How to pay off debt

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This is a follow up on my previous post 'Reasons to avoid Debt'.
Say that you already are in debt and want to start taking care of it to get a little peace of mind, but don't really know how to do it. Here's some ideas that might help you.

Start paying off the smallest debts first

This way you will get rid of them fast, and also free up cash that in turn can be used to pay off the next smallest debt that you have.
I think that many people want to get rid of the big debts first as they are the ones that hurt the most, but it is hard to pay off more than you already do on them as the rest of your money is going to other loans.

Lets picture a scenario

Random person X has the following debts at the moment, not taking into account interest rates etc. Just calculated on X months left and how much it costs per month.

Appartment	Study loans	Car	Samsung Curved 65" 4K	iPhone 7 128 GB
€300000	€5000	€18000	€2000	€750
€800/375 months	€60/83 months	€350/52 months	€166/12 months	€62/12 months

As we can see, the living expense is the highest per month. After that comes the car. First ask yourself the question do I need to live in this expensive appartment or drive this expensive car?
If for any reason you answer no to any of the debts you have, get rid of the item. Buy a cheaper one, or not at all? DO you need a TV? :)

If you feel that you could downgrade:

• Sell the item
• Buy a cheaper one
• Use whatever money is left to pay off the loan
• Continue to pay off whatever is left on the loan.

Hopefully this tactic has cut of a couple of months on your payment plan.

If you need the things but want to pay them off quicker

Ok, So somewhere you need to get the extra cash to start paying off your cheapest loan, in this scenario the cellphone. If you can muster an extra €60 per month for a while by cutting other expenses you will have paid the phone in 6 months.

After 6 months, you have learned to live without that €60, and also freed up another €60 so you have €120 extra per month to pay off another debt.

Next small fee per month would be the study loan, but it has so long term left. At this point 77 months so lets focus on the TV.

The TV has 6 months left, but with the extra €120, you can pay it off in 3.5 months, so 4 months.

After that you have €286 per month to work with and we are 10 months in.

Apartment	Study loans	Car	Samsung Curved 65" 4K	iPhone 7 128 GB
€292000	€4380	€14700	-	-
€800/365 months	€60/73 months	€350/42 months	-	-

At this point you start to get options. I would recommend you to start setting up a savings account if you don't already have one, say €50 per month as a started, you still have €236 to pay off next debt with. So lets continue our scenario.
Study loans in 15 months or Car 25 months. Lets look at both

Option 1, pay the study loans first
After 15 months, you would up your paying power to €316 and then be able to pay the rest of the car in 14 months. Total of 29 months.

Option 2, pay the car first
After 25 months, debt paying power is up to €586. Study loans paid in 5 months. Total of 30 months.

So, I guess we will go with study loans first. So after a total of 39 months, 3 years plus some change you have paid all your loans but the apartment and should have 1450 on your savings account, not to mention the extra €646 per month that you can use to build up your buffer and start investing. You could also use it to pay off a bit on your apartment to minimize the risk if the house prices should turn down.

Be sure to read my series on how to stabilize your economy:

Step 1: Stabilize your economy
Step 2: Expectations and mindset
Step 3: Index funds

Until next time: Work to Live, Don’t Live to Work

Disclaimer. I am in no way an expert on capital management or investing. On this blog I only wish to share my findings, ideas and comments on current events and fields that interest me. I hope that my thoughts can entertain you. I expect that everyone reading take their time and do their own research before acting on anything read on this blog. Investing is not for everyone. E&OE.

Abrupt reminder of mortality

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For the full story see:
An abrupt reminder of mortality.
Update, week 3 of pulmonary embolism recovery
Update, week 4 of pulmonary embolism recovery
Update, week 5 of pulmonary embolism recovery
Update, week 11 of pulmonary embolism recovery
Update, 12 months after pulmonary embolism
Another reminder of mortality (here we go again)

So last week was interesting.
2 weeks ago, Friday I felt really bad. Didn't have any go in the body at all and got really breathless walking a few hundred meters from my car to the office.
I didn't think much of it, once at the office everything went almost as normal. A little out of breath but nothing that stopped me.
In the afternoon when I walked back to my car, the same out of breath situation came up. So I decided to take it really easy over the weekend.
Saturday, couldn't walk the stairs at home without getting out of breath.
Sunday, the same thing.
Monday, decided to stay home from work. Felt a little better.
Tuesday even better, a little out of breath still. Was able to climb the stairs without any bigger issues. Decided to go to work the next day.

Wednesday, totally out of breath walking from the car to the office. Halfway (halfway is around 100 meters...) I thought about giving up. Somehow I still managed to get to the office and decided to call a doctor. Got a time the same afternoon. Sitting still in my chair was no problems. Walking to the coffee-machine turned out to be a big challenge.
At four in the afternoon I drove to the doctor, who in turn sent me to the bigger hospital for x-rays of my lungs and papers that told me to stay at the emergency room afterwards to wait for the results. The first pictures didn't tell anything, the doctor at the emergency room decided to run a CT scan of my lungs as well. They decided to take me in over the night and rigged me up with mobile ECG unit. At around 1 a'clock in the night a nurse tells me that I have pulmonary embolism in both my lungs and that I was to receive a fragmin shot to prevent future clots. Needless to say I didn't sleep that much that night, at an age of 33 this was not the thing I thought I'd get. Maybe later but not at this moment.

Thursday, not much happens. Talk to a doctor, he tries to get a time for another CT scan but it has to wait a week. Need to stay at least another night for monitoring.

Friday. Get rid of the ECG unit and can move a little more freely.
Walk up and down the corridor really really slow. Get information that I need to start eating a medicine called Xarelto, for 6 months to start with and then they will do a study and decide if I need to eat it for the rest of my life. At least I can continue to work-out normally.
Need to stay another night, doctor prepares papers so that the weekend doctor can send me home during the weekend.
In the evening during routing check, nurse asks me if I tend to have high blood pressure and I told her maybe? Most times when they check I have over. Turns out I'll get pills against that as well, starting immediately..

Saturday, start with Xarelto . Doctor sends me home. On sick leave for 2 weeks.

So.. I don't know. Just feels like a really abrupt reminder of mortality. I don't think that I've managed to process the implications of this fully yet but for starters I need to decide if I'll continue riding my MTB or to sell it. Evidently head injuries are really really bad when eating blood thinners so probably not worth the risk. Maybe buy an adventure bike instead, just stay clean of the single-tracks from now on.

But first. 2 weeks of reading books, sleeping a little extra, taking it easy and posting cat videos online.

Thanks for reading, here's some cat-tax:

For an update after 3 weeks go here.

Until next time: Work to Live, Don’t Live to Work

Get out of your financial comfort zone

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this is where the magic happens.

When training and you stay in your comfort zone, the gains you gain will not be anything but average. But when you make that extra effort and move outside of the comfort and into the pain then the results follow automatically.

And it is the exact same thing with your personal finances as well.
If you always do whatever you always do, the results will be the same as your previous results. It takes a little extra effort to start building financial freedom. But when you do take those steps outside of your comfort zone, the results will start to follow.

If you feel that you want to make a kick-start into your financial future, then look at what to cut away from your daily/weekly/monthly spending habits.
Even if you only cut the things for a couple of months, the extra momentum you gain will pay of in the long run (by the power of compounding)

So, just to get started. Try cutting some of the following for some months and automatically transfer the cash to your investment/savings instead and see for yourself what happens.

Some ideas of things that might be worth cutting

	SEK
Spotify	100
Netflix	100
HBO	90
Amazon Prime	60
XBOX Live	80
Lotteries	120
Daily News Paper	250
Cable TV	400
Strava Premium	85
Total	1285

The prices above are in SEK as that's what is visible to me. But USD and EUR estimates are just a division by 10 away.
We have some of the things above, some people that we know have them all and they don't know where their money go.

So, try cutting some of the items above, maybe you don't need all of Cable TV, Netflix, Amazon Prime and HBO at the same time?
Can you cut out the lotteries for some time so that you can actually save some money so that you can start investing instead?
And do you read your daily news paper, or could you do it online just as well?

In the end, it does not look like a lot of cash but if you have the daily news paper for a year it goes to 3000 SEK. (roughly $300)

But you want to watch TV, right?
Your choice, stay in your comfort zone or do something drastic to start seeing results. :)

And when you start to see results, it may be OK to back away into your comfort zone again. But who knows, it might be in a new place.

Be sure to read my series on how to stabilize your economy:

Step 1: Stabilize your economy
Step 2: Expectations and mindset
Step 3: Index funds

Until next time: Work to Live, Don’t Live to Work

Disclaimer. I am in no way an expert on capital management or investing. On this blog I only wish to share my findings, ideas and comments on current events and fields that interest me. I hope that my thoughts can entertain you. I expect that everyone reading take their time and do their own research before acting on anything read on this blog. Investing is not for everyone. E&OE.

Your problems are yours to solve

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A little rash title but really. They are your and yours only to solve.... :)

How often have you heard a dialogue that goes something like this:

Person 1: I have this big problem that stresses me out and no one is doing anything about it
Person 2: OK, have you tried to...
Person 1: No, it's no use... Because this and that prevents me.

I am really tired of hearing these kinds of reasoning from people and nowadays I tend to just walk away. I don't want to get dragged into the negative spiral.

Don’t waste your energy on things you can’t change. Walk away from toxic people and hopeless situations.

So what can you do to prevent yourself from being that lost cause that people walk away from?
Some steps to follow in situations like the above:

Create a Plan

Create a plan on how to tackle a problem, if it is a bigger problem then break it into smaller sub-goals. Once you see that the step to start making progress is small, it becomes easier to take it.

Act on the plan

When you start to work on the problem, people around you will react, you will start to receive feedback. Both positive and negative.
By nature, feedback is always good. If you want to do something great you need to listen on the feedback you get and make decisions on how to respond or not to respond.
If the reactions are negative, but you are sure on your thing. Ignore them.

The reason why feedback is good is because it means that people are noticing that whatever it is that you do, is changing something that impacts them.

Re-evaluate your goals

Actively evaluate the effort you put in towards the end goal.

If the struggle is still worth it 

Continue with your plan.
Winged words from a video game meme:

If video games have taught me anything, it's that if you encounter enemies, you are going the right way

If it is not..  

It is OK to stop. In that case you have tried something, learned a lot and gained experience. So in the end you walk away with gains that can be used in your next project.

The key here is to stop wasting energy on the issue if you cannot change it. Don't blame it one someone else.

Let go gracefully and focus on your next project.

Workplace

If the issue is at your workplace, initiate a dialogue with your manager. If your manager is the one that is negative towards your goals... then you have the choice to work elsewhere. This is your choice and you can make it. There is nothing more toxic then working at a workplace where you do not have your own manager holding your back. Just find something that suites your goals better. 

Cat tax bonus

Thanks for reading. I hope this helps someone out there. 

Until next time: Work to Live, Don’t Live to Work

My current plan, 2017 January

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Happy New Year!!!

A really lazy start of the year, as it should be...
The holidays are over, work is back to normal and this months investment went into my favorite candy company.
Why the candy company? It just felt that right...
My choice each month is either the bank or the candy company or find something more profitable. For the last few months the choice has been the bank, and now it was the candy company's turn just to keep some resemblance of balance between the two.

Last year was a good year, the money invested during the year also managed to grow 9,95%. So now to look forward to this year.

In a few weeks the annual report season starts (at least for me, some companies I guess have already started). Be sure to read up on my Annual Report series for ideas to keep in mind while reading the reports.. You are reading the reports yourself and not just some speculative analysis? Right?

• The Annual Report (Management)
• The Annual Report (Dividend)

Lets start the year with a video of 2 of our cats fighting or playing.. hard to tell sometimes..
At the time of the video, Prime (female) was 6 months old and Tiger (male) 2 years.. They love to fight each and every day.. Sibling love.

Since the video, we have renovated that room as well, so no more yellow wallpaper. The header image of this post shows the new wallpaper, and Tiger.. : )

Until next time: Work to Live, Don’t Live to Work

Disclaimer. I am in no way an expert on capital management or investing. On this blog I only wish to share my findings, ideas and comments on current events and fields that interest me. I hope that my thoughts can entertain you. I expect that everyone reading take their time and do their own research before acting on anything read on this blog. Investing is not for everyone. E&OE.