Overmatched.

My friend Jackie Beck is over at The Debt Myth is on a crusade to destroy debt. I love a good crusade, but she doesn't even need me in this fight. Her goal is to get 100 bloggers to write about why debt doesn't have to be forever. My guess is that she'll have more than 120.

On the Debt Myth blog, she writes:

"You might hear people say that you’ll 'always have debt'. I automatically bought into that notion myself, believing I had to borrow money for emergencies and to pay for big ticket items.

But after paying off over $147,000 in debt, I now know that you CAN break free of debt’s grip and live the life you love."

The concept is simple: Debt is not forever. There is no "always" when it comes to debt. 2015 is the year to pay it off. It's nearly a couple of weeks since we saw the ball drop in Times Square... a perfect time to renew those vows.

Read my lips: "No new debts."

I think I got all the clichés out of my system. So it's time to be blunt. I believe there is a big difference between good debt vs. bad debt. I have a 0% interest rate on my Subaru Forester, so I'll happily carry that debt for 5 years. I took on more debt to buy solar panels as it will save me more money in the long run.

When it's well-planned, well-designed, and productive debt, it is okay. Unfortunately, this kind of debt is in the minority. More often it is credit card or something else with a high interest rate. That's the debt that we NEED to get rid of if we are ever going to be financially free.

So how do we get rid of debt? We can talk about it until the cows come home, but Jackie's got an action plan. I'm going to liberally steal from her blog post, but not use exact quotes (I don't think she'll mind). Here it is:

  1. Share your why - Take a photo of something that shows YOUR reason for getting out of debt. Then post it on your favorite social media platform(s).
  2. Take a stand - Write down a self-affirmation statement (she gives some examples) and take your picture and share that.
  3. Spread the word - Share it with your friends and tell Jackie about it on her blog.

You can probably tell by now, but 90% of the get-out-of-debt game is half mental. (I stole that from the great Yogi Bear Yogi Berra.) The idea is to make yourself accountable and motivate change. I love the idea.

There are two other things that I want to mention. There's a giveaway involved. For one person that will kickstart that debt payoff, right? The other thing is that Jackie sells a mobile application to help you pay off debt. I'm sure some of you are thinking, "A ha, there's the marketing gimmick." Maybe so, maybe not. She didn't mention the app when telling me about her goal. I only know about the app because we go back 7 years or more as personal finance bloggers.

I have no problem with one person can make a couple of dollars here and there helping people get out of debt. Sounds like one of the best moves one can make all month.

I don't write about debt very often. I'm simply not in that place and further down the road to financial freedom. So I want to close this article out by mentioning another debt blogger that I love: Melanie from Dear Debt.

When it comes to debt, the more weapons you have at your disposal the better. Be like Jonny Gomes empty the quiver on debt:

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Posted on January 13, 2015.

Solving a Huge Problem with the Financial Planning Industry

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A couple of weeks ago, Evan from My Journey to Millions wrote about a huge problem with the financial planning industry, which was itself inspired by a post on Sweating the Big Stuff (StBS). Yes, the Inception runs deep with three layers of articles commenting on articles.

Here's a brief explanation for those who want to skip the Russian nesting dolls. Daniel on StBS has a friend, "Doug", who has net worth of negative $114,000 - most of it in student loan debt. Daniel, being the awesome guy he is, is trying to help his friend get back on track.

Evan in his article on My Journey to Millions makes the point that Doug is pretty lucky to have someone like Daniel who will help him out. Why? Because most financial planners wouldn't do it. More importantly he emphasizes that it isn't their fault. He goes on to explain that financial planners get paid in three possible ways: selling an insurance product, selling an investment product, or via a fee from the client.

In this scenario, Doug isn't in the position to invest. Selling him an insurance product isn't going to help with the $114K debt. Lastly, is Doug, who is living paycheck-to-paycheck going to voluntarily pony up $500 to see a financial planner? Probably not.

The end result is that the person is in the most need of help is least likely to receive it.

Evan is right that this is a huge problem. His article lays out a plan that involves "a 2.0 type site that provides a planner with a snapshot (think more business like than – so a planner can see investments as well as cash flow... I have access to one such program at work), and then a once a month phone call with a single planner for a nominal amount."

I liked the idea. Hopefully the Mint-y site can do 80% of the work which would allow the financial planner to do the other 20% at a cheaper rate... making it more more likely that someone like Doug get the help he needs. Evan shoots a few minor holes in this plan.

I love solving problems. So I thought I'd take a shot:

A Plan to Help the Under-Served like "Doug"

[Note: If you take this idea and create a company off it, please contact me as a consultant. This is a very general outline of what could be done and I have a lot more ideas including how such a company would be profitable. I simply don't have the time/resources to take the reigns myself.]

You start with that "Mint-y" 2.0 website that Evan mentions. Maybe it's similar to Personal Capital's software for example. If done well it can provide a solid foundation. Have an initial planning session with a money coach instead of a financial planner. This is almost an 80/20 rule with the money coach maybe able to provide 75% of the value at perhaps 40% of the cost. The "money coach" would create a customized plan with that website and the client. This should be able to be done for a one-time fee.

To keep clients accountable on an on-going basis, they would be grouped together in small teams, maybe 5-6 people. Each would be required to write a money diary (like a personal finance blog). They would also be encouraged to read and comment on each others diaries. These people would meet, hopefully physically, but perhaps virtually once a week to discuss their financial progress. The idea behind these groups is to get them to be their own support system as much as possible.

Once a month the client has a check-in with the money coach. This is kept quickly as possible with the client supplying a list of question for the money coach in advance and the money coach reviewing the client's progress through the "Mint-y" website.

By now you are probably spotting a trend: Keep costs for the clients low. Give them tools and a support system. Personalized service is expensive by its nature (the cost of money coaches), so the idea is provide this option of expert advice minimally and perhaps only when necessary.

What do you think? Could it work?

This post deals with:


... and focuses on:

debt, Financial Planning

Last updated on September 3, 2014.

An Apology to Dave Ramsey

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A couple of days ago, I received a call from a local pastor at a church. Before I get into the call, let me assure you this article will not be about religion. As Seinfeld famously said, "Not that there's anything wrong with that."

The pastor asked if I was interested in helping manage the church's endowment. Despite my best efforts, I guess word has gotten around town that I know a thing or two about money. However, I have no clue if my knowledge translates to managing a 1.5 million dollar endowment. They are spending around 60K or 70K a year. Using a simple rule of 4% that's popular in retirement planning circles, they should be able to hit the low end, but it is cutting it close. In any case, I'm hoping the key word is "helping."

I mentioned to the pastor that I focus more on personal finance. She's got a Dave Ramsey bumper sticker on the back of her car, so I knew we could speak that common language. The church uses a lot of Dave Ramsey's philosophy. I explained that I simply disagree with much of what he says about personal finance.

Her response hit me like a ton of bricks. She said that no system is perfect. However, she's seen military people come in the door with $30,000 of debt and leave with none. The system works.

For a long time, I've had this ideal, perfect system in my head. I realized that perfect is the enemy of good. If Ramsey's philosophy gets people interested in personal finance and that helps them get out of debt it's a huge win. I shouldn't over-critique his game, because we are all on the same team. I've written that you should ignore Your personal finance guru. Today I'd like take that back.

Getting back to the call, I agreed to look at doing what I can to help the church. I'm not sure my religious beliefs match up with its teachings, but I definitely agree with their charitable causes.

The pastor's story about the military families carrying big debt hit home. I was talking with my wife a few night ago about how it happens far too often. Our nation's bravest deserve better, hopefully I can use this endowment thing as a stepping stone to help as an unofficial money coach.

This post deals with: ... and focuses on:

debt, Financial Planning

Posted on May 14, 2014.

3 Reasons to Pay Off High-Interest Debt

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There is a subset of people that are very comfortable with their debt. Even if it's high-interest debt, like what you see with credit cards, they are comfortable with it. That's because it is "affordable" for now. However, before you get too comfortable with high-interest debt, it's a good idea to step back. Your finances might be in better shape if you tackle this bad debt, getting rid of it once and for all. Here are 3 reasons getting rid of high-interest debt is a good idea.

1. It Doesn't Usually Provide You With a Future Return

In most cases (but not all), high-interest debt is associated with consumer spending. When you only pay the minimum payment on your high-interest debt, you stretch out how long you are paying for those consumer items. The problem with taking years to pay for consumer items is that you end up with diminishing returns for your efforts. You pay more over time, but the value of the item goes down.

This isn't the case with many low-interest debts. A case can be made for mortgages, business loans, and student loans. These low-interest loans often (but, again, not always) represent investments in your future. What you get back has the potential to return more than you borrow and pay in interest. This is rarely the case with consumer items bought with high-interest credit cards.

2. You Usually Can't Deduct the Interest You Pay

The interest you pay on credit card debt doesn't come with a tax benefit. You just pay the money into someone else's pocket. With a low-interest loan, like a mortgage or student loan, and even some business loans, you might be able to deduct the interest (you may have to itemize to get this benefit).

As a result, even though it's still debt, at least a low-interest loan made for many so-called "good" purposes probably comes with a tax benefit. This is just another reason to pay off high-interest debt before you move on to low-interest debt.

3. Your Investment Returns Probably Won't Overcome High Interest Rates

Many of the folks I know who are content with their debt levels are investing. They invest their money in taxable and tax-advantaged accounts, even as they pay 19.99% APR on their credit cards. There is no way that their investment returns are going to overcome that interest rate. From 1926 to 2012, the annualized return for the S&P 500 was 9.82%. That basically amounts to a 10% loss annually.

You have a reasonable chance of beating low-interest debt with your investment returns. If you get a tax benefit for your low-interest debt, and you have a tax benefit for the investments you make, the chance of overcoming what you spend on your low-interest debt increases. This just isn't going to happen if you have high-interest debt, because high-interest consumer debt doesn't come with any of the possibilities that mark low-interest debt that is considered "non-consumer."

As you consider which debts to pay off, and whether or not it's worth it to pay off debt, don't forget to consider the various attributes of the debt you have. It might make sense to invest instead of paying off your mortgage early, but it almost never makes sense to pay off your high-interest debt slowly.

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Last updated on February 16, 2014.

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