Category Archives: Three-Post Introduction

A Case Study of Lifestyle Inflation

Day 107 | $50,944 paid | $39,773 till freedom

I’ve been beating myself up about my lack of spending discipline in November and even, to a certain extent, this month  (e.g., the tow bill, New Years’ Eve party ticket & hotel, Christmas gifts, etc.). Then I started looking at past spending, and I realized that my spending hasn’t been that bad. With this post, I’m hoping to put things in perspective  for myself by contrasting my spending levels these days with my spending habits before and directly after I graduated from Harvard. It’s a story with visual aids like charts and pictures. Buckle up.

The first couple of pictures are me about to embark on what turned out to be a 22-hour, straight-through, no-sleep drive from Michigan to Austin in August 2005 to start my first real-world job. I had just graduated from Michigan debt-free (thanks to my parents) and was moving to Austin to take a job with a $52k annual salary + bonus, but I bought a 2002 Ford Focus for about $10k. I was very focused on my spending habits at that point in time, and I had successfully fought the very strong urge to buy a slightly used Mustang GT convertible that was calling out to me on Autotrader like the Sirens.

Those are all my worldly possessions–just enough to fit into a compact hatchback. I was the definition of “mobile workforce.”


I got to Austin and moved into a one-bedroom apartment for about $500/month. All of the  furniture in the pictures below except for the bed was free from my aunt and uncle living in Fort Worth.

Note the following:

  • Lack of nightstand next to bed
  • My desk doubled as my dresser
  • Lack of dining room table–I literally ate all my meals on my couch



I stayed there only for a year, then I got rid of the couches, coffee table, and end table and rented a room in my buddy’s house to save money and be less lonely–I had lived with seven friends at Michigan, and I just wasn’t cut out yet to live completely alone. I had gotten a raise and was making $67k/year, but my frugal self decided $500/month for a lonely rent was too high a price.

I sacrificed when I moved into the room below–for example, my closet was across the hallway rather than in my room. But I was still happier there–and paying less–than I was at the apartment.

(I did end up selling the Ford Focus and getting a red Honda S2000 for $18k, so I wasn’t a completely innocent consumer.)

Below is a pic of all of my worldly possessions packed up in August 2007, almost exactly two years since I had moved from Michigan to Austin.  The boxes were staged for my colleague to put them in his rented U-haul truck on the way to Boston. He was also headed to HBS, but I couldn’t drive with him–I had to take a flight to visit my family for the weekend before heading to Boston. Note the lack of car that I had sold a week before this pic was taken.

I graduated from HBS in May of 2009 and moved back to Austin, and that’s when the spending really kicked into gear. I ended up moving back to the same apartment complex I lived in when I initially moved to Austin in 2005 (I’ve since bought a house), and the result is a before/after portfolio that is pretty darned poetic–I ended up spending a good chunk of my signing bonus on new furniture when I graduated. I had not one, but two nightstands, a real desk, and even a place to eat meals.


Oh, yeah, I also got a 2004 BMW M3 the same month I graduated in May. Then I got a motorcycle in October. Then I got a house in July 2010. Then I sold the M3 and got a Murano and an S2000. During this time, I also got a huge LCD TV, a surround sound stereo system, gadgets, more furniture, and I also went on trips.

What the hell happened to the guy renting a room from his buddy who owned just a car and some clothes? And who, by the way, was pretty content to live that lifestyle (but did wonder what it would be like if he had more money).

I want to take a second to stress that all of my spending was in complete control. I never carried a balance on my credit card, and I always had at least $15k in savings. I was buying stuff that I could afford and spending at a sustainable rate–not at a “retire-by-age-35” sustainable rate, but sustainable nonetheless.

But seriously, why did I buy all of that stuff? What was I thinking? I’m only in my fourth month of NMHD of living a relatively frugal lifestyle, but looking back at my spending history, I cringe.

And it’s not like the stuff made me happy. Far from it. I remember how much stress the furniture purchase caused me. The morning after I bought it all, I woke up at 4 AM in a panic and couldn’t fall back asleep. I called the furniture place as soon as they opened and asked what their return policy was, which turned out to be quite lenient, and I came within an inch of cancelling the entire order.

The thing was, I had been quite content to be a guy renting a room out of a house, then a guy living in a dorm, always able to cut ties a moment’s notice and do what I wanted, go where I chose. I had freedom. And then, just like that, I was grounded. Tied down. Completely trapped.

At the time, I was able to talk myself off the ledge and convince myself that I was doing what “adults” do. This was all about growing up and being a responsible, contributing member of society. The argument worked; I kept the furniture, and I went on to consume more stuff.

Now I’m not so sure anymore.

I prefaced this post by explaining that it was an attempt to put my so-called lack of spending discipline in November and this month in perspective, and it’s sort of working. I don’t know that I deserve a pat on the back or anything, and I’m far from out of the woods, but I think I’m doing alright–I’m doing better, at least, which is something I think we can all agree on. A couple of data points that support that claim are the sales of the Murano and the motorcycle.

Other supporting data can be found in the charts below. I started NMHD at the tail end of August and my spend for Sept-Nov in 2009, 2010, and 2011 is graphed below. My min/max spend pre-NMHD was $15,831/$4,002 with an overall average of $7,911. Those same data points for the NMHD period-to-date are $3,420/$2926 with an overall average of $3,196. In other words, during the past three months, I spent, on average, $4,715 less per month than the same time period a year ago and a year before that.

Below is my consumption rate from the past 18 months, including average indicators. The Pre-NMHD average is $7,754 versus the NMHD average of $3,196 for a delta of $4,558/month. The peaks, from left to right, are 1) down-payment on the house, 2) Murano purchase, and 3) S2000 purchase. Even when I wasn’t buying big things like a house or a car, I still managed to throw down $7k in a single month, and on more than one occasion. (All expenses in both charts exclude student loan payments.)


I was a certain consumer when I drove down my parents driveway in the Ford Focus in August 2005. I was a similar consumer when I packed my bags for Boston in August 2007. When I came back in 2009, I was…different. It sounds weird, but I’m trying to get re-acquainted–on a certain level–with the guy I was before I came back from Boston.


Filed under Three-Post Introduction, Uncategorized

Let’s Get Down to Brass Tacks

Day 3 | $0 paid | $90,717 till freedom

Yesterday, I mapped the mountain by laying out the assets and income that will help me climb it, and the liabilities and expenses that will stop me from climbing it. Today, I’m going to make a first-pass at making a path up that mountain by determining what my new expenses and new income will have to be to make it to the top in ten months and pay off my $90k of debt.

Putting the Final Touches on the Mountain
The monthly expenses I listed yesterday are actuals, not necessarily what I have budgeted for. Yes, believe it or not, I do in fact have a budget that I track on a monthly basis. However, there have historically been no consequences if I exceed my budget. For example, my entertainment budget is $850/month, but I’ve been averaging about $1,300 per month. If I were doing real budgeting, then if I spent $1,300 in entertainment one month, I would have spent only $400 in entertainment the following month. I didn’t. I just kept spending, spending, spending.

At the beginning of my fiscal year in May, I laid out the following monthly expense budget for myself:

Monthly Expense Budget

  • Mortgage:$1,441
  • Student loans: $1,057
  • Entertainment: $850
  • Groceries: $330
  • Car insurance: $171
  • Car fuel & tolls: $160
  • Phone: $85
  • Electricity: $68
  • Water: $55
  • Lunch at work: $55
  • Internet: $50
  • Dry cleaning: $40
  • Gas: $36
  • Haircut: $20

Total: $4,418/mo or $53,016/yr

Annual Expense Budget and Status to Date

  • Medical/vision/dental: $500 budget / $260 remaining
  • Clothing: $1,000 budgeted / $214 remaining
  • House maintenance and repairs: $2,000 budgeted / $1,465 remaining
  • Donations: $450 budgeted / ($25) remaining – oops!
  • Car/motorcycle maintenance and repairs: $3,000 budgeted / ($328) remaining – oops!
  • Gym budget: $350 / $25 remaining
  • Christmas travel: $600 budgeted / $600 remaining

Total: $7,900/yr

Total expenses: $60,916

(Sorry if this last part seemed a bit redundant to yesterday’s post. I’m not a professional blog writer and am just kind of winging this…hopefully this is the last re-tracing of steps.)

Now for Revenue
We’ve already talked about my salaried income and how I don’t really want to state it. But let’s just say, for grins, that it’s a nice, round figure like $100,000. If 10% goes to my 401k right off the bat, I’m down to $90k. Then 20% goes to tax, so I’m down to $72k. If my budgeted expenses as outlined above are $61k, and I reset the annual budget and expenses-to-date from this point forward, then I’ll be able to contribute $11k to savings or loans at the end of a year. Since this is a ten-month project rather than an annual one, though, I can put only ten months, or $9k towards loans. 

The $25k loan that I plan to pay off as soon as USB pays me will be paid off with the liquidated IRA funds ($8,000), stock ($14,100), and the balance by cash, or $2,900. So that $9k for loans over ten months actually goes down by that $2,900 to $6,100.

Once I pay this off, I’ll be left with an $871 monthly loan payment. So, I’ll be spending $871 per month on my $66k of Federal loans, or $8,7100 over ten months, 70% of which will be principal, so I’ll chip away at $6,100 of the principal.

So the walk to debt freedom looks like is:

  • $90,717 starting debt 
  • Less $22,100 paid down immediately by IRA and stocks
  • Less $2,900 paid down immediately by already-accumulated cash savings
  • Less $6,100 paid down by savings to be accumulated over next ten months at current course and speed
  • Less $6,100 paid down per regular monthly payments over ten months

Delta to goal: $53,517

But because I want a cash buffer of $4k, I really need $57,517.

So it’s not exactly a “walk,” and it’s definitely no walk in the park. It’s going to be a hustle.

Finally Ready to Make the Path
So I’m off-target by over $57.5k. Clearly, if I want a real shot at making this work, I’ll have to…

  1. Cut costs
  2. Increase revenue

I have to either cut out $57.5k in spend, make $57.5k more, or do a little bit of both that nets me $57.5k extra.

Cut Costs
Where do I cut? How deeply do I cut?

Mortgage: $1441/mo
There is no real way to cut this. I bought the house a year ago using the $8k first home buyer tax credit, and I would have to pay this back if this address ever stopped being my primary residence. The possibility of getting a roommate, however, will be investigated in the revenue section.

>Potential Upside: $0

Student Loans: $1,057/mo
I’m paying off the $25k loan on which I pay $186/mo.

This leaves me with $871/month x 10 months = $8,710 off $66k, but probably only 70% will go towards the principal. So I’ll pay off $6,097.

I’m not going to double-count these expenses since I already included them in my walk above, so I can remove them from my monthly budget.

>Potential Upside from Federal Loans: $6,097

>Potential Upside from Non-Federal Loans: $186/mo | $1,860 through June

Entertainment: $850/mo
Oh, entertainment. We have so much fun together, you and I. The dinners, the drinking, the travel…I will miss you so, so much.

I want to get aggressive on this category. If I completely cut out entertainment for the next  ten months, I will get $8,500 towards my $56k goal.  Not shabby. But also  pretty freaking hard.

I’m going to say $50 a month. Doable? Can I go from spending $1,300 per month to…$50??? Lord, help me.

>Potential Upside: $800/mo | $8,000 through June

401k: 10% of income, taxed
First off, much to the chagrin of all financial advisors everywhere, my 401k is getting chopped. Completely. Ah, glad I brought my work laptop home. Give me a just a second. Okay, zeroed out. Thanks, Hewitt, for your user-friendly, easy-to-use online platform. 10% of my pre-tax salary is no longer going to my 401k, and 4% of it is no longer getting company-matched. Yes, I’m walking away from free money. Bye bye. Now that 10% will be taxed and will go to my loans. It’s too bad I can’t go back in time and put 0% contribution on my first day of work. I guess if I do get fired from my day job, I can use that $37,500 as my Screw You fund.

>Potential Upside: ~$550/mo | $5,500 through June

Groceries: $330/mo
My diet is laughable. I eat Frosted Flakes and Honey Nut Cheerios every morning. On Sunday, I make two boxes of angel hair spaghetti, distribute it into four tupperware containers, mix in parmesan cheese and sauce, and stick it in the fridge. That’s my lunch for four days of the week,and I treat myself to a lunch out for the fifth day. I’m typically too busy at work to even go down to the cafeteria to get something, let alone actually go out.

While I’m making those meals on Sunday, I bake five lemon pepper chicken breasts. That’s my dinner for the week, along with steamed vegetables (from the freezer, naturally), as well as a baked potato. On the weekends, when I don’t go out to lunch or dinner, I have two Hungry-Man TV dinners for a meal. At 810 calories and 36g of fat each, they are just what the doctor ordered.

I also buy protein bars at $2 each and have one a day. I have an apple in between breakfast and lunch. And that’s it–that’s all I eat. The non-edible part of my groceries is what must be going to that $330 month–I will have to spend some more time on this and pareto it out to determine the big hitters. I don’t think the upside will be very significant.

>Potential Upside: $50/mo | $500 through June

Car Insurance: $171/mo
Alright, I wasn’t exactly truthful on the first blog post. I actually have two cars, and I actually do have an expensive hobby, as I wouldn’t have two cars and a motorcycle if I weren’t an automotive enthusiast. I was afraid of being judged–sue me! I promise to be more truthful going forward.

Rest assured that the cars were not expensive at all to buy.The first one is a 2003 Nissan Murano with 127k miles that I picked up for something like $10k. The second one is a 2000 Honda S2000 with 62k miles that I picked up for about $11k. I need the Nissan Murano, a crossover, for household projects, and if I am ever DD for my friends or need to pick a friend up at the airport. The Honda S2000, a two-seater convertible, is…a toy. I’ll admit it. It serves no purpose whatsoever, other than to bring a smile to my face every single time I drive it.

Anyway, I provide that context to explain the $171 ($2k annually) in insurance I spend (and automotive maintenance and repair). It does not include insurance for the motorcycle–that was $392 and is already paid through September 2012, so that’s off the table. I do have full coverage (liability/comprehensive/collision) on both cars, so I could call USAA and ask for liability only and see what kind of savings I could get. I could also ask them what it would be if I sold one of the cars. However, I get a multi-vehicle discount, so I don’t think it would amount to much. The entire call would be just for grins, anyway, as I sure as hell am not getting rid of either of them. The Nissan is a workhorse and the Honda makes me happy. They’re both in excellent condition and I got incredible deals on them.

I’ll be keeping both cars (and the bike), but I’m not sure that I want to drop insurance on them. If I get hit or if I hit somebody (it’s been known to happen), I am looking at serious costs. I’ll check the potential upside with my insurance provider later. If it’s compelling, I might go for it. Not for now, though.

>Potential Upside: $0

Car Fuel & Tolls: $160/mo
Seeing as how I have been trending at $225/month, getting to the budgeted $160 is going to be hard enough.

>Potential Upside: $0

Phone: $85/mo
That’s a Verizon data plan that I am locked into for the next 16 months, plus a discount from my place of work. It can’t go lower. And I refuse to give up data.

>Potential Upside: $0

Electricity: $68/mo
This is an annualized number. It’s closer to $100+ in the summer and $40 in the winter. In the summer, I keep the thermostat at 85 while I’m at work, 76 in the evenings, 78 at night. I run it only a couple of months or so in the other three seasons. So I think this cost is already optimized. And it’s not like I have any servers or a second fridge that draw a lot of power.

>Potential Upside: $0

Water: $55
I would try not watering my lawn, but seeing as how we’re in the middle of the worst drought in a century, that’s probably not a good idea–the cost to re-sod my lawn would easily outweigh any savings from not watering.

>Potential Upside: $0

Lunch at Work: $55/mo
I will stop eating out. Tear.

>Potential Upside: $55/mo | $550 through June

Internet: $50/mo
I’m not going to steal internet. Nor will I go without it–I sometimes have to work from home.

>Potential upside: $0

Dry cleaning: $40/mo
Ugh…I hate ironing so much. And my slacks have to be dry-cleaned. If I iron my button-down shirts, which I wear only during cool months (Oct-Mar), I should be able to cut this in half.

>Potential Upside: $20/mo | $200 through June

Gas: $36/mo
This has been coming in at $23. I mis-budgeted for it when I built my budget in May. Plus, I have no idea how to lower the usage of gas. I hardly cook as it is. Must be the hot-water heater. Well, my showers aren’t getting any cooler!

>Potential Upside: $13/mo | $130 through June

Haircut: $20/mo
I love my TGF haircut. I guess I could shave my head myself once a month, but if I get the promo I’m interviewing for at work, then I’ll be in a B2B role with customer engagements, and I would be judged. No thanks.

>Potential Upside: $0

>Total Potential Upside: Ok, so if I can cut some costs, I am looking at $22,837 contribution to the $57.5k delta.

Remaining delta: $34,663

I still have some annual spending to go attack.

My automotive budget is tapped at ($328). There’s no upside here.

>Potential Upside: $0.

If I don’t get sick, I can save $260. I do need to get my annual physical next month, so I’ll keep $10 for the co-pay.

>Potential upside: $250

Hmm…not sure how I feel about cutting this. Not super excited, but I guess I don’t need anything…

>Potential upside: $214

House Maintenance and Repairs
My exterminator comes quarterly and there are three visits remaining, for which I’ll owe him $100, I think. Hopefully I won’t need any other work done?

>Potential Upside: $1,165

Donations – tapped out

Gym – basically tapped out

Christmas Travel
I don’t think my family would be very happy if I didn’t come home for the holidays. That would be cold.

>Potential Upside: $0

>Total Potential Upside: So on top of my $22,837 that I can save by cutting my monthly expenses, I can save another $1,629 for a total of $24,466. That leaves me with a delta of $33,034.

Increase Revenue

How in the world am I supposed to make $31,534 in ten months?

I have 224 shares of my company’s stock. If it is still where it currently is, I could get $2,350 after tax.

>Potential Upside: $2,350

If I get the new job, I might get a 10% raise.

>Potential upside: $500/mo | $5,000 through June

Tax return
My tax return last year was $1,200, and I moved into my house in the middle of the year, so I paid income tax-deductible property tax for only half a year. I also didn’t realize huge losses on stock like I will this year. I’m going to get bullish and double this.

>Potential Upside: $2,400 through June

I got a decent bonus last year. I was ranked the highest out of my peers, and since the bonus system at my office works like a a meritocracy, that ranking was manifested in my bonus. My compnay also had a great year last year. This coming year, if I get the promo, my peer group will change, and I will not be at the top of it since I’ll be so new to my role. However, in the new pay grade, a greater portion of my salary will be subjected to the bonus, and my company is having a good year so far. To be conservative, I’m going bearish on this bonus.

>Potential Upside: $8,000

Pedi-Cab Job
If I pedi-cab on Friday and Saturday nights and make the low end of what has been advertised, I’ll make $200/weekend, or $100 night. There are roughly 40 weeks between now and the end of June. I am out of town for three of them, and might not start until a weekend from now, so I start with 36 weekends. I’ll want to take some weekends off, so let’s put it at 30 weekends. I have to pay for the bike and rent the cab $10 each time. So minus $500 + $10×60 = $1,100 from my revenue.

>Potential Upside: $4,900

Other Random Job?
$12/hr @ 16 hours/weekend and 30 weekends = $4k after tax

>Potential Upside: $4,000

I have to do it. It’s going to suck like hell for so many reasons, but I have to do it. Just looking at the numbers above, it’s obvious I am nowhere near the $34.5k bogey.

I figure I can get $650 for the room which is already furnished with a double bed and dresser. I will include utilities, which will go up a bit but shouldn’t be out of control.

$650/month x 10 months = $6,500

>Potential Upside: $6,500

>Total Potential Upside: $33,150

Delta from $33,034: ($116).

In other words, I can exit June with my loans paid off and $116 plus my $4k cash buffer burning a hole in my pocket.

The Delta
Now, I went pretty high-level here and there were a lot of assumptions, and tax, when used inconsistently like I did, can make things a little tricky. For example, things like the 401k, raise, and bonus were post-tax, but I didn’t include tax in the pedi-cab job and for the roommates, even though I’ll end up having to claim that. Still, $116 surplus–even if it’s only directonally correct–is not bad at all. If I can stick to this plan, I will meet my goal. Of course, that is a major “If.” For example, can I really find two side-jobs, and work the entire weekend, nights and days?

Can I execute?


Filed under Three-Post Introduction

Sizing Up the Mountain

Day 2 | $0 paid | $90,717 till freedom

From Here to There
I know where I want to go, but I have no idea how I’m going to get there. So first, I need to take stock of my liabilities, assets, expenses, and income. Once the map of the mountain is made, a trail can be planned and ultimately blazed.

Liabilities (Loan Obligations)
Here’s my Mount Everest:

Liquid/Semi-Liquid Assets
Here is some of my climbing gear:

  • Cash: $7,167
  • Stocks: $14,100
  • IRA: $12,235
  • 401k: $37,500

Total: $71,002

Now subtract $37,500 since I can’t access my 401k unless I get fired(God forbid). Then subtract 10% on top of 25% from that IRA–an early withdrawal fee plus the income tax imposed to liquidate the IRA.

Net Liquid Assets: $29,219

This is basically my Screw You Fund–about six months of living expenses–to be used in the event of a lay-off or an emergency.

Monthly Expenses
Here’s the weight that is dragging me down the mountain on a monthly basis:

  • Mortgage: $1,440
  • Entertainment: $1,300
  • Student loans: $1,057
  • Car insurance: $171 (edit 8-31 – typo; changed from $271 to $171)
  • Internet: $50
  • Cell phone: $85
  • Electricity: $60 to $100
  • Water: $50 to $100
  • Groceries: $330
  • Car fuel & tolls: $225
  • Dry cleaning: $40
  • 401k contribution: 10% of my salary

Total: $4,848/mo or $58,176/yr + 401k contribution

Non-Recurring/Irregular/Annual Expenses
Here’s the weight that is dragging me down the mountain on a non-regular basis. Four months (33%) into my fiscal calendar, I have the  following positions in my annual budget:

  • Medical/vision/dental: $500 budget / $260 remaining (I never get sick; $240 was used on contacts)
  • Clothing: $1,000 budgeted / $214 remaining
  • House maintenance and repairs: $2,000 budgeted / $1,465 remaining
  • Donations: $450 budgeted / ($25) remaining – oops!
  • Car/motorcycle maintenance and repairs: $3,000 budgeted / ($328) remaining – oops!
  • Gym budget: $350 / $25 remaining
  • Christmas travel: $600 budgeted / $600 remaining

Total: $7,900/yr

Summary: At my current rate of spending, I can expect to spend $66k + 401k contribution + income tax within the next year.

This is the other part of my climbing gear arsenal. A reader comment from my first post asked me to divulge my income, and another reader replied that that could be grounds for termination from my current job. All I know is that I’ll never reveal my true income. However, you can get an idea of it by going to and searching for product line manager in Austin.

What Does it All Mean?
I’m screwed. This mountain is going to be a #$%*& to climb.

Realized: A Huge Loss
Today I called UBS and requested the liquidation of the aforementioned stocks and IRA.

Before I went to grad school, near the peak of the market before the Great Recession, I rolled my 401k, valued at $13,675, into an IRA. The market has since tanked, and today, the IRA stands at $12,235. After the aforementioned penalties and income tax, I will get 65% of it, or $7,953. That’s a loss of $5,722, or 42%. Ouch.

Before I went to grad school, I sold off my furniture and my car. I initially kept the funds as cash, but was so excited by all finance stuff I was learning about in b-school that I invested almost all of it in the stock market…during the month of October 2007, at the very peak of the market. Yes, in October 2007, yours truly dumped $17,210 into the stock market. And today, I called UBS and asked them to liquidate those stocks. I received $14,100. That’s a loss of 18%. Double ouch.

My financial advisor–a term I use loosely since we’ve only talked four times since I started investing with him in 2007–strongly advised me against both of the moves above. I explained to him that the way I see it, I have loans accumulating interest at a rate of 3% to 8%, and funds losing value at the rate of 10% or worse.

I assured him that I knew what I was doing, but I don’t think either of us believed me. I heard him breathe a heavy sigh and imagined him on the other end of the line, shaking his head in disgust and rolling his eyes at my shortsightedness and lack of investing sophistication.

My only hope now is that I see some respite in my income tax return in April.

Time to Start the Snowball
Okay, so I have $29,219 burning a hole in my pocket. Except it’s not really burning a hole because I need it if anything bad happens to me.

Ah, well, this blog wouldn’t be any fun if we didn’t completely throw caution to the wind, now would it?

I spy a loan valued at $24,891 that is just waiting to get paid off. Time to start the snowball.

The premise behind the “snowball” is that as you close off a loan, you use the money you were spending on that loan towards another loan. When you close that second loan out, you use the funds that were going to the two closed-out loans to pay down the third, and so on and so forth. So once I close off that $25k loan, I’ll free up a whopping $186/month with which I will go attack the remaining $65k.

You might ask, “Why don’t you go after the $60k loan? It has a higher interest rate than the other ones.” I agree with you, but I would need an additional $35k in cash to kill that loan, and based on some analysis I’ll finish tomorrow, it’s looking like I will accrue the cash to pay that off slowly, over time, by doing things like earning more and spending less. It will also get paid off by some things that won’t happen until a ways down the road, such as getting my bonus and my tax return. So by unloading that $25k loan instead of paying off $25k of the $60k loan, I can free up $186/month now to put to the other loans. I also get the intangible benefit of completely closing out a loan, which is an exciting stimulant. Finally, I hope to be out of all the loans in 10 months, so the interest rate argument is not quite as valid here as if I were planning on paying that loan for years and years.

Paying off the $25k loan leaves me with $4,300 in my pocket.

That’s less than a month of expenses at my current spending rate.

But Seriously, What Does It All Mean?
Okay, yes, I’m screwed at my current rate of spending and income. But that means I need to look for ways to…what? You know the drill by now. Say it with me:

  1.  Cut Costs
  2. Increase Revenue

We’ll get into cost cutting at a later point in time–maybe tomorrow. Today, I will focus on the revenue part.

Update: The Job Search
First, I am in a big transition stage in my life, as I am not only looking for an extra job or two for the weekends, but I have been looking for a new day job internally for the past month. I’m looking at roles in the pay grade above my current one. I had an interview for one today, and I walked away feeling good about it. If all goes well, I will get an offer and could get up to a 10% raise, which will certainly align with the “increase revenue” front of my attack.

On the other hand, I haven’t heard back on the weekend delivery driver job. Maybe tomorrow?

Another great job would be a pedi-cab driver in downtown Austin. If I do get the weekend delivery driver job, I can feasibly work entire weekends–delivery driver from 8AM to 5 PM, followed by pedi-cabbing from 9:30 PM to 2:30 AM.

There are so many good reasons to pursue a job as a pedi-cab driver. Think of all of the benefits:

  1. Increase revenue: I would make $100 to $300 per night in tips.
  2. Cut costs: I would not be in the bars during those peak hours, so I would save my money.
  3. Live long: I would be working out.
  4. And prosper: I would be transporting attractive drunk girls.

A man could do far worse than be a pedi-cab driver in Austin.

The only drawback is that I would have to buy a mountainbike, which I imagine would run me $500. But I guess you have to spend money to make money, right?

There are quite a few steps to becoming a pedi-cab driver:

  1. Fill out an application.
  2. Visit the DPS and purchase criminal background check.
  3. Purchase a driving record history from the DPS website.
  4. Intervew with Pedi-cab company.
  5. Drop application off at City of Austin Ground Transportation Building and get pedicab license after taking a test.
  6. Bring in mountain bike, hitch it to one of the cabs, and complete a training shift.
  7. Start riding.

Because of prior infractions, I was actually very wary of step 3 initially, and was afraid it might completely kill this opportunity. Back in October 2010, I got my license suspended for three months because I got four moving violations in six months (speeding, unsafe lane change, failure to yield the right of way, and no motorcycle license). Apparently, getting four moving violations in as many as 12 months is grounds for a three-month suspension.

What can I say? I’m an over-achiever.

Anyway, I confirmed with the pedi-cab depot owner that my impeccable driving record won’t hold me back–he told me that even people with DWIs on their record can pedi-cab. I’m in the clear. Huge sigh of relief. Now I just gotta nail the interview. Since my license was suspended for three months, I had to ride my bike to work every day, a 7-mile round trip, and I built up some decent quads during that time. I will use this as the basis for my qualification in the interview. It’s tomorrow at 6 PM downtown. Please wish me luck.

More to come later, and I also hope to soon address some of the great comments that were posted yesterday.


Filed under Three-Post Introduction

The Challenge

Day 1 | $0 paid | $90,717 till freedom

I graduated from Harvard Business School with my MBA and $95k of student loans ($101k including accumulated interest) in 2009 at the age of 26. After graduation, I started a job with a modest income (relative to my banking and consulting peers) in the tech industry of Austin.

Since graduation, I’ve made 21 monthly loan payments at $1,057 each. After paying $22k towards my $101k of loans, the balance stands at $90,717.

That’s absurd. The math indicates that I’ll pay $42k in interest if I go to term (10 and 15 years) with the various loans.

Thanks, but I’ll pass. Enough is enough. I’ll do everything in my power–short of lying, cheating, and stealing–to pay down this debt in the next ten months.

I don’t have a huge stockpile of cash, my 12-month salary after tax is less than the principal of my loans, and the ten-month timeline is completely arbitrary. So, quite frankly, I have no idea how or if I’m going to pull this off.

From this blog, you can expect an account of my adventures as I cut costs and look for supplemental income in an attempt to pay down this enormous debt weighing down my balance sheet.

Today is 8-29-11 and the target completion date is 6-29-12.

Will I be successful? Does it even matter? After all, “It’s not the destination in life, it’s the journey that matters.”

Liability #1: $65k

Liability #2: $25k

Liability #3: $5k

Here We Go
I graduated with my MBA from Harvard Business in the middle of the Great Recession: May 2009. I had a truly fantastic experience, and am grateful that I went. I learned a lot and made a lot of friends. I have no regrets.

I was lucky to land a job at a Fortune 50 tech firm in Austin as a pricing analyst. (I’m now a product line manager.)

Thank God I found a decent job in the doldrums of the recession–I had borrowed $95k to  fund that education, and that was after Harvard gave me a fellowship of $54k. (All I had to do was write two thank you notes to the trustee to get that particular award. I had been a superivsor in factory prior to enrolling, so they knew I wouldn’t turn down a hand-out.) Once the interest I accumulated on the loans over the two years that I attended school was capitalized, I owed just over $101k. It is a veritable loan cocktail: a mix of Federal loans (Stafford/Ford, Grad PLUS, Perkins) and private (CitiAssist and a subsidized HBS loan).

I had a six-month grace period after graduating, and made my first loan payment during the same week as Christmas in December 2009. The monthly payment is $1,057, which can actually pay the rent on a decent-sized, brand-new apartment in the middle of downtown Austin.

My thoughts at the time: Merry Christmas! Bah humbug!

Yesteryday–21 months after that first payment–I logged on to a couple of sites to review my various loan principals. What started at $101k has been worked down to $90k. And then it hit me:  I don’t want to be paying these notes until I’m 41 years old. In fact, I don’t want to be paying them when I’m 30. It’s not that I can’t afford the $1,057/month–I’ve budgeted for it, and I live accordingly.  It’s just that I don’t want to pay the $42k in associated interest–when all is said and done, I’ll have paid $137k at my current payment rate–and I don’t want this drag on my paycheck for the next 15 years.

Unfortunately, I don’t have any get-rich-quick schemes. I don’t have a killer business idea, I don’t gamble, I don’t play the lottery, and I didn’t interview for banking or consulting roles that would have made short work of that $101k. I enjoy my tech job and living in Austin, and I’m doing exactly what I wanted to be doing when I graduated from HBS two years ago.

It’s worth mentioning that I’m not insanely talented at anything, so I can’t sing and dance my way out of this, either. And Peace Corps can only defer loans and forgive 10% of a Stafford loan. Trust me, I checked.

That being said, there are only two ways I am going to be able to pay down this $90k in 10 months:

  1. Cut costs
  2. Increase revenue

The “cut costs” part will not be easy, as I already live fairly frugally…for the most part. My biggest expense–after the mortgage on my home–is entertainment (including travel). The past four months, I have averaged around $1,300/month in entertainment dollars. That is a little less than my mortgage+property tax+insurance, which is $1,440/month. So the entertainment side of my life is roughly equivalent to my mortgage. What  can I say? I like to party. That will need to change.

My (used) car and (used) motorcycle are paid off, and I don’t have any expensive hobbies. So, with the exception of three trips in October–Ann Arbor for a Michigan alumni event, Ashville for a wedding, and Detroit for a wedding–I’m staring at ten months of lots of free (read: boring) fun. Reading comes to mind. But so does cycling and running, so maybe it’s not all bad. That is, if I don’t sell off my bike to meet my goal. And can afford to replace my running shoes. And in case you were wondering, yes, I do regret booking those trips, but the tickets were purchased before I set this goal, and they’re non-refundable. It’s a sunk cost and I’m going.

The “increase revenue” part is where this blog gets fun. I already tried to cash out my 401k, but that was a non-starter–I’d have to quit or get fired to get that cash, and subjected to a 10% early-withdrawal fee and income tax. So it’s going to come down to working more. I don’t really want to work evenings as I value my gym time way too much, and my job often requires me to take nighttime conference calls with Asia since my colleagues there work during those hours. So I need to find a weekend gig, which invariably means something related to manual labor.

So today, I spent my lunch break on Craigslist looking for jobs. Here are the unedited CL titles of what I found:

  • Weekend Delivery Driver (NorthCentral Austin)
  • Field Service Labor Technicians (Austin Tx, )
  • Pedicab Driver: Flexible, Paid Workout! (Downtown)
  • raking hay and digging bushes (NCentral Austin)
  • Roof Assembly (Buda, TX)
  • Warehouse Workers (Austin)
  • Janitorial (Downtown)
  • Warehouse Positions (Buda)
  • Assembly/Warehouse (Round Rock,Texas)
  • On-Site Supervisor (Austin, TX)
  • construction labor (austin area)
  • Security Officer Needed – Start Immediately (Austin Round RockTaylor)
  • Seo Company (Austin)
  • Demonstrators needed (Austin & all surrounding areas)
  • Extras Needed (Austin, TX)

The weekend delivery driver actually sounds like the perfect gig:

We are a small business seeking a trustworthy, capable delivery driver/general maintenance man. This is a part-time job (20 hrs/week) taking place on Saturdays and Sundays with daytime/evening hours. We need someone who can make a long-term commitment and can appreciate working with a small, close-knit family type of environment while still maintaining an appropriate level of professionalism. Job duties and requirements include but are not limited to the following: – Repeated heavy lifting (100lbs +) to load and unload our truck – company vehicle provided
– Driving of delivery truck within the Austin area (valid driver license required)
– Attention to detail in handling of our delicate product
– Reconciling petty banks and tills at our retail locations
– Cleaning and general up-keep of delivery vehicle and containers, as well as retail locations
– Landscape maintenance such as weed-eating, raking, etc.
– General maintenance and repair of simple issues (leaky faucets, etc.)Please email us your resume with a cover letter or a few paragraphs telling us about yourself so that we may get a feel for your personality.

I mean, in all honesty, that sounds like a hell of a job! And the person who wrote it sounds pretty nice–they care about my personality!! I replied as such:


I am extremely interested in the role you placed on Craigslist. Based on my background working as a rough carpenter for four summers and my solid work ethic, I could add a great deal of value in the role you described.

A cursory glance at my resume might cause you to raise your eyebrows, but please let me explain my motive in reaching out to ask for the job in question. I received my MBA from Harvard Business School in 2009, and with that diploma came over $100,000 of debt. I am gainfully employed and have paid off 10% of that debt in less than 18 months. However, I am growing tired of the debt, and I have set an audacious goal to pay off the remaining $90k within ten months. One way I’ll be achieving that goal will be to dramatically cut back my expenses; the other way will be to take on a weekend job to increase my overall income.

My long-term goal is to own my own business, and I believe that working at your place of business, which you describe as a small, close-knit family type of environment, is exactly what I am looking for. I believe this sort of exposure–no matter how limited–will give me an idea of what it will be like to run my own business. There are some things that business school can teach, but it can’t provide one with the experience of actually working at a small business.

As I said earlier, I used to be a carpenter during the summers I studied at Michigan. I miss working with my hands and doing manual labor–it feels good to create and actually “do” stuff other than make spreadsheets and answer email all day. I also have general handyman skills that I learned from my father, and I do all of the yardwork, repairs, and maintenance at my house here in Austin.

I would really like this job, and I hope to hear from you soon. My resume is attached; thank you for your consideration. I hope to hear from you soon.

Best regards,


Will they reply? Will I get the job? Will they take me seriously? Am I even qualified for the gig? I’m anxious.

Please stay tuned.


Filed under Three-Post Introduction