Basics of Financial Independence: Paying off debts

2. Pay off any debts you have. Start with the highest interest debts and work down until all is paid off.

• The second thing one should do on the road to financial independence is pay off all high interest debt obligations. Of course that begs the question, "What is high?" For simplicity, let's define "high" as anything 1 point higher than the current 30-year fixed mortgage rate (currently 4% so "high" would be 5%+). I think that should be easy enough.

• Now that you have identified all your "high" interest debts, you should begin aggressively paying them off starting from the highest interest debt working downwards. Now of course you make minimum payments to all with the extra funds going towards the highest interest obligation until that is paid off, rinse-repeat. It also doesn't hurt to look into refinancing/consolidating these debt obligations under better rates when available. Often times a simple call can save mucho dinero.

• Now that you're left with NOT "high" interest debts, what should you do? You can ratchet down a notch or three on "aggressively paying them off" but you definitely want to pay MORE than the minimum required payments. Remember, this is the "basics of financial independence" not the "basics of getting rich via leverage." I know this can be a challenge for someone who has a car loan fixed at 2% and/or a mortgage fixed at 3.5% while the stock market (S&P 500) has double-digit returns over the last X years, but keep in mind there are also 1, 5, 10 and 15 year periods where even a 50/50 balanced portfolio has lost or made very little money (see chart below for 15 year real return periods). In conclusion, while your debt obligations are fixed who knows what the next X years of market returns will look like?

Basics of Financial Independence: Emergency Fund

1. Set aside 6-12 months of expenses in a savings account as a rainy day fund.

• The very first thing one should do on the road to financial independence is set aside an emergency fund. And the first step in this process is finding out your average monthly expenses. This can be accomplished the easy way by using an expense tracker such as Personal Capital or by manually adding them (housing, utilities, food, etc) up using pencil and paper. Either way, this step shouldn't prove that difficult.

• The next step would be to find a savings account that offers you some return on your money since the best case scenario is that this money will never be used. Deposit Accounts is a useful website that can assist you in finding a high interest bearing personal savings account that suits your needs. Personally, I am biased towards credit unions such as Alliant Credit Union but you are free to find one that best suits your individual needs.

• So is it 6 or 12 months of expenses? Personally, I recommend having 12 months of expenses set aside just because of the peace of mind it buys. For example, with only 6 months of expenses saved the average person will start panicking after 4 months of being unemployed. This can lead to rash decisions being made. One way to have the best of both worlds is to first set aside 6 months of expenses, complete the remaining 4 steps towards financial freedom, then circle back and increase the emergency fund to 12 months of expenses.

The Basics of Financial Independence

This list is actually in order starting with the most important item first:

1. Set aside 6-12 months of expenses in a savings account as a rainy day fund.
2. Pay off any debts you have. Start with the highest interest debts and work down until all is paid off.
3. Maximize your savings rate. I recommend starting with spending less since there you have the most control but finding ways (side gigs, promotions, etc) to earn more is just as important. Another angle on this is getting the most out of your employer via pension/401K contributions, tuition reimbursements for education/training that will improve your earning potential, corporate discounts on existing bills (cellphone plans, childcare, etc).
4. Invest in a low-cost (as low as humanly possible, aim for < 0.20%), tax-efficient (bonds in tax advantaged accounts such as IRAs/HSAs/401Ks), diversified (Total Bond, Total US, Total Int'l OR a Target Date fund to save all the stress), balanced (for your time horizon, 80-20 is a great starting point) index portfolio.
5. Time...let it marinate. The sooner you get done with #1 (you can weather storms), #2 (you are debt free), #3 (you have grown your earnings AND/OR lowered your expenses so you are investing more), and #4 (your investments are growing with very little headwinds from fees and taxes) the quicker you can be financially independent.

And the above list is such that if you just get the first 1, or first 2, or first 3 done, you are better off for it. Don't look at it as a all or none to prevent you from starting. Best of luck.

The power of a legacy...

If I had known this, there's a good chance I wouldn't have become a comedian. Until I lucked into a comedy club at age 20, just on a whim, I assumed I would pick up things for White people for the rest of my life. If I had known this, it would have taken away the inevitability that I was gonna be nothing.

- Chris Rock, upon learning that his great, great, grandfather fought in the Civil War and was elected to the South Carolina Legislature.

The quote above resonates deeply. More importantly it makes me wonder if my father knew something about his ancestry that instilled him with the confidence that he could achieve anything. He in turn, tried his very best to instill that confidence in me. To this very day, almost 14 years after his passing, I can only wonder if his confidence was based on something real or fabricated.

Strangely enough though, I have found peace in simply knowing that I exist today because all my direct ancestors going back to the beginning of time survived long enough to reproduce and actually did so. I was born a winner, I was born a winner.

mASS in de place!

I have now lived in mASS longer than ANY other place and it's about time I started showing it some love:

1. Spring-Summer-Fall. Who has a better stretch of 3 seasons? This year, our Summer has been averaging temperatures between the late 50s and mid 80s for the most part.

2. Professional sports teams. Over the last 10 years the Pats, Sox, Celts, and Bruins have all won at least 1 championship. Hell, the Pats currently have the longest championship drought in mASS. Think about that for a second.

3. Top tier in the country in K-12 school system.

4. Top 5 in the country for employment.

5. Top tier in the country for healthy residents and healthcare.

6. Top 5 in the country for educated citizens. Hell, I think it may actually be #1.

7. Top tier in the country for homes retaining value.

8. Every major airline including my fave JetBlue (now with seasonal non-stops to STT).

9. And last but definitely not least, even though her and I were both in attendance at friend's wedding in St. Louis, MO, the first time I ever laid eyes on my beautiful wife (yes, I married the ScriptKeeper) was on Newbury Street in Boston, mASS.

Getting in shape

The older I get the harder it is to get in shape. And not incrementally harder either, exponentially harder. So for the last 4 months I have been weight training, walking, jogging, and over the last 3 weeks I ran in THREE 5K races all in an attempt to get back to a reasonable shape (round not included).

Look, 5 kilometers (3.1 miles) is a lot harder than it sounds. Oh don't get me wrong, the pace you run is entirely up to you. My dilemma is that I started running with REAL RUNNERS. And trust me, there is a difference. For example, in the first race I started at the back of the 150+ runners and was basically jogging. Midway through the race I passed a few folks and started feeling real proud of myself. However, when the race was over and the results were published I was ashamed to find that I was in the bottom 25%, overall AND for my age group. And I did it in 29:11, DAMN!

So then, I started training just for the next 5K because I'm thinking I've been working out for roughly 3 months so I should be at worst average. Well, the following week I figured I would start at the very FRONT of the race. So, I go right to the front of the 150+ and the only thing in front of me is open road. Hey, I'm figuring that all I have to do is just maintain speed with the pack. Look, this was probably the most embarrasing thing to happen to me in recent memory. The funny thing is I drastically improved my time from 29:11 to 25:46. However, I have never been passed by so many people in my life. I mean, young boys passed me, young girls passed me, old men passed me, old ladies passed me, overweight young boys passed me, overweight young girls passed, and overweight old men passed me (I don't think their were any overweight old ladies in the race). But the point I want you to get is that 2 miles into the 3.1 miles I started getting tired and my brain started telling me to quit and I started listening. But then I saw this overweight old guy running by me and I tried to pick it up and I couldn't. I repeat, I COULDN'T. I repeat, I COULD NOT. At this stage I wondered, what is wrong with me and who are all these people blowing by me?

Then I figured it out. Those are the people I see running early in the morning while I am on my way to the Burger King drive thru to pick up my 2-for-$3 Croissandwiches. I also see them around lunch time running and wonder how is it that these people can get a run, shower, and lunch in 60 minutes when I can barely make it back from Chick-fil-A. I see them later in the evening as I drive home from knocking down a tequila and some nachos at On The Border. These are REAL RUNNERS. I have been going to the gym roughly 2-3 times a week since May and here I was expecting to hang with the REAL RUNNERS in a 5K. What the hell was I thinking?

So, I tell myself that all I have to do is train harder, which I did. Then the following Tuesday (race day) just happens to be the hottest day of the year. 7pm and the race is about to start yet it is 90 freaking degrees IN THE SHADE. I thought to myself, "Ok, I have trained for this and I will break 25 minutes this time." The race starts and within the first 5 minutes I realize that breathing in extremely HOT AIR doesn't bode well for my lungs. My brain started talking to me, "Hey Troy, is that lungs you just coughed up?" At this stage I realized I haven't even reached the 1 mile mark. I started thinking about my Sister's reply when I told her I ran a 5K. "Running is bad for your knees...walking is the best exercise", she said. Thoughts started entering my mind, "Man, she is a GENIUS...I shouldn't be running...I'm damaging my knees." Then I remember, bad knees never killed anyone that I know. Heart disease killed my Father, has a strong grip on many of my family members and is already starting to come after me. And so, I finished in 25:57 which was slightly more than my previous record. But more importantly, I didn't give up or give in.

Microsoft Communicator in the Workplace

So I'm sitting at my desk at work on the day of the Michael Jackson memorial and I get an instant message from the resident slacker at my job via Microsoft Communicator (basically Instant Messenger for the Workplace).

Slacker: Did you moonwalk to your office this morning?

Troy: Shh-mon!

Slacker: And did you start your day with a beat-it?

Troy: Ha! Nope, but I am gonna end it with a thriller.

Slacker: With Billie Jean?

Troy: Not my love...old news, she's out of my life for some time now.

Slacker: You can teach her the ABCs. I've heard they are easy as 1-2-3.

Troy: Or is it as easy as black or white?

Slacker: Sometimes you have to just look at the man in the mirror.

Troy: Whoa, where did that come from? You and your off the wall comments.

Slacker: Hey buddy, do you wanna be starting something?

Troy: Try as you wish, I'm unbreakable.

Slacker: Nah.. you are just a P.Y.T.

Troy: I don't know where you're going with that last comment but if there is a pretty young thing out there you should know the girl is mine.

Slacker: I'd like to jam with you on Communicator about MJ all afternoon but some of us gotta work.

Troy: Work? You? Ha! I want to be where you are...come in when I want, "work" from home when I want.
...
[Slacker is taking a long time to respond]
...
Troy: What? Have you resorted to googling songs now? What type of monkey business is this?

Slacker: You think you are a smooth criminal, but you're just a hater.

Troy: Dude, not only am I smooth, I am also dangerous.

Slacker: Say, say, say whatever you want.

Troy: Lots more to say...for instance, did I ever tell you I once dated Dirty Diana.

Slacker: Nope...I'm pretty sure you are still in the closet.

Troy: I'm so far removed from you and your "closet" that I'm a stranger in moscow.

Slacker: Who are you fooling? You are with Ben thinking about butterflies.

Troy: You've got the wrong guy. I'm with a beautiful girl.

Slacker: You are not alone with her, I'm with her too.

Troy: Hey, are you calling my girl a cheater?

Slacker: Her and I have been workin day and night until there is blood on the dance floor.

Troy: Blood?? Can someone say, "in the back?" But if that's your thing, may I suggest you don't stop until you get enough.

Slacker: It's my patented move. I call it the rockin robin.

Troy: Dude, I'm laughing so much I am speechless.

Slacker: Why don't you go ahead and cry then?

Troy: I haven't cried since childhood...I can't even remember the time?

Slacker: Hey tabloid junkie, enough of this crap, I gotta do some work.

Troy: Ha! You finally realized that you can't win huh?

Slacker: Dude, quit it. Someone just walked in my cube. This dialogue in the Communicator window looks bad.

Troy: Who is it?

Slacker: My boss. Had he seen this my ass would have been on the line. Okay, definitely quitting now.

Troy: Look at him and yell, "Leave me alone!"

Slacker: Dude, you're crazy. I want to spend one day in your life.

Troy: Hey, it's just another part of me.

Slacker: Are you sure its not just human nature?

Troy: Enough slacking, back to work. Time to heal the world one Liberian girl at a time.

Slacker: Dude you are a trip. One last song drop and I am done. Like all the great ones, gone too soon.