However, I’m not ok with feeling this way. The truth is, I got into debt a few dollars at a time, and if I don’t watch out, it will happen again. So, I’m going to rededicate myself to getting rid of the extra expenses to keep our budget lean!

There were some obvious cuts to be made initially. We budget $50 for household decor/furniture, because we’ve been setting up a new (rental) house since we married in June. However, we’re pretty much set on furniture and decor for now, so cutting this to $10 will be enough for the occasional picture frame, and to build up some savings for larger things later. Next went World of Warcraft, which I simply don’t play anymore. As a substitute, I’m going old school with a text-based MUD. Just as fun, but totally free!

After these obvious trimmings, I dug a bit deeper. I’ve been spending $35/month for my own virtual private server, which is indeed a good deal. However, I’ve been using the free Heroku plan for hosting the occasional small development application, and thus the only things left on my server are this blog, a few other miscellaneous blogs, and a few sites I used to host for a friend. I’m no longer getting my money’s worth, and even worse I don’t have the time to administer the server and keep it secure. So, I’ve switched to DreamHost, which costs less than $10/month, and is a pretty awesome hosting service. I’m totally happy with it thus far!

Then, I reduced our dining out budget by $10. We probably won’t even notice this decrease. I reduced the grocery budget by $20, which we also likely won’t notice. Tomorrow I plan to call the cable company to put us on a plan to save a few bucks each month but with better service. I reduced our entertainment budget to basically allow us to do Netflix and then a movie theater trip every other month. Finally, I called to see where my student loan consolidation was, and realized they were waiting on one company. So I called them to get the ball rolling for the consolidation, which will save me $150 per month in costs.

Overall, these changes amount to about $300 or so per month! Those little charges do add up! And even though you think some may not be changeable, you may be surprised when you try to cut costs. It’s particularly effective if you do it in a way where you won’t notice (cutting the dining budget by $10), or where you have a good alternative (MUD instead of WoW). The key is feeling like you just won extra money without sacrificing at all.

So, the lesson here is to always revisit your expenses, and never let your budget stagnate. Things change, and you have to be able to roll with it. And rolling with it in order to salvage 10% of the budget is always a positive thing!

For example, I had several blogs I would read daily, wasting hours of each day. I decided that I only really wanted to read about 2-3 blogs I really loved, and a few daily comics. This has cut down my RSS reading by over 90%, and after a few months of adjusting I simply don’t miss those subscriptions I no longer have. Same with money; I have learned to only buy things that support my goals in life, and not to waste money on things I don’t need. Since I don’t watch a lot of TV, I don’t need a 52″ Plasma taking up space in my living room. Sure, it would be nice, but what would be nicer is to own my own home. My wife and I could go out more, but we are childless and do not need a “date night” outside the home. We get Netflix instead.

Now, I find myself in the predicament (or joy) of investing. My debt is paid off, my student loans consolidated, and I want to start looking at investments beyond a money market account. I want to do it right. I used to have a retirement IRA that completely tanked when the economic bust happened, and lost over 70% when it was all said and done. So, I wondered, how could I use this concept of doing things on purpose, and apply it to investing?

It’s actually simple. I did not read about stocks, bonds, commodities. I did not analyze charts and graphs, nor did I read forums about investment advice. I merely took a step back, and thought about what the word “investment” meant centuries ago. Investing in something used to mean that you were supporting a person, company, or cause that you believe in. There was risk of failure, of course, but also risk of great success. If a family member wanted to open a small factory to create widgets, you might loan some money to get it going. Your money became directly proportional to the profit he made. If you lost money, you simply made a bad choice in who you were investing in.

The contrast among this type of investment with today’s markets is easy to see. It’s somewhat the same, but instead of really believing in the person or product, you are shielded for many layers from the CEO and product. Shareholders are numbers on the screen, mere percentages. Profits and losses do not always correlate to what you earn. It’s a loser’s game, where it becomes pure speculation based on what others are doing. If Berkshire Hathaway bought a stock, you can be sure the price will then rise due to massive purchasing. Of course Berkshire then sells it and shows “once again, we picked right”, when in reality they earned money on their own fame, not necessarily the merits of the stock itself.

So, I’m going to invest in what I know. If there is an existing company I believe in, I will invest in it. If a family member needs a startup loan, maybe that is something I can help with. I want to start my own business, and that will be its own investment. If I fail, then at least it won’t be due to market speculation. I’m willing to bet that if I really believe something will work, then it will probably return a good deal on that investment in years. The plan is not to speculate or day trade, it’s to keep buying stock that I believe will rise, and stock in products that I personally use and like. If Chick-Fil-A traded publically, I’d buy it in a hearbeat, because I think they offer the best service and food of any fast-serve restaurant out there. There are other businesses that I think offer good service and good products, and I will continue to put money there.

Likewise, I can invest in our nation. If I think the policy makers are headed in a great direction economically, I may buy bonds or notes to invest in the US. If I think Brazil is more expansionary, then I might buy into it instead.

Of course, I may not earn anything. Or I may even lose. But this way, even if I lose, I did it while supporting something I believed in. But I have a feeling that supporting things you believe in will usually return on that investment. Clearly, the days of earning 10% return are over for now, and we have to be satisfied with a few percent anyway. Why not put that otherwise stagnant money into a business you think has a good chance of succeeding? For me, it’s all about purpose. What better way to live by purpose than to put your money where your heart is?

For those new to economics, a weak dollar is what it sounds like – weak. As a quick example, buying a Euro half a decade ago was cheaper than it is now. Almost half cheaper, in fact. This is partly due to inflation, and partly due to trade and budget deficits. Most people agree that a weak dollar is a bad thing if you are a consumer, and a good thing if you are producer. As an example, my business is getting a lot of attention from international clients, because our products are cheaper here than they are in their home country. On the flip side, if you travel to Europe, expect to pay twice as much for everything.

So, basically, if you had a total debt of $20,000 five years ago, that amount does not change with the dollar (unless it is in overseas currency). Meaning that you would technically be paying less for it now, even though the amount is the same.

However, this is not true, for the most part. If you had traded your money for Euros five years ago, yes, they would now be worth twice as much. But since you kept your money in US dollars, then you have the same amount as you did then. Your debt and savings both weakened at the same time and to the same degree. It is no better to pay off debt now than it was at the time you built it up. In fact, since your debt likely carries an interest penalty, your debt actually weakened LESS than your savings, meaning you now owe more than you did back then, unless you’ve been trying to pay it off.

Since your debt is worth the same it was back then, relative to your savings, then it will be the same thing when it bounces back. $20k ten years ago = $20k right now = $20k ten years from now, when you only consider a strong or weak dollar. It only becomes worth more or less when you invest in international currency. When the dollar is particularly strong, you may consider trading it for a currency that is particularly weak. And then, when the situation reverses, you will have extra money. However, when you factor in a typical inflation rate, this is not a sound investment strategy; you almost always lose in the long run, and it requires a long run to see a gain. Of course, there are always higher risk currencies (if a country is about to crash and you believe they will bounce back), but most of the time you will lose on long term gains.

So, then, what is the right time to pay off debt? Put simply, the right time is NOW. With interest rates rising, that $20k right now will become $30k before you know it. If you’re waiting for the “right time”, then your money is sitting there gaining interest by the minute. In general, paying off debt is almost always smarter to do immediately, rather than waiting for some magic moment. The monetary benefit is eclipsed by the psychological benefit – imagine being free of the weight of that debt! Imagine if you owed nobody but yourself, what you could do with that paycheck every month.

So, start now! Create a strategy, maybe review this blog and some other ones for support, and get started today. List your debts, create a budget, and put as much money as possible towards it to get it paid off soon! In a bad economy, the one thing that makes it worse is debt. Losing your job is terrible no matter what, but imagine losing it and not having to really pay any bills but the necessities… it would be great, right? So, the best way to prepare for the worst is to get out of the red. It’s a difficult road, for sure, but it’s rewarding in so many ways.

1. Build a Home Gym. It might be a new concept, but you don’t need fancy machines to lose weight. Buy a set of dumbbells, which should cost less than $50 easily, and you might be able to pick up some for less than $10 on Craigslist or a yard sale. You can do pretty much anything with a dumbbell you can do on weightlifting equipment, with modified exercises. Don’t worry too much with leg exercises for now; when you are overweight you get enough workout on the legs by simply using them. You may also choose to buy a floor mat, a weight bench, an exercise ball, resistance bands, etc. If you really want to spend nothing, fill some gallon jugs with water to use as weights, and use a towel for resistance exercises. It might not work long-term, but it should definitely get you started!

2. Use Nature. Want a truly free way to lose weight? Get outside. Seriously. Throw a frisbee, ride a bike, walk, jog, run. It doesn’t matter. These things all work to benefit both your muscles and your heart, you get fresh air while working out, and it is truly fun. Embrace getting sweaty and playing hard, like you did when you were a kid. You don’t need a treadmill or elliptical (though they certainly do the job great), if you have the great outdoors to play in.

3. Eat Smart. You don’t need to go all-organic premium foods to eat more healthy. Yes, fast food is cheap, but should be avoided at all costs. Use whatever vegetables are on sale that week. If you are busy, then you may have to eat out a few times per week. Don’t sabotage yourself though; look in advance what types of foods are best to eat at the places you like the most. Usually salads are the best, but not always. I was surprised that Chick-fil-a’s chicken sandwich was fewer calories than their wraps! Go for grilled over fried (trust me, after a few weeks you won’t miss it). Substitute the fries for something else, or get a small fry and eat only half of it. It is possible to eat fast food and still eat healthy, you just have to be smart and informed before you go.

4. Drink Water. Water is free. Don’t buy bottled water. Use tap water, a good filtration system or pitcher, and invest in a good water bottle that you can carry with you and doesn’t sweat. Fill your bottle every morning, and at work if the water is good. Bottled water is too expensive anyway, for something you can get for free (or really cheap if you use a filter). You know what costs you a lot of money? Sodas and other drinks. Give up alcohol too, or cut back. If you have to have coffee, learn to drink it black (it is healthy for you, and you’ll spend less on sugar and cream). If you have to have tea, cut back on the sugar or honey. Both coffee and tea are cheap to drink, if you drink them correctly. You should not have to drink a lot of milk, but if you can’t give it up, then use store-brand lowfat milk. But your calories should be invested in food, not drink. Water is free, both monetarily and calorically.

5. Shop Creatively. Use coupons, or use The Grocery Game (google it) to maximize your food budget. Don’t feel like you can’t use canned vegetables if they are cheaper. But if you see fresh vegetables on sale (or have a good farmer’s market nearby), then load up. Incorporate whatever meat is on sale that week into your menu. In general, it is easy to tell what foods are healthy or not. If you tend to eat a lot of TV dinners, buy some Lean Cuisines when they go on a good sale, and stock up. Whatever your strategy, stick to it and you’ll be fine. I actually spent $25 less over the past week on foods that were very healthy. Use fresh herbs and spices to add flavor to your food, and you won’t feel like you are sacrificing anything!

6. Adjust. As you lose weight, you should be eating even less and exercising at a higher intensity. While jogging might help you drop initial weight, you may notice a plateau. At some point, you may have to get a gym membership in order to get the higher intensity you need. But by this time, a gym membership is a good investment; you are dedicated to the process, so you don’t have to worry about not getting good use out of it. The biggest mistake is to buy one and not use it at all. By starting at home, for cheap, you build a habit that can carry over to the gym. Look for gyms that are local or privately owned, and you may save even more money. For foods, you should be buying less, since you should be eating less.

In general, though you may be spending more on quality foods, gym and recreational memberships, and adventures you will be able to go on, once you lose weight you should theoretically be spending less on volume of food, medical care, clothing, etc. Lack of money is no reason not to start losing weight today! You can make a few small changes right now and gradually keep adding changes in, until one day you have changed your whole lifestyle. And all that, without spending any extra money!

On a not-so-side note, I finally learned what not having a degree means in terms of job availability. Even though I don’t feel the degree really means you know more (and personally will never hire people as if that were true), a lot of companies weed out potential candidates based on that little piece of paper. Oh, if only this were happening two years from now when I will have finished school.

So, this is a pretty shaky month. I had to start working part-time immediately, which reduces my cash flow quite a bit. I’ve made some big cutbacks already, and have more to make. If by next week I do not have a job, I’m going to have to call creditors and see if they’re willing to give me a break while I find a job. I do have a few prospects, and if worse comes to worst I’ll have to move back home and work fast food or something. So I’m not sweating it too much; worrying about it will not get me anywhere. I am, however, allowing it to motivate me to keep looking for jobs. Unfortunately, out of about 500 jobs I’ve looked over, only 2 seemed appropriate for me.

I’m also at a disadvantage because I won’t be able to make what I’m currently making at a lot of places, without that degree. In a small business, I provide a lot of value. In a large business, I’m just another programmer, and the pay scales accordingly. I’m hoping I can transition into a position that pays what I’m making now, and also pay for school still (or put school on hold for the immediate future).

So, some lessons well learned about life and how it throws you all sorts of curveballs. Don’t worry, I’ll come out of this stronger. I now see even higher levels of importance in being debt free and having plenty of savings stockpiled. That will motivate me to try even harder.

On a side note, I’m not allowed to talk about it in detail yet, but let’s just say that Mint.com is going to be an incredibly awesome tool, and will blow every other finance tool out of the water easily.