Everyday Hero

Update: Getting the snowball rolling

noreply@blogger.com (Peter) — Fri, 07 Oct 2011 10:42:00 +0000

Two and a half years ago I posted an entry called "Getting the snowball rolling". I also promised to keep you updated, and here goes.

Main events that took place:

Since my last post our life has made many new turns.

After 15 wonderfull months in San Diego my family and I moved back to Denmark. We did this with huge regret, but the financial situation in California and the lack of jobs made it impossible to stay.

Coming back to Denmark we found out that the job situation was similiar to that of California. My wife had occasional consulting work and I managed to land a job at 7-Eleven and a grocery store. Times were tough.

I eventually landed a consulting gig in my field and things started looking better.

A year after returning to Denmark we managed to sell our apartment in a market still going down hill. This freed us of a great deal of debt.

A new job allowing me to work geo-independantly caused us to move away from the city to live in the woods in a very rural area of Denmark.

Living in our summer cabin relieved us of the cost of rent or a new mortgage, but winter was challenging. Over a period of 2 weeks we were snowed in, and the kids were home schooled almost the entire month of December. We really enjoyed living in the woods, but in the end the municipality wrote us a note that zoning laws prohibited the use of a summer cabin for year round living. We therefor now live in a rented house.

All the time we have been focused on reducing our debt. Below is a comparison between the situation 2½ years ago and now:

Debt	Principal
	May 2009	October 2011
Mortgage I	286,667	Payed off
Mortgage II	178,333	Payed off
Mortgage III	159,667	159,667

Bank loan I	101,000	119,500
Bank loan II	64,333	Payed off
Bank loan III	58,333	Payed off

Private loan I	1,833	5,000
Private loan II	33,333	2,500

Total debt	883,499	286,667

As you can see our debt has been reduced substantially. Out net equity however is negative, being around -20,000..

Plan

We havent been abel to pay off the small private loan. This friend loan is a pain, but the combination of hard times and this friend being a very good friend, asking us not to pay, has caused us to put the repayment on hold.

Selling our home, allowed us to repay the two big mortgages. The third one is a mortgage in our summber cabin. It is interest only (1,6%) for another 7 years.

As a part of the sale of our home, the three bank loans were consolidated into one loan and partly repaid. For a period of time we made extra payments towards the principal and we hope to do that again. The loan is a 8 year loan, but during the first two years we have almost gained an extra year through those extra payments.

Our plan going forward:

We are considering selling the summer cabin to reduce our debt further
We have decided to start saving for a down payment on a house.
We will continue to pay all we can on the bank loan.
The private loans will be payed in case of a windfall or when the bank loan is gone.

I will appreciate your comments

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Getting the debt snowball rolling

noreply@blogger.com (Peter) — Thu, 07 May 2009 23:57:00 +0000

Two prevailing methods of getting the snowball rolling are found in the blogs.

Both demand that you list all your debts and find out what the minimum payment and interest rate is on each of them.

Method #1: Pay the minimum on each loan, and as much extra as possible on the loan with the highest intrest. Apply all extra cash towards the principal of that loan.

Once it is paid off apply that minimum to the the minimum of the loan with the next highest intrest + any extra cash. Keep going until all loans are paid off.

Method #2: Start with the loan that has the smallest principal. Then move to the loan with the next smallest principal, to sort of get the snowball rolling.

The latter is the method I prefer. It seems very motivating even realizing that I will be paying more intrest that I would have to. I also believe that I will combine the two methods along the way.

My challenge is that I have 8 loans to pay down. My wife and I dont have any credit card debt or car loans, so the loans are mortgages, debt from failed businesses, consumer debt and private loans (from friends and family).

Here is the run down:

Type	Principal	Minimum	Interest

Mortgage I	286,667	1,251	4,7%
Mortgage II	178,333	781	4,8%
Mortgage III	159,667	711	4,8%

Bank loan I	101,000	489	6,0%
Bank loan II	64,333	542	8,0%
Bank loan III	58,333	0	9,6%

Private loan I	1,833	167	0,0%
Private loan II	33,333	0	0,0%

Monthly total payment		3,939

Plan

The initial plan is to pay of the small private loan first. This is a friend loan and one that I dont particularly like.

Once that one is paid off, we will then add the payment to the payment we are making on Bank loan II, to get this loan paid down.

We also plan to sell our home, which would fully pay down mortgages I and II as well as Bank loan III.

Check in later to follow my updates on the plan.

What are your thoughts about this topic?
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My financial map

noreply@blogger.com (Peter) — Thu, 07 May 2009 01:11:00 +0000

Its version 1.0, but its definitely a financial map.

I made it using Microsoft Visio and the wording is in Danish in case you wonder.

The map shows all our accounts, including two PayPal accounts, two private loans and our three mortgages (Realkredit Danmark).

Red lines means money flow out of those accounts and green lines shows flow into an account.

The bottom five heptagons are different types of income.

Some people annotate all their different expenses in the financial map, and i might do that too.

If you like this post, please subscribe and check back.

What are your thoughts about this topic?
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Climbing a mountain of debt one step at a time

noreply@blogger.com (Peter) — Wed, 06 May 2009 21:26:00 +0000

My wife and I have decided to get rid of our substantial mountain of debt.

Fortunately there is an aboundance of personal finance blogs available, offering (free) advice on how to do it.

The long term goal of our efforts is to adapt a Simple Living (frugal) lifestyle which is paid for with passive income that exceeds our expenses.

This vision is inspired by such books as "Your Money or Your life", and will allow us to travel (frugally) and put our time to use without having to think of being paid.

The Debt Snowball will help us reduce our debt in a structured way, by paying off our loans one at a time starting with the smallest loan. Get your full explaination of the Debt Snowball at Get Rich Slowly.

A Financial map will give us the consistant overview of our finances that we need. Bargaineering tells you how to do it, and you can see the initial attempt on our financial map here.

Our reason for having a budget is to see how much money we have to make each month and to see where we can cut back and how much is available for our emergency fund and debt reduction. Man vs. Debt discusses the purpose of a budget, and Debt Free Adventure talks about how to make a budget, check them out.

Automatic bill payment is something that we've alway used, but to actually aim for full financial automation is new and exciting. It involves taking a look at the financial map and making sure that as many transactions are automated as possible. Not just bill payments, but also loans and tranfers to savings. Ramit Sethi of I Will Teach You To Be Rich wrote in a guest post on Four Hour Work Week about how to automate your finances.

If you would like to follow our efforts please subscribe.

What are your thoughts about this topic?
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Wall Street roadkill - No longer

noreply@blogger.com (Peter) — Wed, 06 May 2009 05:48:00 +0000

It is easy to feel run over by the recession, to be Wall Street road kill.

The truth is, that what I did was more like stepping out in front of a semi truck on the highway of Personal Finance.

Since my wife and I bought our home 10 years ago, we have gotten deeper and deeper into debt.

We liked new cars and when it was time to get a new one, we paid of the car loan by refinancing our home, which grew in value all the time.

The increasing debt necesitated a high income, which we were able to take in with well paid jobs doing independant consulting an borrowing still more money to pay off old debt. Juggling 5 credit cards also helped out, but it was a constant job in itself.

When the economy turned sour in 2008, that was the time we decided to leave our home country of Denmark and move to California, to start up business!

We could not have chosen a worse time and once again the credit cards were abused. Slowly but surely our options shrank, and finally the bank called it quits. One morning all our credit cards had been cancelled.

Fortunately the process of moving to a different country had brought my wife and I even closer together, and we had no trouble agreeing that our days of living on borrowed money was over.

For a long time we had been reading litterature about financial freedom, and the economic downturn, global as well as micro, will be the kick off that gets us started on the road to financial freedom.

Our financial future will be based on the three principles of

No debt
Simple Living
Passive income

We have a long road ahead and I will share it on this blog with you.

What are your thoughts about this topic?
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Wine will add another 5 years to your life

noreply@blogger.com (Peter) — Mon, 04 May 2009 19:11:00 +0000

Some news is just almost too good to be true :0)

"British Medical Journal" reports from a Dutch study that drinking up to half a glass of wine a day may boost life expectancy by five years-at least in men

Drinking beer and spirits in moderat amount will also add years, but only around 2.5 years more.

Drinking wine was strongly associated with a lower risk of dying from coronary heart disease, cerebrovascular disease, and death from all causes.

These results held true, irrespective of socioeconomic status, dietary and other lifestyle habits, factors long thought to influence the association between wine drinking and better health.

Personally I wont completely stay off beer and spirits.

What are your thoughts about this topic?
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How much are you worth?

noreply@blogger.com (Peter) — Sun, 03 May 2009 16:06:00 +0000

While Cashflow and Networth are definitely two very different concepts, knowing your networth involves taking a good look at your finances, which is always a good thing to do.

I tried out NetworthIQ that lets you create a profile, enter your assets and debt as well as keep a financial journal.

Follow me here as I update my networth month by month. You can also log in to see the details of my networth.

What are your thoughts about this topic?
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Cash or Credit

noreply@blogger.com (Peter) — Sun, 03 May 2009 01:34:00 +0000

I used to keep 3 credit cards in my wallet, one personal and one for each of my two businesses.

My wife had two credit cards, and we were excellent at raking up credit at our bank.

We discussed the pros and cons of loans and credit, but were mostly just talking about it, and what to do.

BargainBabe really goes into detail on the Cash vs. Credit

In the end I did'nt get to choose, one morning I woke up and the bank had closed all our credit cards.

We did'nt have a very high balance on any of the cards, so they were paid off the first month, and now we're free to focus on the rest of our debt :0)

Man vs. Debt talks about how much you really pay for stuff when your in debt, and that makes using your debit card-not- so-bad.

3 months after going cold turkey we actually feel good about not using credit cards and going debt free is a step closer.

What are your thoughts about this topic?
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What will increased self confidence do for you?

noreply@blogger.com (Peter) — Sun, 12 Apr 2009 21:39:00 +0000

Do you feel that you fail in everything you do? Does no one trust you, or is that the way you feel?

I've failed countless diets, failed to ask countless girls to dance and failed to call countless people because I was afraid of failing.

There is a sure way to build your self confidence and make other people trust you and look up to you.

Its called making and keeping promises.

Like every other habit, this is one that takes practice and a slow start in order to succeed. I therefor recommend that you do the following.

For one week make and keep a daily promise to yourself.

Start out with something easy, like going to bed at a certain time or reading for 20 minutes or eating 3 pieces of fruit, or not eating a particular food.

Promise yourself something that does'nt involve other people and does'nt involve things that need to happen before you can keep your promise to yourself. But tell at least one other person about your promise. If you are a Twitter person, Tweet your promis or if you are a blogger, blog about it.

Even though the first promise is easy to keep, it will instantly start building your self confidence. Move from making easy promises to yourself, to making them more difficult, but still only one promise a day. More fifficult promises include saying "No" to other people, calling people you feel uncomfortable calling. working out or getting up half an hour earlier in the morning.

At some point, after two or three weeks, you will find yourself challenging yourself to harder promises. People around you will start noticing that you are changing the way you carry yourself, and how your confidence is improving. They might even ask what your secret is. This is when you make your first promis to someone else.

For one week make and keep a daily promis to someone else.

Write each promise down. Preferably tell some one else about your promise and make it your top priority to keep it.

You will notice that people will start to confide in you about other people who do not keep their promises. They will most likely express gratitude that you are a person who keeps his promises and since you do, they will ask you to help them and promis them to do stuff for them. This is the time to practice saying no, which by the way also shows character.

Just as promises kept builds reputation, so does promises forgotten degrade your reputation and not least your selfconfidence.

The good news is that the building part is a real fast process and it works right away.

Make a promise to yourself right now, that you will begin building extraordinary selfconfidence and trust from others.

What are your thoughts about this topic? ________________________________________________________

Be a hero with Tim Ferriss

noreply@blogger.com (Peter) — Tue, 17 Mar 2009 04:54:00 +0000

Tim Ferriss of "The 4-hour work week" has started an exciting fond raiser build on Twitter.

All you have to do is to sign up to follow Tim on Twitter, and $3 dollars will be donated to www.donorschoose.org.

Read more about the experiment at http://www.fourhourworkweek.com/blog/2009/03/09/tweet-to-beat/.

Getting started with GTD

noreply@blogger.com (Peter) — Tue, 10 Feb 2009 15:27:00 +0000

GTD, or Getting Things Done, is a philosofy explained in the book "Getting Things Done" by David Allen. Reading the book is very worthwhile, but it is not essential to get started with GTD.

The purpose of GTD, in my mind, is simplicity and productivity in order to achieve my goals in life, and on the way experience peace of mind instead of stress.

Five habits will get you started on that road and gradually have you wanting more of the same.

Keeping a nice workspace
Upholding the idea of only one inbox
Getting stuff out of your head and down on "paper"
Maintaining a filing system
Focusing on next actions

1. Keeping a nice workspace

No matter how small or cramped, setup a nice workspace for yourself at work and at home.

A workspace is a place where you sit down to work, write, read and plan. You should have your own workspace and avoid sharing it with others. Instead help them set up their own workspace.

Essentials:

a desk that is big enough,
a good chair,
a notepad or blank pieces of paper,
a good pen or pencil
a physical inbox
a filing system

The desk must be big enough for you to sit and write at, and should preferably be permanent. Setting one up every day and packing it away at night is not ideal, but can work.

The chair should be comfortable enough, so that you dont develop back pains or get distracted by unrestfulness.

A notepad or pieces of blank paper for taking notes and getting things out of your head.

A good roller pen or ball point pen is nice, but some prefer good pencils. Always keep it with you.

A physical inbox can be anything from a cool leather box fitting a folder, to a pile of stuff that has come your way.

My filing system is a box from Crate and Barrel that holds about 35 file folders, but it could also be a cabinet with drawers.

2. Upholding the idea of only one inbox

Think of everything that comes into your life as stuff.

All stuff must be handeld and you can apply the 5 paths to Email Nirvana to getting this done. E-mails are stuff too.

Stuff ends up in a variety of places like your car, your wallet, kitchen counter, post it's on the mirror.

Begin a habit of collecting all stuff in one place or inbox. That means emptying your car (all shelves and compartments) and your wallet into the inbox on your workspace.

Then apply the "5 paths".

3. Getting stuff out of your head and down on "paper"

Keep a notepad and a pen with you at all times for jotting down your thoughts or doing more structured brainstorming in a mindmap.

4. Maintaining a filing system

As you go through your stuff, on a computer or in real life, you will purge a lot, but you will also need a filing system.

The most simple one is using plain file folders. Keep them handy for easy access and remember to label them according to how you will be retrieving the folder. E.g. for insurance related documents use "Name of Insurance Company" or "Insurance". Its up to you and you will find your own style.

5. Focusing on Next Actions

The key to Getting Things Done is to focus on the next action. If you focus only on the end goal, it is easy to get paralyzed.

Practice these habits, and you will find that you want more. Then read the book or ask questions here.

A book might be clutter to you...

noreply@blogger.com (Peter) — Sun, 01 Feb 2009 00:10:00 +0000

...but to the next guy they are just what he needed.

In my Simple Living quest I was cleaning out clutter, and dumping books in the trash. I did'nt feel good about it, but who would want my old books.

A lot were also sold at garage sales that I had in preparation of my moving to the United States.

Thats when I discovered BookMooch, and its really simple.

You get extra points for shipping to another country, and other users award you with extra points for sending books in nice condition and for shipping promptly.

For a year now I have been using this completely free Internet service for recycling my books.

I send on average 2 books a month and recieve the same. When people have books in boxes I ask for them to "recycle" and add them to my inventory of books to give, adding to my points account.

Its fun going "shopping" in other users inventory and having great used books sent to you.

There are presently only 3 books in my inventory, but I have plenty of spare point to "shop" for. It seems though for the time being, that the books I would like to mooch are books that other moochers are holding on to.

Go ahead and sign up at www.bookmooch.com.

The purpose of life - What is your mission

noreply@blogger.com (Peter) — Thu, 29 Jan 2009 04:49:00 +0000

What is your moral foundation, why you are here? There are lots of ways to think about your mission in life.

Personally I decided that since I was fortunate to be here, I also want to be happy.

Because I believe in positive affirmations thats how I put it:

I am happy because

I live a balanced life and I am healthy and strong

My children are happy and independent.

I am passionate about the activities I engage in.

I love and respect my wife.

I am curious and a seeker of knowledge.

I am always open for for new relationships and contribute to the succes of my acquaintances.

This I believe to be true, and I finde it to be true because I believe it to be true.

What matters most to you?

Who do you admire the most?

What do you most want to be remembered by when you are no longer here?

5 paths to e-mail Nirvana - Heros make it simpel

noreply@blogger.com (Peter) — Sun, 25 Jan 2009 22:18:00 +0000

Simple Living demands going back to basics and doing more with less.

E-mail is a part of my life that I would not want to live without, and therefor I try to make it as simple as possible.

I'm always amazed at how complex people manage to make their e-mail, and however clever systems the results are almost always some or all of the following:

The same E-mails are read over and over again.
Action items in e-mails are overlooked.
Filing and retrieving e-mails takes way too long.

Leaving your e-mail in the inbox will cause you to read and re-read your e-mails, often trying to decide weather to do something about it or not.

With no easy way to capture actions, these are often lost overlooked. Adding just another folder makes filing exponentially harder with every new folder and harder to retrieve, because you first have to decide where to file and then afterwards have to go through numerous folders to locate an e-mail.

There are 5 truths to better manage your e-mail. Adhering to these truths will cause you to spend less time on e-mail or get more done. It will clear away the stress most people feel about e-mail and finally, show your co-workers, clients and friends that you care and respect their correspondence with you.

Receive less
Delete
Do
File
Defer

1. Receive less e-mail by sending less. It is a universal truth that, "One shall receive more than one e-mail per e-mail sent", so by simply writing less e-mail, your inbox will shrink. You can do this by simply putting less people on cc and bc, or by calling someone instead of e-mailing, or waiting to communicate until you meet them.

Newsletters are a great way of having information pushed to you, but too many of them gets intrusive and fills up your inbox. Remember to cancel your subscriptions when they get tired or file them automatically (see #4).

2. Delete any e-mails that are clearly spam or of no interest to you, right away. You can often decide just by scanning the sender and the subject. I have set up my reading pane in Outlook to display a preview in the size of a newspaper column. This is a familiar format for the eye and allows me to quickly scan the importance of new e-mail.

A different way of deleting/removing e-mail from your inbox, is to create a filter that automatically categorizes and files any recurring e-mails that you might want to read later.

3. Do the actions that are embedded in an e-mail right away, if these can be accomplished in less than two minutes. If someone writes, "Should we meet for lunch", don't skip to the next e-mail to come back and read the first one later. Answer it right away.

4. File all e-mails that you want to keep. Most e-mail programs have a built in automatic filing feature aka "Sent Items". Sent Items let you automatically keep a copy of anything you sent, but wait there is more! The mails you send also contains the mail you received, so there is no reason to file that one, just delete it.

A different way of filing e-mail to get it out of your inbox, is to create a filter that automatically categorizes and files any e-mails that you want to keep or might want to read later, like newsletters.

5. There can be 2 reasons for deferring an action, not the e-mail itself but the action embedded in it.

The first reason is when an e-mail holds an action that takes more than two minutes. By definition you should defer it.

The other reason is when an action is related to your hard landscape, your calendar. This could be an agenda sent to you, or a text to go over at a meeting. Or it could be a telephone call that you must make, but only on or after a certain date.

And finally remember:

Never start your day by answering e-mail - It will consume you and your time before you get anything important done.

Refrain from constantly checking e-mail - They can wait until you finish that one important task that you started.

I will go over the setup of Outlook and Gmail in other posts, so check back.

Think about it - From doing to beliving

noreply@blogger.com (Peter) — Sun, 25 Jan 2009 05:40:00 +0000

Sometimes contemplating a mission statement can be hard.

Its easy to be struck by writers paralysis, when the white screen is staring at you.

For my self I've come up with a structur that starts from the bottom up. It is a structure of five layers. Five layers of reflection and thought.

By starting from the bottom, your everyday work in the trenches of life, you see a very real hands on picture of what is on your plate and it enables you to ask yourself some good questions ending up being almost philosofical.

What are the Next Actions I have to do?
The actions can be phone calls to make, e-mails to write, people to talk to, documents to read, places to go with your family, friends to meet brainstorming to do. Piles of clutter to go through. A lot of actions that that you might have in your head, on notepaper, in your calendar or in your computer.
What Small Projects are you trying to accomplish by these next actions?
Small projects or comitments have at least 2 actions attached to them but can spawn a lot of Next Actions, more than you might think. They could be getting your child ready for going away to school, getting the car fixed or re-decorating a room. A commitment could be going to a game with your kid or finding a restaurant for a date (and going).
Big Projects are often made up from small projects.
Moving to a new home involves selling your current home, buying a new home, packing, decorationg and moving. Starting a new business involves Marketing, Selling and Delivering. Signing up for a marathon will demand a big commitment.
Big Projects come from Focus Areas in your life.
You're a parent loving your children, a brother, a runner, a manager with responsibilities, a citizen willing to contribute your time and effort to the common good, a student striving to get a degree, maybe your second one.

For the Focus Areas in your life, you want to visualize yourself achieving the ultimate success. Select stretch targets 3-5 years in the future, and think about what major projects or commitments would be needed to achieve those goals.
Your spirit, Life Mission, values or purpose, is where those Focuse Areas come from.
What do you find important and who do you admire and what charecter traits do you admire.

Dont start out trying to figure out your Life Mission. Focus on finding out what smaller projects your actions derive from, and write them down. Make this a habit and move on to the next level.