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.

What You Can Learn from the 4 Events in 2012 That Changed my Financial Life

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I'm rarely one to follow the pack. So when everyone publishes a review of 2012 in the first week or January, I say, "Let's make em wait until February." Also, rather than just give an update of what I did financially in 2012, I'm going to dig a little deeper and get a little Fat Alberty on you delivering a lesson or two.

1. Having a Baby

One of the biggest events of a person's life is when they give life another. This past year I got to experience that. And while it is fun to joke that Little Man is a nice little tax deduction, he's a whole lot more than that. Having looked at the the cost to raise a child in the United States it looks like this USDA calculator estimates our costs to raise Little Man will be $28,500 a year.

We are only a little more than four months into Little Man's life. I feel safe in saying that we are going to come in far under that... at least for the first year. Here's a breakdown:

  • Housing - The USDA estimate is that it will cost us another $10,600 in housing. I don't think our housing costs have gone up that much, but it's hard to say since that's related to the #2 event (our move).
  • Food - The USDA estimate is $2,450. I think we are under that, but it is hard to calculate because right now he's on breastmilk. That indirectly leads to his mom eating more food.
  • Transportation - There's an estimated $3,125 in transportation costs. We bought a new car due to our move to Boston, and part of that was because I felt I needed a safer car for Little Man. On the other hand, my 12 year old car probably need replacing soon anyway.
  • Clothing - Due to the generousity of friends and family, especially my own mother's gift of amazing bargain hunting, we shouldn't have to buy clothes for the next five years. The USDA budgets $1438 and I think we'll avoid much of this expense.
  • Health Care - One of the best benefits the military has going is its health care. I think we'll save a vast majority of the $1113 that the USDA has allocated. The exception is out of pocket things like baby Tylenol and the like.
  • Child Care and Education - The USDA estimates $7,538 and this is where my blogging career really pays off. I can be that child care provider. I had estimated day care for Little Man to be around $15,000 a year. Since that's after-tax money, it's almost like adding $20,000 in salary. However, as it turns out we might be able to get almost full-time coverage for $6,000 at a military base. We'll see if that comes to pass.

I think the lesson here is that raising a child can be done on a budget. It certainly helps to plan ahead (be a blogger), have a great support system (thanks Mom!), and get a good breaks (military benefits rock). Oh and if you are going to be a new parent soon, here's some of my favorite baby gear.

2. Moving Across the Country

This year we moved back to Boston, which has always been where my heart is.

One thing I can say about Silicon Valley. Having lived there, I understand how a foreigner would come to United States thinking that the "streets are paved in gold." Silicon Valley is a lot like that too. There's a ton of money due to all the successful technology companies such as Google and Apple. I don't know if it is the money or great schools like Stanford, but there are a ton of very smart people there.

Not only is it a land of opportunity, but the three feet of snow that we are getting right now in Boston reminds me how wonderful the weather is in San Francisco.

As wonderful as that is there were two major downsides for us: 1) Our friends and family are in Boston 2) The price of housing is 3 times more than what we can get in the Boston area. That's literally a million dollar difference.

It's not like Boston is a horrible place either. With Harvard and MIT, there are some smart people here too. I'll probably always wonder what life would have been have been like, not just for me, but for Little Man, if we stayed in San Francisco.

What's the lesson here? It's probably nothing new, but geography does play a huge role in personal finance.

3. Refinancing Two Mortgages

Lost in the birth of baby and the move back to Boston is the financial move that flew under the radar. I was able to use the government's HARP program to refinance two mortgages. With the drop in value of real estate over the last 8 years, these properties no longer had 20% equity and we were paying on average 6% interest on them. We were able to keep the payments close to the same and change 22 year mortgages to a 15 year one. The reason we were able to do that? The interest rate of 3.5% on a 15 year lowers the payments to what we were paying on the 30-year at 6%.

It was extremely difficult, especially because I'm a self-employed blogger. I might as well be a third-class citizen to mortgage underwriters. The hours on the phone and email really paid off...

The result of eliminating 7 years of mortgage payments on two properties is tremendous. Some rough math tells me it will save us $225,000 in mortgage payments.

The lesson here is to take advantage of these low interest rates if you can.

4. Buying a New Car

In any other year, buying a car would trump the money moves. After buying a house, it is usually the biggest purchase someone makes. One month in, I still have no regrets on buying my Subaru Forrester.

Wait, maybe I do.

The last lesson is that before you buy a new car, look at what is coming down the pike in the near future. It's something that I think about whenever buying technology, but I somehow forgot about it with buying a car. I think it was because I was going in with the intention of buying a slightly used car and saving on depreciation. However, they made the new car a lot better deal because they had dealer incentives and 0% financing for 63 months.

It wasn't until a few days later, I found out that they are coming out with a 2014 Forester in a couple of months that is going to get 5 miles more per gallon. As it turns out waiting wasn't a good fit for us because we need to snow-worthy cars in New England, but doing some rough math, the money that I saved with the 0% financing is about what I was likely to save on gas through the life of the car.

I might still come out ahead if Subaru bumps up the price of the 2014 Forester as many expect they will.

Putting it All Together

Most years, I don't make too many big financial moves. Obviously some of them like taking a new job or having a baby are common life milestones. Other things such as taking advantage of historically low interest rates (particularly for mortgages and cars) fits in the category of making the most of opportunity presented.

Now it's time to take a year to settle down.

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Posted on February 8, 2013.

The Financial Renaissance Man

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The following is a guest post by CT, a personal finance blogger over at his personal blog,

I have a friend who never worries about money. Ever. Whereas my wife and I are always scrambling to pay our student loans or praying for a raise at work, my friend and his wife are equally as calm and relaxed.

More and more over the years I began to notice his worry-free attitude towards money. Which again, stood in stark contrast to my own gripping financial fears.

When I would complain about my pay or my concerns over how to meet all of my many financial obligations each month, he would laugh. He works a 9-5 job just like me, so one time I reminded him that all of us are just one late friday conversation with a boss away from having no job at all.

He said he was not overly concerned. That he could survive an extended layoff. He said it simply and without ego.

I was curious, so I dug deeper. As my friend is as stoic as they come, getting to the root of what he meant was a chore.

"Are you independently wealthy and you just failed to tell me this before? Are you a trust fund baby or something? How can you not be worried about money?

"Yeah right." He laughed. "Although I do have some decent savings set aside."

"So what's the deal, you just don't care? Everyone worries about money, after all."

"No he said. I care a great deal about money. I just never worry about it."

I was now getting a little upset by his cavalier attitude. "Then what!" I said, almost shouting. His answer was brief, befitting the man, and it was said without the slightest sense of irony or conceit.

"If I want money, I'll go get it."

I laughed. "What are you a pirate?" I joked. I parroted the phrase in an incredulous tone. "If I want money, I'll go get're a riot."

But my friend was dead serious. He responded and clarified his previous statement.

"If I want money I will go EARN some."

When he later explained what he meant by that statement, it shook me to my core. It made me feel like a domesticated dog, in awe of his cunning and free fox cousin. Here I was, firmly entrenched working "for the man." My friend was too but he had other things going on. He was a Financial Renaissance Man.

What Is a Financial Renaissance Man? (Or Woman)

My friend explained that he had over the years, developed a lot of skills, none of which were hard to learn. "In fact" he said, "most of them are skills just about everyone already possess." He explained further that some of the skills he was already putting into practice and others he could call upon if the need arose. He provided some examples.

"I go on craig's list and see if anyone wants to get rid of things for free. Then on Saturdays I will go with my truck and haul them out. I then turnaround and sell these items for scrap metal to make an extra buck. I do the same thing with firewood. I put up signs which say: "Firewood for sale... I will deliver." Most people can't find anyone to actually deliver firewood to them. That means I can mark the firewood up 50-100%. "If you make people's lives a little easier, they will pay you for it." He said, almost amazed at how lazy the average person is.

Go on, I said. What else do you do? He laughed. "Lot's of things."

"Elaborate," I said. "You know I run a personal finance blog and I talk about money all the time!" "I don't like talking about money." He said. "I just like making it." It was a slight dig, but I pushed on. "What else do you do to turn an extra buck?"

"Well, he said. I just think of things people don't feel like doing themselves, and then I offer to do them. Like the other day, one of my friend's was complaining bout a twenty foot tree in his backyard, so I offered to cut it down for him. He said that if I would do that he would give me a few hundred bucks." My friend was now getting more talkative.

"Another thing, I buy cars and fix them up to resell them. That's more like a hobby but sometimes I can sell even old car parts for a good deal of money."

The list went on and on. He admitted to not being above dumpster diving. He recycled cans. He never threw anything away that could turn a profit.

Who Has Time to Be a Financial Renaissance Man (or Woman)?

"Is it worth all the time you put into these things?" I asked.

"I just do these things on Sunday afternoons when everyone else is lounging around. I like waking up early, so I don't miss out on anything if I go out and make a few bucks while everyone else is sleeping." He confessed that a constant thought on his mind, in almost any situation was if the possibility to make some money existed.

"It's like a compulsion," he said, now that I got him talking he was letting it all out like I was Bryant Gumbel or something. "If I'm not doing something productive-- if I'm not trading my time for money in some way, then it starts to stress me out."

What Can We Learn From The "Financial Renaissance Man"

For one thing, his attitude of always being on the lookout to earn money is refreshing. For too many of us our default setting is consume, not create.

Also, he proves that you don't have to really be an expert at anything; you just need to let people know that you are out there and willing to work and that you are a hustler. My friend doesn't talk much and yet he has developed a wide network of people, all of whom consider him the first person to call if they have an odd job.

Whereas you or I might see a hubcap lying on the ground in the street as trash, my buddy sees it as cash.

While many of my friend's odd jobs are the furthest thing from the ideal passive income we all dream about, I think he enjoys performing the tasks and getting to use his myriad of skills. For me, I know that it inspired me to focus on offering my services as a personal finance freelancer, a business which I just started. Although I am not handy like my friend, I have a different cross-section of skills and interests. As do we all. There is no reason why we can't use those skills to make money outside of our normal 9-5 jobs.


Finally, it should be stated that when it comes to money, my buddy rarely asks for it upfront or even expects it. For instance, when his elderly neighbor complained about the way her landscaper was cutting her grass, my buddy just volunteered for the job. He said he would do it for free, but of course impressed by his work and his generosity, she now pays him a decent $25.00 each week in the summer to cut her yard.

That is less then she was paying the landscaper but my buddy doesn't mind.

He's just happy to keep busy and to keep earning money.

He's a Financial Renaissance Man. We should all be so lucky. focuses on one families struggle to pay off nearly half a million dollars in student loan and mortgage debt. CT recently sold his previous personal finance website to start and to focus on his freelance business: FreelancePF.

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Last updated on April 25, 2011.

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