Financial Freak Show

While cruising around twitter I came across a guy cruising around Detriot delivering pizzas in an attempt to cruise his way out of $101,000 in debt. To keep himself sane while he’s working deliverawaydebt updates his loyal followers on how his pizza delivery world.

With tweets like his “stiffy alerts” (when folks don’t tip him) and various other customer updates I had to learn more about Jeff and his leased Hummer H3 drivin’pizza delivery story. Actual tweets from deliverawaydebt:

4/14-Delivered to the local Moose Club. I deliver to their cook every friday night. I walk in and shout JIMMY! He shouts JEFF! back. Nice

0/21 STIFFED stupid lazy lady wouldn’t get off her big butt to sign the credit card slip. Had her kid walk it 2 feet to her- LAZY!!

3/18-1/31 Thanks for the buck! I loved climbing the 75 stairs to get to you door. Hope you don’t get any bbq sauce on you, 20 wings

STIFFY ALERT!! 0/13 Guy looked like a drug dealer. Had on a watch that looked worth $10 grand plus. Prob rhinestones from the be-dazzler kit

First the Lions win today and then my first run is a 5 dollar tip. What a day!

STIFFY ALERT-lady was singing the song from Dora the Explorer. I even finished the song for her and she still stiffed me. Guess I need vocal lessons

2/13- dude was in a smoking jacket. Must’a been expecting a playboy bunny. Sorry man no dice.

$62 on 13. Made more on Sunday than Friday again. Time to go home and go to bed 5am is just around the corner

4/16-0/12.96 STIFFY ALERT yeah she counted out the 96 cents for me. Thanks lady I guess it’s back to the Coinstar machine later.

This guy is killing it for all the right reasons! – enjoy this post written by the legend himself…

Everyone who’s working on paying down their debt has a specific moment they decide to start the long and painfully journey.  For my wife and me it was a couple of months after returning from an overseas assignment in China.

In February 2007 we had taken an excellent promotion which would fast track my career and put the money we needed into our pockets so we could pay off our debt.  At this point we still had not combined our money; we’d been married about 6 months.  She was working and paying for her car, credit card, and her other bills.  I was paying all of my bills, the house, and entertainment for us.  We were two people with proportional amounts of debt given our separate incomes.  We never sat down and talked about money, we never took the time to see the totals of our debt.  I was making good money and all the bills were being paid, so there must not have been a problem.  Budget, not us we didn’t need one.  Budgets are for poor people who don’t make as much money as we do.  The new job was going to take care of the debt anyway, right?  Our thought was once the normal bills were paid everything left over would be applied directly to our debt. 

We returned to the US in March 2008.  I decided I didn’t like the job and was not the right person for the position.  Add on the fact that we really didn’t like the location.  We were 2 of 20 foreigners living among 3.8 million Chinese.  I took a demotion and returned to my old job.  Now remember the new job was going to pay off the debt we had.  Upon our return we had made zero progress on paying down the debt, wasting a whole year of opportunity.   The next major problem was that we loss of the $1,950 per month by working outside the USA.  Upon returning all overtime was eliminated, the $2,000 a month I received before the trip was now gone.  We had a deficit of almost $2,000 per month to figure out how to cover. 

My wife worked in Media Planning (marketing) before our move to China.  She could go back to work to make up our money shortage, but we also found out we were pregnant for the second time.  Day care for a young toddler and a newborn would cost us $1800 per month, wiping out any money my wife could have made.  Back to the drawing board we went.  I’d been listening to Dave Ramsey for a couple of weeks when I heard him say that delivering pizzas was a great way to make extra income.  After talking it over with my wife, we decided that I would make the sacrifice and take on a second job.  I applied and was accepted to a new pizza joint down the street.  I started delivering in May 2008. 

In January 2009, I drafted our first budget.  Following Ramsey’s advice and after reading a ton on the subject of budgeting, I was able to put everything on paper and see how the money moved in and out of our hands.  We did this for a few months and felt that we were in control but the debt wasn’t going down.  There had to be a better way.  In April 2009, my wife politely suggested we seek out some professional help (she’d been asking to do this for quite awhile, but I was the roadblock to making it happen.)  Yep, I am definitely one of those people who never ask for help.  It’s a good thing my wife knows this and stepped in to straighten me out. 

I looked for a Financial Coach on the Dave Ramsey’s website under the Endorsed Local Providers section (ELP), and found one that was in my area.  With one call to the ELP we had an appointment set up for the next week.  After our initial counseling session my wife and I were excited to get started.  We drafted a better budget and started to use it.  Two weeks later we meet with our Financial Coach and were able to fine tune it and put his system into practice.

We had a total of 3 coaching sessions and after a little over 4 months after starting our plan we had paid off over $13,000 on our debt.  Wow, looking back this was the single most valuable step we’ve taken in our quest to eliminate debt.  Now 100% of the money generated through delivering pizza is applied to our debt.  We’ve paid off both vehicles and use that extra $700 per month to eliminate the debt.  We’ve also been able to pay off another credit card giving us another $100 per month.  That totals to around $2,000 per month including the pizza money that we put toward the debt. 

My wife and started with $101,000 to eliminate.  That’s including our second mortgage and all personal, credit card, and student loan debt.  We finally feel like we are making headway, our debt free date is Oct 2011.  This will be a long in difficult road, but having a plan and working it is the only way we will get there.  Being away from my family at night is one of most difficult things I’ve had to do.  When I look into my kids eyes though, I know it will be worth it.  They will have completely funded college accounts, they will have parents who don’t argue about money, and they will learn about money at an early age and will have their Father around to play with and love them.  It’s tough, but nothing in life that really matters is easy. 

If you’re interested in reading about the day in the life of a pizza delivery driver, follow me on Twitter at @deliverawaydebt.  I tweet about the crazy things that happen during my shifts. I’ve also started a blog to write about all the fun my family is having paying off debt.  http://deliverawaydebt.com/

Thanks to FinancialFreakShow for allowing me to share my story with you

 Jeff Kosola

-post written by Jeff Kosola - Thanks Jeff, your an inspiration!

I was out at a night spot sometime ago with some friends and some friends of friends, some I knew quite well and ac couple I had only met that night. Myself and a couple others bellied up to the bar to order the first round. As we grabbed our drinks one of the guys I just met said “I got this one” and waved us of. So being a gentleman and a budget minded FinancialFreak I decided to allow him the pleasure of paying for the drinks. He then reached in his pocket and pulled a roll of cash with a rubber band around it and proceeded to flip off a couple bills so fast he looked like Al Capone paying off the cops. Now I already knew this guy had some really nice shoes on but I never guessed him to have several grand rolled up in his front pocket!

Now, I always have some cash in my pocket, especially since I refuse to use credit cards anymore, but I sure as heck don’t have $3000 in my pocket very often. Since the thought of having my very own fist full of $100’s sounded so exhilerating I figured I’d give this big shot technique a try and see how it worked for me. This sounded like a logical experiment so shortly after meeting Fist-full-of-100’s Guy I withdrew my entire starter emergency fund of just over $1500.00 rolled it up and stuffed it in my front pocket. After leaving the ATM I headed over to Starbucks to meet up with a friend.  I was excited just thinking about the moment I’d get to whip that wad out of my pocket and say “I got this one.” Just like Fist-full-of-100’s Guy had done a few nights before.  So without hesitation as soon as he placed his order BAMM! The fat wad was out of my pocket and a smile was on my face. The only problem was I looked like a complete idiot bustin’ out $1500 to buy two cups of coffee. 

And sure enough the barista saw right through me. With a smirk on her face and a smart little attitude she said “Is that all you have?” Ouch! I was busted by a 17 year old coffee pusher! 

So I did my best to play it off all FinancialFreak cool and said “Why, how much do the other guys usually tip?”

All in all it was a lame experiment to roll like a big-shot but in the end I came out looking more like Al Bundy than Al Capone

How much cash do you usually carry in your pockets?

It’s hard to dodge all the input and influence of people around you when you’re itching to drop some cash on a purchase (especially a big purchase). It’s even more difficult to ignore the marketing and sales pitches that come at you constantly telling you what normal people are doing with their money and how crazy you’d be to not take advantage of the same great offers.

Just ask any car dealer or mortgage broker (or sadly enough many politicians) how much they think you can afford and I bet they tell you it’s more than you thought you could. Case-in-point – Cash for Clunkers program and Adjustable rate mortgages. Both of these programs were designed to quickly and painlessly separate the consumer from their hard earned money. Though these deals sound like they’re out there to benefit the consumer that it really depends on if the consumer is signing up for deal that’s truly in their best interest considering their own situation. Cash for Clunkers is especially financially lethal because it has now encouraged over a million people to close their eyes to common sense and invest in a guaranteed depreciating asset while grabbing their share of the 3-billion dollar* government windfall. According to Kiplinger’s Magazine it’s estimated a new car looses an average of 20% of it’s value the day it’s purchased. That means for example a $40,000 Lexus ES300 you purchase on Saturday will only be worth $32,000 on Sunday – and this doesn’t even come close to the 65% loss in value over the next 5 years bringing your value down to a pathetic $14,000. Money guy Dave Ramsey has it right when he says “the worst car accidents happen on the showroom floor.”

I’m all for dropping some cash on your ride but do it because it makes sense for you and your family not because they can’t shut up about it on the news. Remember always, always, always think long term when making financial decisions and if somebody’s telling you it’s too good of a deal to pass up they may be right but make sure you’re the one making that call not them.    

Oh well, at least one good thing came out of this Cash for Clunkers program…there are now a lot less warn out cars on the road polluting our precious environment with their filthy disgusting “Election ’08” bumper stickers.

Members of the Financial Planners Association were asked in survey what monthly expenses are the easiest to cut back on. Not surprising, with 81% of the votes, the answer was “Eating one less dinner out per month.”  True, it does seem pretty easy to cut out only one dinner out over an entire month of spending. To me that barely seems like much of a sacrifice at all. 

The tough part for me was once I sacrificed a dinner, passed up a mocha, or dodged an evening with friends was putting that salvaged dough to good use. Normally the money would stay in our checking account until I managed to blow it on something else and not making any progress financially even though I “sacrificed” my lifestyle in some way. So I came up with a plan to attempt to pick up these scraps and try to take advantage of every little opportunity I could to crawl further out of the gutter.

It was pretty simple. If I “sacrificed” something, no matter how small, I would note how much money I saved from our budget. Once I get back home I would immediately access our checking account online and make a payment to our next debt in the same amount I just saved myself from spending. In some cases this was this was as small as skipping a $4 iced mocha or as large as us passing on the opportunity to spend a $100 night out with friends. No matter how small the sacrifice was I would transfer the money immediately towards the debts. Yes, this was far from a life changing debt elimination plan but when we added this to what we were already putting towards our the debts it all added up to more progress at the end of the month. Not to mention the motivation that came with making progress almost daily. I also recently used my Micro Paymentality habit and wrote about my Sick Day Bonus Pay. I figure I only have to skip those Starbucks mochas 32500 more times and I can afford my new car!

So have you tried this style of making payments? How did it work out for you?

In many cases monthly spending just sort of happens. Then at the end of the month you look up and say something like “What the ****! Where did it all our money go” or if things worked out more in your favor it may sound something like “Woohoo! I get paid tomorrow and there’s still money in my account…who’s yo’ daddy now!” Either way this is often a byproduct of us just living our busy lives. So here’s a few steps I recommend to insure you’re yelling “Woohoo” with somebody more often than you’re yelling “What the ****!” at sombody.

Don’t worry this one’s pretty easy I promise.

1. Figure out what you’ve got coming in each month and where the heck it’s all going.
2. Next figure out what you can cut back on (ex. heat, clothing for the kids, food, you know the unnecessary stuff) and what you’re not able to cut back on (ex. booze, smokes, online gambling – you know the important stuff in life) – FYI, that was a joke
3. Begin making some tough decisions and adjust your budget accordingly. Apply the extra money toward your goals– make sure everybody involved comes to agreement on this stuff
4. Come up with a cool way to track you progress. A nifty spread sheet is what I used (but I’m sorta nerdy) Another idea may be to put a big list on the fridge where you can see it everyday and cross things off as you go (ask any kindergarten teacher, this may sound lame but it works!) Use what works best for you and helps keep you on track towards your bigger goals. 

The important thing here is to work on refining your money habits to accomplish the things that really matter to you. Personal finance in many cases is more of a psychological game than a numbers game so play to win. Many of us make enough to accomplish our goals but don’t always behave in ways that allow us to.

 If I’ve got correct goals, and if I keep pursuing them the best way I know how, everything falls into line.  -Dan Dierdorf

So I discovered there’s an advantage to being so far upside down in your SUV that you can’t easily sell it to get out from under the payment – I know that sounds hard to believe but I promise I will reveal it to you later in the post. 

When we began my war on our debts the largest debt (aside from our house) was my sexy black Chevy SUV. We were upside down by over $8,000! So in our plan to remove debt from our lives we struggled with this particular one. At the time I owed just over $21,000 on the car but market value was closer to $13,000 and our payment, not including insurance, was $496.71 a month (and to think I got a “good deal” when I bought it!)

We had several discussions about how to deal with this particular issue. Do we pay this bill down first so we can sell it to break even? Though at the same time we’d need to save up some money to buy something else. Do we try to borrow $10,000? $8,000 for the difference + $2,000 to buy another cheap car. My thought was I’d rather owe $10,000 than $21,000. This was a tough dilemma for me because I didn’t want to borrow more money but I did want to free us from this payment so we could put the money towards more important things. The first thing we did was develop a plan to work towards paying off our other debts. True, this did nothing to mitigate the balance of the SUV but it did free up some cash each month and relieved some of the stress of trying to make the $500 payment.

We decided for now the best thing to do was to create more income to help move things along faster. It was time to rely on a classic surefire way to make money that my dad taught me some time ago. You may have heard of this technique, I call it work.

So I made a few calls and found a second job….a crappy job, but a job none the less. Yes, working two jobs sucks, yes 14-20 hour work days suck, yes not coming home to my wife and daughter several nights a week every single week sucks, but we knew it was temporary and we knew in the long run it would be worth the sacrifice. That put extra cash in our pockets by the end of that next week.  True this wasn’t life changing money but when it was added to the money we were already working with it made a difference.  After a couple months of sucking it up the progress became noticeable. With a strict budget in place I was able to deposit the paychecks and send 100% of it off to the next debt on the list. Not to mention the added benefit of working so much I didn’t have any time to spend much money.  What would happen if you made an extra $1000 a month, next month? Would you piss it away or you make real life changing progress? 

As promised above I’ll now reveal the advantage of being so far upside down in your SUV that you can’t easily sell it. Here you go:
-It gives you a nice cozy place to sleep at night while you’re busting butt to clean up your financial messes and take better care of you family!

 So what have you sacrificed lately for your family? I’m not talking about how you skipped your double mocha last week at “4-bucks” I’m talking about sacrifices you made that may lead to changes lasting generations.

To clean up our financial mess the first big step I took was to come together with my wife and get on the same page regarding our money (now doesn’t that sound like a fun discussion?)  From my experience this is often one of the hardest steps to actually accomplish for most couples. In many cases one person takes on the responsibility of the household finances for one reason or another and the other person is sort of along for the ride. Maybe one person likes to be in control, maybe one person doesn’t want the responsibility or the stress, maybe one thinks they’re smarter, or maybe one’s a nerd and gets off on this stuff, or maybe it was never even talked about previously and this is just the way chips hit the table. Either way unless you’re on the same page with your spouse it’s likely your household finances will not be in good order over the long term. Remember the preacher-man said “and now you are one” remember that line? Note what the preacher-man didn’t say…. “and now you are one except for the money part only one of you will need to pay the bills and carry the stress of the finances until death do you part”  (In other words you take care of it until one of you kills the other!)

Merge your money or separate the accounts – His money & Her money. This takes place, when for one reason or another, when a couple operates their finances separately from each other. In many of the cases where I’ve seen this I’ve noticed it is usually due to one of the people not wanting to bare themselves financially to the other person. They keep their money almost a secret from the other person. According to a USA Today article the FPA’s survey of financial planners nearly 55% of couples hide financial assets from one another. Hmm, I wonder what other secrets they might be keeping. (more…)