In fourth grade, I attracted a particularly nasty bully.
Sometimes, before class, he’d stop by my desk and slap me across the cheek. My response was always to clam up, and he always got away with it.
One day, while I was standing on first base during a game of kickball, the bully ran over to me and pushed me down in front of my classmates. When I looked over to the nearby teachers for support, I saw the bully’s mom–also a teacher—laughing at me while I brushed the dirt off my pants. It ran in the family.
An important detail here is that the bully was much smaller than me, at least by a foot. But I was a friendly, awkward giant and absolutely never stood up for myself. He knew this about me because we were best friends in first grade. I used to spend the night at his house and, on one occasion, we stayed up late and danced to the Macarena. It was new and cool then.
Then one day he jumped on my back during a basketball game. He screamed over my shoulder and said he wanted the ball. So I gave him the ball by smacking him in the mouth with it. It was an accident. But it must’ve hurt; he jumped off my back and responded in a way that I still remember vividly: he clenched his teeth, stomped his foot on the ground, gave a pained ugh! and walked away.
He didn’t pick on my anymore after that.
We went through eight more years of school together after the bullying phase, but things were different then. Sometimes I wished we could go back to first grade when we were friends. But he became a basketball star and I became a musician and our worlds never met again.
I looked him up on Facebook recently. I saw where he is in his life and I smiled. Good for him. Then I closed the tab and went on to other things.
In 1999, NASA lost a $125 million Mars spacecraft due to a simple math error.
The navigation team at the Jet Propulsion Laboratory used metric units of measurement (meters, newtons), while the engineering team at Lockheed Martin used the English system of measurements (feet, pounds).
Rather than slipping into a stable orbit over Mars, the mismatch in measurements led to the spacecraft burning up in orbit.
There are two lessons to take away here.
First, check your work. Pay attention to details and avoid making assumptions. Re-read that email and make another pass at editing that paper. Better yet, get someone else to do it for you.
Second, unless you too are a rocket scientist at NASA, don’t take your mistakes so seriously. Those two engineering teams set the screw-up bar extremely high back in 1999, so you’re unlikely to make a mistake that extraordinary in your lifetime.
Three years ago, my wife and I made the final payment on a $17,500 student loan bill. It took us one year using post-grad, middle class incomes, and we dedicated 40% of that combined income to debt repayment.
Beyond the initial excitement, debt freedom has had a tremendous impact on the trajectory of our life. Here’s what we’ve learned over these past three years.
Debt repayment provides valuable lessons
I’m thankful for my student loans.
When my wife and I were paying off our debt, we were forced to build good money habits. Overspending wasn’t much of an option if we hoped to climb out of the red. It was too stressful to ignore, and debt was holding us back from achieving our goals like world travel and buying a home with a respectable down payment.
Not only were we forced into good habits, there was an added benefit of discovering that, in our marriage, we didn’t need much stuff to make us happy. We were happiest when spending time together with a quiet night in or when we took a trip out for some cheap tacos and a matinee movie.
Happiness, for us, wasn’t expensive.
As a result, the months following our final debt payment were spent hitting the ground running. After a post-debt spending spree to celebrate, we got to work. We reallocated funds previously spent on debt repayment to investing in our future. We put money into index funds, increased our emergency fund, and started researching affordable and worthwhile options for world travel.
Lastly, with good habits in place, we found we were much less likely to slide back into debt. After three years of building our investments and cash reserves, debt is now a strategic choice for investment opportunities rather than a necessity for a comfortable life.
No more living paycheck to paycheck.
Net worth becomes a useful metric
Net worth is now our most-tracked metric of financial health. While we were in debt, we dreaded seeing the big red bars indicating our below zero financial standing. It was discouraging, so we avoided it.
But after climbing our way out of debt, we were able to analyze our net worth, watch for trends, and celebrate our monthly increases from investments and cash saving wins.
At every point in one’s financial life, net worth is either rising or falling. It’s important to remember that paying off debt is a risingaction for net worth, so don’t be afraid to make monthly net worth checks part of a financial strategy early on.
Debt is a tool (that you’re probably not skilled enough to use)
You can only take advantage of debt as a tool once you’ve learned to live without it. If you’re falling victim to credit card debt or buying houses and cars you can’t afford, you’re the tool being used to generate a steady revenue for banks.
By comparison, someone who’s learned to manage debt effectively and not rely on it for basic needs can leverage it to start a business or invest in rental properties.
Credit cards can be incredibly useful if handled properly
When you’re not using credit cards as a means of buying what you can’t afford, they become an invaluable tool for securing inexpensive travel and other handy financial perks.
By aligning our credit card purchases to our budget and paying off our credit card in full each month, we’re able to take advantage of those credit card perks without paying credit card companies a penny in interest.
Money doesn’t have to be stressful
Debt freedom has many benefits, but one of the most important advantages is the alleviation of stress. In fact, contrary to the common marital stereotype, my wife and I don’t fight about money much these days.
Without debt, money troubles can go away entirely, if you so desire. Money becomes a tool to be controlled; it can be given away, used to travel the world, or a means to quit jobs and pursue passions.
Debt can control your life if you let it. It can determine where you live, what job you take, and how you think about finances. But if you find a way to remove it’s negative impact on your life, you’ll gain full control over your money, and by extension, the trajectory of your life.
Regardless of your current mood or situation, make a point to give people a pleasant experience. Smile when talking to them. Give them your attention. Actively listen. Offer a genuine compliment. They won’t forget interactions like these.
Looking back at the past ten years,
spending nine of those years pining for the new model,
waiting eight hours in crowded lines
for seven major version releases,
needing bigger pockets for the six plus
and choosing between five colors,
spending four days’ pay to impress your peers
and three days’ pay on the monthly bill,
promising two years to a contract you don’t understand
and being one of the millions who Thought Different,
it might be time to realize
that an iPhone isn’t going to make you happy.
In video games, there’s a concept called “God-mode”, a cheat code that gives your character unlimited money, unlimited powers, max health, no restrictions.
And without exception, “God-mode” ruins the game.
At first, it’s fun to run around as an omnipotent being, breezing through the game without obstacles. But soon, you realize that having no obstacles means no fun.
The hook of a good video game comes from being given a limited set of resources and having to find a Win scenario.
See also: life.
Don’t go looking for your real-life version of “God-mode.” Don’t try to fill your life with more money, power, or possessions, and don’t avoid challenges. Crossing to the other side of difficult challenges and making the most of constraints can smooth the rough edges of life.
Start that company. Finish that book. Revel in your constraints and learn from them. Solve big problems, and enjoy the game.
Last week, I had the pleasure of interviewing my good friend and psychology researcher, Kyle Naylor. He joined me on my personal finance podcast, Save Money Dammit. We took a deep look at emotions and how they play into our financial lives. Things get heavy, but this is important stuff.
When I was in first grade, I found a Leopard Moth Caterpillar (pic) near a playground swing set. I was instantly freaked out by the prickly needles on its skin.
I ran over to fetch my friend to share what I’d found. He told me a story he heard about a Leopard Moth Caterpillar falling from a tree, landing on a man, and killing him. I was a gullible kid, so from that day forward, I was deathly afraid of those caterpillars. Even worse, I’d get nervous walking under trees.
Each time I’d stand near a tall tree, I’d nervously look up and around, expecting a Leopard Moth Caterpillar to fall out of a tree and murder me with its razor sharp skin.
Only minutes before writing this did I realize that the Leopard Moth Caterpillar’s spiked exterior is actually hair.
I work with dozens of brilliant designers, engineers, and leaders. From time to time, I seek out those people for help, which could include anything from a modification to a deliverable to simply a few moments of their time. As I’ve learned throughout my years, there’s an approach that’s needed if I hope to come away from those interactions with a positive and mutually beneficial outcome.
Before you can get the best out of people, you must first win their trust and loyalty. Building contentious relationships and hoping for a productive outcome from those relationships is futile. I’ve seen projects collapse due to lack of trust among a team. I’ve seen managers lose quality people by betraying their trust.
To win an outcome, you need to win over people first.
Let rich stories sink in. Let different viewpoints strengthen your empathy. Let the expertise of others improve your skills. Let a challenging viewpoint shed light on your prejudices. Let their lessons enrich your experience.
A life without books dulls the mind and clouds perspective.