[-$15,000] Warming Up

Yes, my balance dropped. No, it wasn’t because of the minimum monthly payment. I’ve been standing on the sidelines of this race for long enough, I think. It’s time to get back on the track. This week’s payment is a warmup.

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In Extreme Debt? Rent a Room to Save Money on Your Living Expenses

How to Rent a Room to Save Money and Pay Off Debt

I’ve written before about how to be an extreme saver and how practicing minimalism can help those of us with extreme debt to pay it off faster without losing too much of our sanity. One item on that list is to rent a room in someone’s home.

Contrary to popular belief we are not entitled to home ownership, or even to having our own apartments. These things are wants not needs. Having a home of our own is not necessary for survival. Even though most of us would not prefer to share housing; there is nothing wrong with doing so. I rather reluctantly took the plunge over a year ago and now have a living situation that is actually not horrible and is giving me hope of crawling out of this deep debt before I become a senior citizen. So, I know from personal experience that this can be done.

Save big bucks $$$ by lowering your housing expenses
Housing (mortgage, rent) is often our largest monthly expense by far. And as such, it is the first place we should look to cut our budget to save the biggest money when in deep debt.

Renting a room in a house is often even better than sharing an apartment.  Sharing an apartment is more likely to involve getting tied up in long term and onerous 30 page binding building leases. Renting a room in a home is often less hassle as you’re are likely dealing with the homeowner (or master tenant if you are sub-leasing) and thus provides more flexibility. Renting a room in a home can also provide more space and privacy (depending on the size and layout of the home). However, either arrangement (house or apartment) works if it saves you enough money. In this post, I’ll be focusing on renting in a house.

If you are single, with no dependents, you have the luxury to make some drastic changes in your life and you should take advantage of this option.

Looking for a room to rent

Start looking now

Especially if you live in a tight housing market (NY, SF, etc.), start looking before you are ready to move. Yes, before you are ready to move. This means replying to ads and going to see places in person. It will give you a sense of what’s out there without the pressure of having to jump on the first thing you see. You’ll be looking at low rent options so finding a room and the attached homeowner/roommates that are acceptable to you will take longer than a typical housing search.

When I moved to California a little over a year ago, I only gave myself 10 days to find a room to rent once I landed here and before my new job started. Unfortunately, I grossly underestimated the intensity of the housing market here and soon found myself competing with thousands of college students for every habitable room in town. I ended up having to go up in rent – way up in rent – as time literally ran out. I spent the next year locked into a majorly overpriced apartment lease with bad consequences for my debt repayment goals.

Craigslist is a popular place to find rooms but look elsewhere as well. Include everything from old school local classified ads (remember newspapers?) to the newest, trendiest housing apps. Don’t look for the best luxury guest room in the most upscale neighborhood that you can afford. Remember why you are doing this. If you need to rent a room in someone’s house and live with strangers, then really make it financially worthwhile. Find the cheapest place that is safe, clean, and that you could tolerate living in for at least one year. That being said, sometimes you can get lucky and get a cheaper than market rate room in some nice neighborhoods. Start looking and visiting places early.

original_set-of-three-colourful-suitcases

Pare down (also known as ‘Ditch your crap’)

Downsize, a lot. Then downsize some more. Explore minimalism, essentialism, or whatever you prefer to call it, but be ready to ditch your crap. Rent a room that is clean, well-kept, and already furnished. Not having to deal with furniture and other unnecessary things greatly increases your mobility and flexibility.

Without a lot of stuff to carry around, moving is much faster and cheaper. It also means fewer things to worry about organizing, storing, protecting, cleaning and insuring, etc. Only keep the things you truly need. Get rid of the rest. You won’t miss it.  How to sell your crap so you can pay off  your debt and do what you love.

Realtor is giving the keys to an apartment to some clients. focus on the keys

Who should you rent from? How to choose your landlord / roommates.

Friends and family may be a source of low cost housing, but choose this option with care. Make sure you have a good great fantastic relationship and enough space to move around in their home if privacy is important to you. Just because you get along does not mean that you’ll live together well. Moving in with family or friends is not an option for most people, but if it is an option for you, make sure that the arrangements (rent, length of time, chores, etc.) are agreed upon upfront.

When looking for a room to rent, find a landlord and/or roommates who match your style. Do you like where you live to be social and full of energy and people, or do you prefer a quiet sanctuary after a long day of work?  Read room-for-rent ads carefully. When responding to ads write honestly and in detail about your preferences, hobbies, etc.  Include exactly what you want in a living arrangement. If you keep to yourself and are looking for a quiet sanctuary with roommates / landlords who are similar say that. The worst thing to do is to write a generic response that doesn’t reveal anything meaningful about yourself.

Moving into someone else’s home is a challenge for most of us. When you live in someone else’s house, you have to live by someone else’s rules. Beware, cheap rent sometimes comes at a cost. Despite your best diligence, you may end up with an unstable or power-tripping landlord with an ever expanding list of rules. If that happens, don’t sweat it. Know what you are willing to tolerate. Maybe jumping through their hoops is worth an ultra-low rent. Maybe not. Ask questions of your prospective landlord/roommates to know what is expected of you. As long as you keep some cash in savings, and your possessions few, you’ll never be stuck anywhere you don’t want to be.

With luck you’ll find a good place where you can hang your hat for a while.

 checklist1

What to look for in a room

Privacy. In-law units away from the main area of the house, a bedroom on a separate floor from other bedroom can give the feeling of more space and privacy.

Furnished room with a functioning lock on the door and a window that opens wide to bring in air and sunlight. You’re looking for a room, not a torture chamber. Yes, you can rent a dark windowless closet under a staircase or a partitioned living room on Craigslist for less in rent, but that simply is not sustainable for most people. If you are patient with step one, you won’t have to risk your sanity.

All utilities (including wi-fi) included in the rent. This will keep your housing expenses fixed and make it easier to automate your bill and debt payments. Set up bill pay with your bank to have them cut the rent check to your landlord every month. It’s one less thing to have to deal with and keep track of.

Walking distance to public transit and a grocery store.  Walking distance to work is ideal, but not always possible.  If you haven’t considered ditching your car, you may want to think about it. Owning a car can be a big money sink. If you don’t live in a rural area, consider going car-free or car-lite to save even more money $$$.

Kitchen and laundry room privileges

Make sure it comes with a lease.  Know your city and state legal rights as a tenant, sub-tenant, or lodger/boarder. Month-to-month leases are best as they give you the most flexibility.

bad neighborhood

craigslist ad

What to avoid  

Has the neighborhood gone downhill? Is the street too rough for your comfort? Are you getting some hard stares from neighbors? Visit your potential hood during the day and at night. You want to find someplace cheap, but don’t risk your safety.

Is the place dirty/run-down beyond normal wear and tear? Are there stains on the walls or ceiling? Are there odors in the house or in your prospective room? Not a good sign. Don’t be fooled by perfumes either. Is the house and/or room  heavily scented with air fresheners. Beware of this as it can indicate that these chemical scents are masking odors from lack of cleaning. Run from any place that is not minimally clean.

Random visitors, boyfriends, girlfriends, neighbors, who look too comfortable in the home while you’re visiting. It’s likely that they will be there all the time.

Speaking of unwanted guests, look out for any roommates with more than four legs. Ask about bugs – bed bugs, cockroaches, spiders, etc… Don’t be surprised after you move in!

Avoid bedrooms next to bathrooms, especially if walls are thin. Ahem.  Also avoid bedrooms next to kitchens.

Consider carefully if you’re willing to live with couples, especially young ones. Not all are bad of course, but you may have to listen to arguments or ‘amorous interludes’ especially if you share a bedroom wall.

Don’t depend on your new landlord /roommates to help transport you anywhere even if they offer to do so.  They could move out at anytime leaving you high and dry. Or you could have an argument that causes them to revoke their offer of wheels, etc.

Be wary of moving into low income housing as there may be legal restrictions on tenancy.

Avoid living anyplace that doesn’t require a lease. Remember that a lease protects you as well as the landlord.

Ask, ‘Is there anything else about the room/housing/environment that I should know that I haven’t asked about and that you haven’t told me about yet?’

safe

Keep your important items safe

If you pared down properly earlier, once you move in to your room, you won’t own many things that you have to worry about keeping safe. The vast majority of our things will be replaceable in the event of damage or theft. Identify what is truly irreplaceable and make plans to protect those things. Consider giving these items to family or friends for safe keeping or consider renting a safe deposit box.

Computer: Keep your computer password protected and keep all your files on cloud backup in multiple places (like both Dropbox and Google Drive). If your computer is ever stolen, it’s not the end of the world as all of your files are recoverable from cloud storage.

Documents: Keep all important documents scanned into pdf documents and stored in the cloud. Shred and recycle the paper to eliminate clutter. For super important docs that require that you maintain possession of the original paper, consider a safe deposit box.

Inspiration-Wall

Don’t give up. Stay inspired.

Don’t lose sight of the goal. Remember this is not a way of life that you’ll live forever, only until your financial goal is reached. Once you’ve moved into your new rented room you can do things to keep your situation in perspective and your goal front and center. Here are a few ideas.  Find something to do that keeps you motivated, but not too obsessive about your payoff.

Put your debt (or savings) milestones on your wall. Every time you make a payment, cross off the old debt total and write the new lower balance.

Put a huge yearly calendar on your wall. Calculate your debt freedom date and mark the days off.

Put a big inspirational poster on the wall of what your financial goal looks like to you. Maybe it’s an exotic travel destination, or a happy picture of yourself before you had financial worries, or a collage of what financial freedom would look like and feel like to you.

Oh, and make sure you have permission from your landlord before putting things on the walls.

Image credit: becomingminimalist.com

Finally

Remember this is only temporary. Yes, it may be drastic, but taking drastic action is how you bring about drastic change in your life.  You can do it!

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What did I miss? I’ll add it in to this post.

Is anyone else out there living the rented room life? Tell me about it in the comments.

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“Debtor’s prison is real, and opportunity cost is a bitch.” (DDSW)

The Post Where I Eat an Entire Package of Skinny Feels: Celebrating Debt Milestones

skinny feels

Nothing tastes as good as skinny feels.

Hmmm. Really??

How about, “No shiny crap looks as good as control feels.”

I’m talking about the sense of control you feel when you, and you alone, decide how you spend the limited time you have left on this earth. That’s one of my life goals.

As of yesterday, I have paid off a tad over half of my credit card debt. Last year, my credit card debt was at an all time high of $30,340. My current balance is now $15,000.00!  Yes, this credit card is half-dead and running for it’s life.

gazelle chasing cheetah

Ha! Resistance is futile, you evil little card.

After some fits and starts last year (i.e. losing my job and being unemployed for 3-4 months, and later  after getting a new job in another state, moving into my current overpriced apartment  out of desperation), I’m finally back on track with my debt paydown.

I haven’t decided what, if anything, I’ll do to celebrate this midway milestone.

I know that in 8 months or so when this infernal credit card is finally paid off  IN FULL,  I am going to celebrate by doing the one thing I haven’t been able to justify doing in the past 10 years. I’m going to take an international trip!

Most Americans have small to medium debt loads (excluding mortgage) that can be paid off in 2-3 years of “Gazelle Intensity”. Sacrificing our wants for 2-3 years is not fun, by very doable.

freedom-from-debt

For those of us with massive debt ($100,000 +), the challenge becomes learning how to delay gratification without delaying life.

We can’t delay life for 10 years. I’m talking to those of us in our mid-30s and up. I’m 39. I can’t afford to delay life for another 10 years while I tackle this student loan debt and save for retirement. That’s a deferred life plan. I regret not using my passport for a decade. The reason was entirely financial. I’ve had too much debt, and not enough money for a long time.  I still have too much debt and not enough money, but while debt payoff is important, I’ve realized that living life is also important.  I’m learning the meaning of “balance”.

trial-balance

Minimalism is teaching me to identify the top things I value the most and to put my energy in those places. For me, travel is one of those things.  While travel is absolutely fun and fruitful at every stage of life, there are some things you can get away with, and some venues that are open to you only when you are younger (in your twenties and to a lesser extent into your thirties). I want to travel now and I want to keep traveling.

For those of you who are also deep in debt and a little ‘less young’, it is important that you plan and celebrate debt milestones by doing those precious few things that you value the most, whatever they may be.

I’ll save up and pay for my trip up front in cash of course. That almost goes without saying.  I’m about 70% decided on where I want to go, but I have a list of places I’ve been wanting to see for the past 10 years, so my first destination is not certain. However, wherever I land, it will be someplace awesome.

singapre

And you know what? They are right. Skinny Feels are freaking delicious!

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“Debtor’s prison is real, and opportunity cost is a bitch.” (DDSW)

Credit Card Progress and Annoyances

evil-credit-card-companies

When will it end?! I’m done with evil credit card companies!

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credit-card-bill-620x412

Progress:
My current credit card current balance is now $17,990.00! Yes, I’m actually happy about this.  It hasn’t been this low in years, and I’m very happy to finally turn the corner on the $20’sK to now be in the $10’sK.

I got a small year-end bonus at my job, which I was very pleased to get. I promptly applied every penny of it (what was left of it after taxes), to my credit card debt.

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Bad_Credit_Card_Burns_Cash-Orig

Annoyances:

I got a routine monthly statement from my old credit card company a couple of days ago. This is the old credit card with a 19.9% interest rate that I paid off months ago with balance transfers to two 0% interest cards. Thank goodness I opened the email to verify my $0 balance. What I saw instead was that I now had small balance on the card for $3.99.  What?! Where did that come from?

After some investigation, I realized that I had bought a book on Amazon several months ago on this credit card, but never received it because the release date kept getting pushed out. I remember getting that book eventually, but ultimately sending it back for a refund. I got the refund. However, it did not cover return shipping, hence the $3.99 balance on my credit statement.

Ok. I open the credit card app and pay the bill, or at least I try to. Error message. The payment system will not let me make a payment for under $5.  What?!   Sigh. Fine.  I’ll pay the $5 and deal with having a credit on my account.  Nope. Error message. The system will not let me pay $5 because it is more than 7% over the $3.99 balance.  What?!  Really?!  So I guess the only way out of this is to charge something else on the card to raise the balance and then pay the whole thing off. Sneaky, sneaky.  So that is what I have done.

Grrr. Things like this reinforce my bad experiences with credit cards and particularly with this credit card company.  The silver lining, if you can call it that, is that at least this will show some activity on my account. I’ve read that not having any activity on your credit card can give companies grounds to lower your limit or close it.  I don’t want that to happen on this card – not because I will ever use it again – but because credit scores are important in the super competitive rental market out here. Even private, independent landlords require your credit report as a part of your application. This is also by far and away my oldest credit card, so getting it shut down would adversely affect my credit score.  [Edit: I’m now learning that landlords are more interested in potential tenant payment history on the report than in the credit score itself, so I may not need to be too concerned.]

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credit-card-over-charging-300x220

Patience, grasshopper…

No matter how much progress I make, I’m frustrated that I can’t pay it off faster.  I know that it took me years to get into this debt and it will take time to get out of it, so I need to learn patience.  I’m just ready for all this money that I spend on debt every month to instead go into investment vehicles that will result in earned interest, not paid interest.

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“Debtor’s prison is real, and opportunity cost is a bitch.” (DDSW)

2014 – A New Year with an Old Goal

happy-new-years-2014

It is hard to believe that it is already 2014.

I started this blog a little over 1 year ago to chronicle my climb out of debt. My goal for 2013 started off nobly enough.  I was fed up with debt. I was going to pay off $30,000 of credit card debt as Phase 1 of a larger debt reduction plan.  Did I accomplish this goal? No. Not even close.

Total paid down:  $7,000+.  That’s it??!!

I still have $22,599.00 of credit card debt remaining. How is this possible?  

2013 Recap:

I set up a budget, sold a bunch of stuff,  moved to lower my rent from $1265 to $425, and got a second job. Moving and giving up my stuff and my privacy, was a bittersweet experience, but I was ready to start eliminating some major debt. Life, however, had a curveball for me.  Things had been going downhill at work at that time and after a particularly stressful rough patch I lost my full-time job immediately upon preparing to start this journey. (To be honest, I’m still a little bitter about how it all went down, but I’m trying to move on.)  I collected unemployment for three months until I found a new job that required a move to a new state. This process, including the expense of moving and having to quickly find a new place to live, put me further behind in my debt repayment goals.

I’ve been thinking about the silver lining of my debt cloud. I was lucky to land a job that paid more than my old job, but I now live in a much higher cost of living area.  I set up a new budget, but sticking to it has been a challenge, as it was likely too tight.

Last week I quit my second job.  I deliberated about it for quite a while, but the number of hours that were expected of us for the same pay, made the effort not worth it.

paperwork

The second employer advertised that employees would only have to work 8-10 per week, but after starting, they made more and more requirements that we had to meet in order to “meet expectations” for continued employment. It was more like 15-20 hours/week worth of work that they wanted for the same flat payment.  I was already putting in 50-55 hours per week at my full-time job. Working 65+ hours per week started to wear me down. I’ve started developing a few chronic health issues. I’ve also been sick multiple times and stress has been a part of it.  I had to let the second job go.  It was not worth losing my health over.  I will still seek additional income, but only after a break.

What will I do in 2014?

I will focus on lowering my living expenses. When my lease is up will move to save as much on rent as I can without sacrificing safety. I will start a few months early so I don’t have to overpay on rent out of desperation like I did when I moved here not long ago. Not sure if I should throw everything at the credit card debt or start a 401k. I’m leaning toward the latter. I’m almost 40 and have NO retirement savings of any kind, which scares me. That is part of what burns me up about debt. Now I understand the meaning of opportunity cost. I think about all the money that I am going to spend paying off debt. If I put that same money into different investment vehicles, I could retire early and have a MUCH better life right now.

Never-Regret2

But I can’t dwell on that.  You live and you learn. I’m going to have a different standard of living than I envisioned for myself, probably for the rest of my life. Extreme frugality is not for everyone, but it is for me. It is my only hope. I have to take my own advice and start paring down even more.

I want to pay off the credit card this year. Next year I focus on maxing out retirement funding and pouring everything else into my six figure student loan debt.

Here is to an electric 2014!

Colourful 2014 in fiery sparklers

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“Debtor’s prison is real, and opportunity cost is a bitch.” (DDSW)