This isn’t the actual “sold” sign from my new townhouse, but you get the point

The common theme, though, was the unstable relationship between my finances and my housing situation. What I mean by this is that by not owning the different locations where I’ve lived over the years I was at the mercy of externalities that could (and did) have a direct impact on both my housing stability and my personal finances. For example, if one of my roommates decided to (or had to) leave in the middle of a lease, then their leaving would increase my monthly expenses by a factor based on how many other roommates I had at the time. In other words, an expense that should have been “fixed” in my personal budget was always at risk of increasing based on externalities that were outside of my control.

As a guy who works in finance and who is a maniacal manager of my personal finances, I don’t like it when I’m not in control of my long-term fixed costs and, by consequence, other financial stability-related issues.

At the end of February 2014, my now-former roommate told me that he was finally hired by a group that he had been hoping to get a job with for the past few years. This was a tremendous success for him and a really good, positive moment. This was also a good moment for me because I had been searching the “for sale” listings for a few months at the time that this news came around. In a different scenario, I would have been at my wits’ end trying to find a way to piece together a new living situation. However, after paying off my student loans and feeling financially free since August 2013, I was ready to purchase a home.

The stability that I received in my personal finances from paying off those student loans was great. Yet, it also made it abundantly apparent that I needed to stop renting and buy a home sooner rather than later. Given the high cost of owning a home in New Jersey (if you’re reading this from a state other than New Jersey, you don’t want me to start going into our property taxes), it was always a smarter move for me to live with at least one roommate instead of buying a home of my own. Over the years, though, certain things change. One example of the things that changed is that I’ve gotten older over the years and with that age has come a certain rigidness in what I want in my home. I like what I like and don’t want to be bothered with whatever annoys me! When you live with a roommate, you have to share space and sometimes you can get annoyed by what your roommate does without even thinking about it. Maybe you don’t want to watch the same show on the television or maybe you don’t want to wait for your roommate to finish making breakfast/lunch/dinner so you can get into the kitchen to fix yourself some food. Perhaps you’re not a fan of the state that your roommate leaves the kitchen in when they’re done making their food. The list can go on and on.

This isn’t to say that I haven’t had a wonderful group of roommates over the years. Rather, this is all to reiterate the point that as you get older you change. And as I got older I slowly segregated myself from the entire townhouse that I lived in to just living out of my bedroom. Imagine a very dorm-like situation – I would wake up, shower, and prepare for work all in the same room. When I got home from work, I grabbed a bottle of water from the refrigerator and then headed to my room to catch up on the day’s news, do some work for my small businesses, and then eventually go to bed… just to perform a very similar routine the next day.

I won’t get too deep into the process of buying a house here, but suffice to say that I found a place nearby where I live now that I felt was priced right. I struck a deal with the owner for a few thousand less than the townhouse was on the market for and we’ve were out of attorney review quickly. The home inspection was done and came back stellar, the appraisal was completed and the value is right where I thought it would be and my mortgage company was lined up and ready to fund me. In the space of about a month, I was able to go through the entire searching and closing process. Not too bad.

For the few weeks that I worked through this process, I had a chance to consider how I want to arrange the 3 bedroom, 2.5 bath townhouse that I bought. I had a chance to consider what I want to do with the garage that is attached to it, what I want to do with the living room, dining room, and eat-in kitchen. I also had a chance to think about which family events I want to host on an annual basis and which events I want to host for my friends in the area. Another aspect that I considered is how I wanted to furnish the place and that’s another aspect of the townhouse that I thought about during the closing process. Luckily, my sister-in-law’s twin sister is an interior designer and she came in to help me choose colors, textures, furniture, and more!

Buying a house was a fun time and not such a bad idea. Plus, I now get to write these blog entries from the comfort of my personal home office – which is fully separate and apart from my bedroom and living space!

Remember when I paid off my student loans?

Now I’m not going to go into another discussion here about how I paid off my student loans and you can, too. Lord knows I’ve written enough about that stuff that if you really wanted to learn how I was able to pay off those loans and pay them off quickly, then you can find that information on the blog.

And yet, I was struck by my buddy’s utter shock at my having paid off my student loans. And this had me thinking about something for the rest of that night and for the days since the auction ended. Namely, there are some people in life who are victims and there are other people in life who are victors. I’m not suggesting that my buddy is a victim. In fact, he’s the furthest thing from a victim.

There are people out there, though, who look at the hand they were dealt and hang their shoulders in defeat; they essentially turn into Droopy. They may as well turn around and ask everyone to go ahead and kick them in the ass. That’s the victim mindset. That’s the mindset that takes whatever the world gives you and says, “Oh, I was hoping for something better. But okay. I guess this will do.”

It won’t do, damn it! Be a victor! Be someone who makes their own way on this planet. If you don’t like the hand that you’re dealt, then get a new hand. If you don’t like the new hand, then stop playing that game and get up and make something else of your life! We are all the end result of the various choices that we make – choose to be a victor. Choose to be the person with their hand raised at the end of the fight. Choose to win!

I’ll be the first to admit that I’ve made many mistakes and I’ve not always made the choices that led me to be the victor at the end of a particular fight. But when it came to student loans I made a conscious decision that I was winning this fight. In fact, I made the decision that I wasn’t just going to be the victor, I was going to be the conqueror! And I was…

Throw your excuses to the side and make this world your own. Be a victor – the choice is yours!

Do you know who I’m talking about now? Good!

I received my biannual billing statement from State Farm and the cost of my insurance jumped about $150 per year. As you might imagine, I was shocked by the jump considering that I don’t get into any accidents, I don’t get any tickets, I’m a good driver, I haven’t purchased a new car in a couple of years, etc. The only thought that came to my mind after reading that bill was, “What gives?!”

After reviewing the bill to make sure that there weren’t any weird or one-time charges included, I called my local State Farm agent. This is the agent that I’ve been using since I first received my driver’s license back in the late 1990s, so we have a generally good history together. I’ve never had a claim or any other problem with my insurance during the entire time that I’ve used State Farm. When the woman answered the phone at the agent’s office, I explained my concern and asked why my rate was increased such a large amount. She responded that she had to check with one of the senior folks, but that I should wait on hold – so I did. To their credit, I was only on hold for a few seconds before they transferred me to one of the more senior associates (who I’ve sat down with and discussed insurance with one-on-one in the past).

The senior associate told me that State Farm just changed their rates and my rate went up. I responded that I was aware of this change, but I wanted to know why my rate would go up after I’ve done nothing but pay my bill every 6 months like a good, faithful customer. They said that there was nothing they could do about it – the rates just went up and that was the cause of the increase. I said that if my rate didn’t return to what it used to be, then instead of gaining my original rate plus this nearly 20% increase, they were going to lose 100% of my payment because I was going to cancel.

Now, I’m not a big believer in the customer always being right. However, I think I made a decent case. Here I was paying nearly $1,000 per year to this insurance company and I wasn’t even using their services. They wanted even more money from me and I said no… and they opted to lose all of my business instead of saving my already exorbitant annual payments.

In a remarkable display of poor customer service, the folks at my State Farm office stood their ground and I canceled my coverage. How a company can happily accept losing all of my business – after 15+ years of being a good, paying customer – and not even try to fight to keep my business is beyond me. This was one of the poorest examples of customer service that I’ve ever seen.

But hey, I saved more than 15% in less than 15 minutes by switching to Geico!

Family Guy Box Set, Volume 1 – $1.88
Family Guy Box Set, Volume 2 – $1.25
Family Guy Box Set, Volume 3 – $1.88
Family Guy – The Stewie Griffin Story – $1.25
The Lord of the Rings, The Fellowship of the Ring Box Set Extended Edition, Standard Definition – $6.26
The Lord of the Rings, The Two Towers Box Set Extended Edition, Standard Definition – $3.75
The Lord of the Rings, The Return of the King Box Set Extended Edition, Standard Definition – $3.75

In addition to the dollar amounts noted above, I also received $4.01 in bonus store credit for choosing store credit over cash. In total, those DVD box sets brought me $20.02 in store credit to use at F.Y.E. Overall, not so bad.

Might need to pull back on the “stay” portion of these vacations

Instead of hitting on those items, I focused on rest and relaxation – almost to an extreme. In fact, early in my vacation there were some days that I didn’t roll out of bed until after 12 o’clock noon. Talk about a waste of a day!

One of the most disappointing parts of my vacation, though, was that I didn’t reach the point of renewal and energy growth that I reached several years ago when I took a similarly long hiatus from the office. During that prior vacation, I distinctly remember some time around the 13th or 14th day that I was out of the office I began to truly feel relaxed. I was on a great sleeping schedule, I was active during the day, I was active during the night, and things were going so well that I actually felt relaxed enough to have my metaphorical batteries feel recharged. When that vacation ended, I remember going back into the office like a ball of fire. Even the commute didn’t bother me after that vacation! Okay, well the commute not bothering me was short-lived for sure, but I was still charged up and ready to go after that staycation.

In addition to using my vacation to take care of many of the long-term items on my To Do List, I believe that one of the reasons why I was not able to achieve that zen-like relaxation was because I – again – opted for a staycation versus a true vacation. So in the future, I’m going to actually consider going on a real vacation when I take time off from the office. In fact, if you don’t count the different places that I travel to for work or the fraternity, then the last time I was truly on vacation was a trip to Orlando with my family when I was in sixth grade. And if I’m not mistaken, that would have been during the 1992 – 1993 academic year.

Scary, right?

For years now, my older brother has been asking me to consider going on a cruise with the entire family. That might be an option to consider in the coming year. Also, I’ve wanted to visit the true northeast of the United States since I was young – to check out Vermont and New Hampshire during the fall months and see the rolling forests change color. That might be fun for a weekend trip. And I have to admit – I did have a good time when I visited both New Orleans and San Antonio for fraternity events. They would both be great places to visit during a regular vacation where I’m just getting away to get away.

Anyway, that’s what I learned after spending 17 days out of the office during the Christmas and New Year’s Eve season.

“Getting into debt beyond means of repayment” is ranked No. 5 on the Society of Occupational Medicine’s 2001 “Life Events Inventory,” which ranks the psychosocial stress of 100 life events. “Stress is one of the drivers for health conditions related to cardiovascular disease, allergies, diabetes (and) gastrointestinal disorders,” says [Carole] Stovall. That’s why paying off debt can result in physical healing. “When people pay off debt, they’re going to say ‘My stomach feels better, my heart feels better,'” says Stovall.

Regardless of what my doctor thinks is going on with my body, I’m convinced that my enjoying my return to the gym is directly related to not having a six-figure cloud hanging over my head. Now I workout not just because I need to for my health, but because I actually enjoy the entire working out process. It’s fun!

Eliminating debt is more than just a numbers game. It’s an act of breaking free from difficult past experiences. Debt associated with rough events — such as divorce or a reckless phase in life — is painful to carry around. So when you finally cut that debt from your life, you’ll likely “experience tremendous emotional liberation,” says Dallas-based financial adviser Derrick Kinney.

I guess I’m not the best person to make a comment on this particular outcome of paying off your debt because I don’t really carry around any emotional baggage. How this particular blurb translates to my life is that I can now actively plan and work towards achieving certain life goals that I should have achieved 6 – 8 years ago (for example, buying a permanent residence, building a sufficient retirement fund, and fully funding a just in case savings account). The article actually talks about these types of life goals in the context of buying a house and starting a family, so if you click on the link at the top of this entry, then you can read their take on achieving major life goals for yourself.

When you pay off a big debt, you strengthen your resolve to stay financially solvent. That comes with one important caveat: Your ability to stay out of debt likely depends on how you paid off your debt, says [Derrick] Kinney. If you worked hard to steadily pay off your debt, you likely have practiced discipline to keep your finances in check going forward.

Not only did I work hard to steadily pay off my debt, but I worked hard for years on end to pay off that debt! Even though I had a strong work ethic heading into my major repayment all of those years ago, there is no doubt that my work ethic and determination were both honed during this process. By adding precision to determination I believe I’ve developed a dangerous calculus for those obstacles that may get in my way in the future. There are a lot of ancillary skills that come along with devoting so much time and effort to a successful debt repayment – too many to list here. However, suffice to say that I agree with the point in the blurb above and I believe that my financial discipline is stronger than most individuals my age.

Click on the link above if to read more about the connection between psychology and paying off debt. Enjoy!

The update from the other day was based on the premise that my roommate was leaving to take a job in another state and that I needed to find a new place to live. That update also noted that I’ve been holding back the excessive additional student loan payments so I can use those funds to purchase a home in the next few weeks.

Could this all be over soon?

It turns out that the organization that was going to hire my roommate has decided to cancel all hirings for the time being. The next possible time that they’ll be bringing in new hires is this October… maybe. This is another topic entirely, but I’ve been telling my roommate for a few years that he needs to diversify his career prospects. He’s in the process of doing so right now, but let’s not digress from the purpose of this entry.

With the change in my roommate’s career switch I’ve been presented with a unique opportunity. Clearly, I’m going to push back my plans to purchase a home for a few more months. It just makes sense to rent the townhouse that I’m in through at least October, if not through next spring (I would stay through next spring in the event that my roommate doesn’t make/isn’t offered the career change in October). The unique opportunity that I now find myself in is that through saving to increase the size of my down payment, I’ve been able to put away more than the $17 thousand that I need to eliminate the remaining balance of my student loans. Most folks would make the quick decision that since I’ll be staying in my rental for a few more months, if not longer, then I should some of these funds that I’ve saved up to retire the student loan debt once and for all.

After all the aggravation that I’ve been through with my student loans, that’s an extremely appealing option!

However, as a guy who tries to be reasonable and thoughtful on issues of money and personal finance I can’t help but think that I should just save this money and use it to increase the amount of my down payment when I do eventually purchase a home. Retire the remaining balance of my student loan debt or keep hording money for an eventual down payment? It’s an interesting dilemma to consider.

Trust me, I’ve been giving this issue some deep consideration.

I think the benefits of saving the money for a future down payment are obvious. The total amount of the mortgage is reduced and since I didn’t plan on putting 20% down for the new home, by increasing my eventual down payment I’ll be able to put down 20% and avoid having to pay private mortgage insurance. Further, the more you put down, the better rate you can demand (even in a world of low rates). As a guy with near-perfect credit, increasing the amount of my down payment would be an ideal use of these funds.

And yet… I can’t shake the idea from my head that if I decide to use these funds to retire my loans, then I’m literally about two weeks away from having absolutely no student loan debt, period. Gone. Done. Eliminated. Game over.

The benefit of repaying my student loan debt? In financial terms I’d be retiring debt that is currently accruing interest at 4.25% and (when I purchase a home) replacing it with a mortgage at a lower interest rate. That’s good for my financial health over the long-term. The bigger benefit to retiring my student loans, though, isn’t something that you can easily quantify. The bigger benefit is the combination of financial freedom and the incredible feeling of accomplishment that comes with repaying such an immense amount of debt. The benefits of saving this money aside, I just can’t shake the idea of how awesome it would feel to know that I repaid $121 thousand in student loan principal and another $30 something thousand in interest in under 7 years.

For those of you who are analyzing whether or not I would suffer from using $17 thousand to retire my student loans, here’s some information for you. If I wait until November or December to buy a home, I can pretty much replace that entire $17 thousand with new income from the summer months. In essence, I’d net out even and wind up in a state of stasis, but with one less bill each month. My minimum student loan repayment is $333.50 per month – so that amount would be put towards my future down payment, too.

What to do… decision, decisions… What do you think? If you were in this situation – what would you do?

I’ve paid SO much more than this in student loans over the last six and a half years!

Sometime towards the end of January/early February, my roommate told me that he finally received a call back for a job that he’s been waiting to hear from for several years. He said that if he passed the different qualification rounds (he did and there was never a question on whether he would) and the agency offered him a position (which was and remains likely), then he would have to move out at some point in the middle of May.

Just like any sane person, I reacted to this news by weighing my future housing options. Through this process, I realized very quickly that my options for selecting a living situation in 2013 are much different than they were 5 or 10 years ago. Today, I don’t really need a roommate to pay for the too-high rent required for the three bedroom, two and a half bath townhouse that I currently live in. However, only having to pay half of the rent and half of the utilities obviously makes my financial life easier and I can’t complain about the roommates that I’ve had over the years – they’ve all been great with paying their share of the costs. And they’ve been good guys, too.

However, I’ve gotten a bit older and what I’ll accept for living space today is different than what I would have accepted 5 or 10 years ago. For example, I could very easily continue life as a renter and move into a less expensive condo or apartment that is much closer to the beaches and the bars that I go to (on those rare occasions when I actually go out to the beach or bar). But not only would continuing to be a single renter be a poor use of my income, living in those areas is not really where I want to be at this point in my life. Granted, “those areas” are only minutes from where I live now, but as a guy with an aggravating commute I’d rather be as close to the main highways as possible. The area that I live in right now is less than a mile from the Garden State Parkway and less than 5 minutes to other major highways in the area. It’s nice to have that type of access to main highways.

I’ve quickly gotten off topic here. The point of this entry is to provide a brief student loan update! I’m in an awkward position right now with my students loans. For the first time in years, I haven’t made any extra, excessive payments to the USED / MOHELA loan because I’ve been saving my money to buy a new home. Of course, as you might imagine there are two aggravating items that I have to report on about this situation.

First, I have $17 thousand still outstanding on my student loans. What is aggravating about the outstanding balance is that I have the entire amount (and then some) sitting in a savings account right now. Why not use the money in the savings account to pay off the balance of the loans, you ask? Simple. I’m saving those funds to buy a house. Just like the detour I had to take last year when my Honda Civic crapped out and I bought a brand new Ford Escape, I’ve been presented with a situation that requires me to change my financial goals.

Second, between principal payments and interest over the last nearly 7 years that I’ve been repaying my students loans, I’ve given private entities like NJHESAA and MOHELA and government agencies like the USED some $104 thousand in principal payments and some $35 thousand in interest payments for a combined nearly $140 thousand no longer in my possession. Just to give you a perspective on how that type of repayment has had a lasting, real impact on my life – the $140 thousand from the repayment could have easily combined with the $17 thousand that I’m sitting on to allow me to buy the condo that I’m considering purchasing – with absolutely no mortgage.

No mortgage.

Of course, that’s not the situation that I’m in and that’s not the way my financial life has progressed. And I’m not mad… Am I aggravated about it all sometimes? Yes. But definitely not mad. In fact, I’m grateful that I’ve been able to position myself such that I can buy a home at 32 years old when there are so many people in my generation that just aren’t able to do so yet. And the path that I’ve taken to get here will allow me to decorate the walls in my soon-to-exist-home-office with various degrees and professional commendations. Not such a bad outcome, really. Does buying a home mean that my plan to retire my student loan debt by this summer is going to change? Yes. Unfortunately, I’m going to have to push that repayment plan out a little bit longer. But pushing the repayment plan out a little bit longer because I’m buying a home isn’t so bad!

So instead of reading about how I retired my student loan debt in the summer of 2013 you’re probably going to have to wait a few extra months – possibly a full year – to read that update. In any event… stay tuned!

The folks at Princeton have an interesting study about money and perceived happiness.

An August 2010 study by Princeton University suggests that the more money you make, the happier you are… until you make $75,000 per year. According to the study, $75,000 is the magic number where a person’s annual salary maximizes personal happiness. Any money earned over $75,000 doesn’t significantly add to a person’s evaluation of their life. The study also suggests that when you make less money, then issues like poor health, divorce, and loneliness are amplified. In other words, if you can make $75,000 per year, then you just might be able to buy yourself into being satisfied with your life.

From my personal experience with sinking so much money into repaying my student loans, I don’t know if I’m a good example of the results from the Princeton study. Sure, my income is at or above the $75,000 mark (forgive me for trying to express some modesty with my income here, folks), but I wonder if the Princeton group analyzed what the impact is of significant levels of debt on the happiness or perceived happiness of individuals. On the one hand, I’m a happy guy with not many complaints so I think I already fit well into any happiness measures. On the other hand, though, even with my current income I’m constantly trying to find ways to earn more money so I can retire more debt.

In light of my own experiences, I would suggest that there might be an addendum that we can include with the Princeton study. That addendum would say that while making $75,000 per year is the apex of integrating money earned with impressions of happiness, there is a correlation between exhaustion and high levels of debt – regardless of how much money one makes.

All of this really begs the question, though, on what you think of the results of the Princeton study. Do you think $75,000 is enough of an annual salary to buy happiness? Or, as the Princeton folks write it, is $75,000 in annual income enough for you to feel satisfied with where your life is right now?

I don’t know – I wonder what other people think about this conclusion. It seems to me that $75,000 might be a lot of money in some parts of this country, but not necessarily so in other parts. Also, if you have extreme amounts of debt, then how much of that $75,000 is actually being used to enhance those factors in your life that would leave to an improved self-image? Or improved happiness? And is there a level of debt where the money you owe is small enough that it doesn’t necessarily impact your happiness any more? Interesting questions…

One – Cut up all of your retail credit cards.

Retail credit cards are credit cards that can only be used at certain stores. They have no value outside of that store and serve only to facilitate spending money in that store. These cards should be completely eliminated from your budget if you are trying to eliminate debt. If you have debt on many different fronts, this is the debt that you should eliminate first.

Two – Limit the use of your credit cards to emergency funds.

It is very difficult to get out of debt if you constantly use credit cards. Credit cards should be relegated to emergency use only. Take them out of your wallet and place them in a locked cabinet that is difficult to get to.

Three – Use the snowball method.

Psychology plays just as important a role in paying off debt as any other purely physical financial aspect. The snowball method consists of starting with the lowest debt, paying that off and then moving to the next highest debt. This will give you a sense of accomplishment in knowing that you have completely paid off one of your debts before moving onto the next one. It will also improve your organization because you will not be receiving a bill from so many creditors.

Four – Look for better rates on your insurance packages.

Many people believe that their insurance rates on large assets such as cars and houses are completely nonnegotiable. However, people have access to resources that were not available in the past because of the Internet. It is actually quite easy to find insurance comparison websites whose sole purpose is to compare insurance rates side-by-side. Using resources like this will direct you towards money-saving options for your insurance packages.

Five – Do not be afraid to use loan consolidation.

If your financial situation is quickly becoming untenable, debt consolidation is one of the best solutions outside of bankruptcy. Contrary to popular belief, simply taking on consolidated loan does not lower your credit score automatically. As a matter of fact, it can actually raise your credit score if you are able to keep up with those payments.

Six – Refinance if at all possible.

Now is a great time to refinance your home at a low interest rate. The Federal Reserve continues to keep interest rates at historic lows, and if you can take advantage of this to save more money to put toward debt, you should do it. Keep in mind that refinancing does require a substantial upfront payment in most cases. However, this is a good investment for people who are trying to get out of debt.

Seven – Cut down on impulse buys.

Although you may not believe that impulse buying can actually affect your debt, small purchases add up over time. You can eliminate impulse buying from your shopping habits by creating a list before you go out to shop and sticking to it.

Eight – Always be on the lookout for coupons.

Although the newspaper is fast losing relevance as the premier source of news, it is still one of the best places to go if you are looking for coupons for local retail stores. The Sunday newspaper in most towns is a great investment if you’re trying to get out of debt.

Also, many retailers will offer great deals online that are not available off-line. There are also websites whose sole purpose is to partner with retail stores and offer coupons – be on the lookout for them.

Brent Wayne is a 23 years old housing and finance writer. He mostly spends his time writing blog posts and editorials with a focus on housing, mortgage loans and economy. You could reach him at brent.wayne@yahoo.com.