Sharing my financial info with the Steemit community has been one of the best decisions of my life.
Earning more money is just another puzzle.
Every time I think about doing something stupid, I think of y’all. “Just made $100, time to go buy fancy cheese at Whole Foods!! Wait, fuck, I gotta tell Steemit about my finances on Monday. Alright, I’mma go buy that $2 block of cheddar at Walmart.”
The biggest lesson I’ve learned from you is this: Nothing is more important than paying off the debt.
I’ve tossed around a few goals in my recent posts - trying to reach the top 1,000 of Steemians (https://steemit.com/steemit/@heymattsokol/getting-into-the-top-1-000-steemians-how-feasible-is-it), thinking about cryptocurrency investing, moving away from Connecticut… These are all cool.
But time and again, one phrase surfaces in the comments: “Great ideas, Matt - as soon as you pay off that debt.”
“Yup, just take care of the debt first.”
“You’ll crush it after the debt is gone!”
FUUUUUCK.
OK, you win!! I get it. Paying off my debt is THE goal. Full stop. All other goals pale in comparison, and will be much easier in the post-debt phase of my life.
—
Doing the Math: How Much Do I Need to Earn to Pay Off $20,000?
My face when I have to do math.
I discussed in part two how I allocate my income: Basically, I filter it into a few buckets based on percentages. Rather than keep a budget and try to measure exactly how much I spend on food, fun, bills, debt, etc - I just allocate in advance to different bank accounts.
Here’s my current split:
5% - Emergency Savings
45% - Pay off Debt
30% - Bills & Essentials
20% - Guilt-Free Spending
Next week, I’ll be opening a new savings account to put away 15% of income to pay taxes with. Let’s not think about that quite yet. Right now, we’ll use these simple numbers.
If 45% of my income goes into debt payments, that puts me WAY ahead of schedule. I no longer think about debt in terms of when “the payment is due” - FUCK that, those payments are designed to extract a ton of interest from me. If I only pay the minimum payments, or even $50 more than minimum, I end up paying 3-4x what I actually owe before the debt goes away.
This is why most people I know who are in their 40s or beyond have already paid more than the cost of their house in mortgage payments - and STILL owe hundreds of thousands of dollars. In America, this is considered normal. I consider it complete insanity.
Pay four times the cost of the house? ….what?!
Worst of all, it makes people get used to the feeling of perpetual debt as “normal” - and they never end up paying it off, they just buy more stuff on credit and let it ride. Terrible, terrible strategy.
As Ramit Sethi says, paraphrased - “If your goal is to waste money on a bunch of crap, your best strategy is to pay off your debts immediately. Then you’ll have the maximum resources for buying fancy cheese.”
(cheese emphasis = mine)
Here’s the math - if I put 45% of my money into debt payments, and I owe about $20,000 in debt, I’ll need to earn $44,444 in the next six months. Whoa, cool number.
Most people would see that and say - oh well, that’s crazy.
I see it and say: Challenge accepted.
Breaking Down a Huge Goal Into Smaller Chunks
There are six months left in the year. I’ll need to earn an average of:
$7,500 per month
$1,709 per week
$244 per day
I started this year earning $5 per hour. Now I’m earning around $30 per hour. I’ll need to get up to an average of about $100 per hour to work 20 hour weeks and reach this goal.
I think it’s easier to perform at a $100/hour level 20 hours a week, than to perform at a $50/hour level for 40 hours per week. The latter requires too much endurance, and besides, I’d like to spend all my spare time making music. I need to retain some energy for that.
pixabay.com // It’s a sprint, not a marathon
Here’s my earnings for June (Steem multiplied by 1.16 to factor in expected earnings the next five days):
Steem Earnings: $1,500
Textbroker Earnings: $230
Constant Content Earnings: $130
Private Client #1 (Tech Blog): $600
TOTAL: $2,460
aka $615 per week
aka $87 per day
I need to triple my earnings to reach my goal. That’s not so bad! Everybody in the silicon valley hype-sphere talks about “10x-ing” your current output - all I need to do is “3x” it. Easy!
Of course it won’t be a perfectly even jump - I don’t go from $2,500 per month to $7,500 per month instantly and chill. It’ll be a gradual growth curve that needs to average $7,500 per month. It’ll probably look something like this:
July $4,000
August $5,500
September $7,000
October $8,500
November $10,000
December $10,000
Great. That means: My big goal is to pay off my debts before the end of 2017. My immediate goal is to earn $4,000 in the month of July.
Clarifying the objective is the first step towards figuring out how to get there.
See it how it is, then act.
July’s blogs will be all about this task: I’ll show you my adventure to try and earn $4,000 in that month, an increase of about 75% from this month.
The most obvious thing is to cut out my low-earning shit - Textbroker and Constant Content are officially FIRED. I’ve got some new private clients I’m talking to, which should help. Lots of good stuff to talk about - and I’ll see you next week to talk about it :-D
——
PERSONAL FINANCE UPDATE, JUNE 26 2017
Assets:
Bank Account #1: Guilt Free Spending Account: $40
Bank Account #2: Business & Bills Account: $50
Bank Account #3: Emergency Savings: $80
Bank Account #4: Steem Power: 1,500 SP // $3,150
Miscellaneous Crypto Investments: another $200ish
Total Assets: $3,520
Debts:
Credit Card #1: $5,540
Credit Card #2: $240
Money Owed to My Dad: $12,000
Years-Old Debt to an Old Bandmate I just remembered: $700
Total Debts: $18,480 (Hey, it’s lower than I thought!)
--
past posts in this series:
——
It only takes ten seconds to join my weekly email newsletter, packed with mind-expanding media from around the web. Sign up here: https://mattsokol.us