Layout:
Home > My Story

My Story

October 20th, 2007 at 04:19 am

Hello and welcome to my blog, I am a forty-two year old computer programmer from Louisiana that has set a goal of achieving financial freedom in ten years. I set this goal because a few years ago after working almost fifteen years and earning a good salary, I found myself heavily in debt, living paycheck to paycheck, and having to borrow for even minor unexpected expenses. I knew I hit rock bottom when I had to call in sick for work because I did not have enough money to put gas in my car. I realized then that I had been ignoring my finances too long. I started researching my situation and was shocked by how much debt I had acquired and how low my credit scores had fallen. I knew that somehow I had to gain control of this situation or I was headed for bankruptcy. I decided that the only way to solve my problem was to be proactive and learn as much as possible about personal finance and specifically debt reduction. I read every article, book and web site I could find on the subject.

Since that time I followed the most common advice that is given in personal finance; pay myself first, lower the interest on my debt and avoid new debt. I immediately took the following actions:

1. Pay myself first - I set up and started contributing to my 401K, a Roth IRA and a high interest online savings account. I rolled over an old 401K from a previous job and started contributing 6% which was enough to get the full match. Also, I had $100 a month direct deposited into my new high interest savings account. This came in handy when I had auto repairs or other unexpected expenses. After almost a year of saving this way I increased my 401K contribution rate to 10%. I was able to do this because I got a promotion at work with a 6% salary increase.

Last year I opened a Roth IRA for myself and for my wife. I deposited $500 and contributed $100 a month. My wife made a one time deposit of $500.

2. Lower the interest on my debt - Since most my debt was high interest credit cards and personal loans, I immediately rolled all my debt into my home loan by doing a cash out refinance and a home equity loan. I did that at the time rates were extremely low. Even though I didn't get the best rate because of my credit score, I still got 6.125% for the home loan and 7% for the home equity load which was much lower than the 13%-24% rates on my credit cards. This paid off my debts at a lower interest rate and got a tax deduction to boot.

3. Avoid new debt - After my refinance, I exercised self discipline and always paid my credit cards in full every month. I only continued to use credit cards because I figured my credit score would not improve if they had no activity to observe. In a short period of time, I started getting credit card offers with very low interest rates. I opened two low interest credit cards that paid rewards and started using them in place of my high interest cards. My savings account allowed me to keep from using the cards when an unexpected bill arrived. I have been fortunate that nothing too large has come up.

Those actions gave me a good foundation of a retirement fund, an emergency fund and access to credit . Last year however, I decided I wanted more that an OK retirement, I wanted complete financial freedom while I was still young enought to enjoy it (no more than age fifty three. I chose this age because my father was able to retire at this age). Given my late start, if I want to become wealthy enough for financial freedom about ten years, I will need to do more that just create a savings strategy. I need to generate additional income.

This brings me to today, I will be using this blog to hold myself accountable to achieve this goal by posting my net worth monthly, and by posting the decisions and actions I will take to generate additional income. I am hoping this will keep me motivated and maybe motivate someone else as well.

0 Responses to “My Story”

Leave a Reply

(Note: If you were logged in, we could automatically fill in these fields for you.)
*
Will not be published.
   

* Please spell out the number 4.  [ Why? ]

vB Code: You can use these tags: [b] [i] [u] [url] [email]