Money 2020

2020 was a rough year for civilization. It wasn't 1347-1351 rough, when the Black Plague put to death more than 1/3 of the population, but it was rough. I hope many of my friends used it as a wake-up call to recalibrate. I certainly did. Once he first lockdown happened, our motto became, "If we can't eat it; we don't need it." But 2020 wasn't the year of my wake up call. I honestly didn't feel the pain of the pandemic much, because 3 years before there was a thing called Covid-19, I made a life decision to live on 1/3rd of my income. Now, I'm down to 1/4th. To achieve this, I had to drastically reduce my expenses. Then, I had to increase my income. I went as far as to take a job in the Middle East, because foreign earned income is not subject to federal tax up to $100,000 per year*. Then, I had to work hard to make myself valuable to my employer after being self-employed for many years. Not easy. Then, I had to start hiking up that mountain called "Bad Debts", which can take years to climb. Most people don’t have the luxury of moving to another continent to take advantage of the tax benefits. Then again, most people who say they don’t have that luxury actually have it. They’re just too comfortable and don’t want to make the sacrifice. But comfortable is good, right? Not if your definition of comfortable means credit card debts, a fat mortgage, and debt on depreciating assets. Real comfort is not owing anybody anything. It's possible to put yourself in a position where you can achieve that.

I endured disaster years before The Rona, which gives me an opportunity to re-build better and stronger than before. Kind of like the Six Million Dollar Man, but without the six million dollars. That's why 2020 didn't phase me. 2020 for many has been a disaster. I get that. So maybe it's time to take the lemon called 2020 and make some dandy lemonade in that tall, frosty glass called your personal finances? First, you've got to clean the glass. Before you clean it, you've got to empty it. Re-think everything.

I've never written about finances because my finances were, shall we say, less than exemplary and no one else's business. Then I asked myself, “What would it take for a family like us to live with money to spare and no bad debt; to be comfortable as I just defined comfort?” So, I pulled out the trusty calculator and did some math. In what could only be described as a metaphorical Tsunami, I shall now discard my lemonade analogy and suggest that there is more than one way to climb the mountain called Mount BD, which of course stands for 'your bad debt and your bad decisions'. Notice I said "your" because if you want to fix it, you have to own it, even if others contributed to the situation. If you’re 50 or 100 pounds overweight in terms of your expenses, you’ll never get there. You'll have to lose the weight. Even in the most politically correct environment, I would hope we could all agree that chronically obese people tend not to climb high mountains, not to the top anyway. I have a lot of friends and colleagues in Nashville, and it's the last place I owned a home in the US, so let’s use Nashville as an example. There are no state income taxes in Tennessee, so the average take home pay for the average household in Nashville after Federal and FICA taxes are withheld is $74,079, or $6,173.25 per month. Living on 1/3 of that would give a person a monthly expense budget of $2,057.75. Living on 1/4th of that would be $1,543.31. But realistically, let’s start with half: $3,086.62. What would it take for you to live on half of your take home pay, including your mortgage or rent payment?

Could you imagine going back and living in a place like the place you lived when you were 21, or when you first graduated from college? In my case, I went from a 5,067 square foot house in a posh Nashville neighborhood called Richmond Hills to a humble 2 bed. Could you adopt a philosophy like "If I can't eat it, I don't need it?" Cut out restaurants? Cut out the mall? Cut out alcohol? Could you find the grocery store nearest your job and then get an apartment halfway between the two? Could you sell your car and use Uber? Could you keep your phone a year or two longer? In other words, could you stop living to impress other people and impress your balance sheet instead? Statistically, most of you will say, "buzz off, gringo-face". But maybe just one of you will take conrol of your life and get started now. If you use the disaster of 2020 as a catalyst for meaningful, radical, measurable change, you will look back at 2020 as the best year of your life.

*I'm not a tax or a financial advisor. I'm just a guy expressing personal opinions in his personal blog. Views expressed do not constitute professional advice.

**I define a big mortgage or rent payment as one which consumes more than 25% of monthly take home pay. For example, I know a guy whose mortgage is 14.3% of his monthly take home pay. I define bad debt as any revolving credit amount greater than zero and any car payment more than the cost of some Uber/taxi rides and any payments on any depreciating asset.

Keywords: #money, #mortgage, #debt, #refinance, #freedom, #finance, #Covid

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