1. The Greatest Asset is Time – Not $$$: How much would you pay to be 20/30/40/50 years old (or any age) with an awesome community and real friends to have sober fun with in North County, CA? Does it really matter how much anyone would be willing to pay? It’s still the same price – priceless! Time can buy anything but nothing can buy time. In our mind, it’s not even close, time is the most valuable asset. Not money or material items, time. Time is precious and scarce for each of us. It is one of the first things we gave up in our addiction until we eventually had none of it left. In our addiction, nighttime was taken first with drinking and using, followed by our morning time of hangovers and withdrawals and afternoons of purgatory until the next night. A vicious cycle of giving away all of our time to substances. Today, whether you have a lot of sober time or you have a lot of time left to be sober – we sober people are the most fortunate and abundant when it comes to time. We are present morning, noon and night. This is what we are most grateful for in sobriety – real, sober time with our friends and family, to get to know ourselves, to adventure through life and achieve our goals and ambitions. Better yet, we get to remember these sober moments as we pass through time.
2. Recurring Costs are the Silent Wealth Killer: Being sober is bar none the best financial decision anyone can make. Heck yeah us! We get a kick out of tracking how much we are saving each week, month and year by not drinking and using in our apps (we use the “I Am Sober” app). So let’s take our financial savvy and savings to the next level and see how many recurring charges we are incurring each month with an app like Truebill. We were stunned with the all the stuff / crap we were paying for each month. It’s not so much the bigger one-time purchases that get us. It’s all those $5-15 per month charges that started adding up in a hurry to $500 bucks or more (that never end until we end them). Once we were able to see what we were paying for each month – we were able to cut back to what we needed, loved and wanted to keep. The basics stay: rent/mortgage and utilities, health and car insurance, phone bill and debt payments. Then we enter the maybe keeps which are basically subscriptions services like Netflix, Apple TV, Hulu, Spotify, etc. We love our Spotify so that’s not going anywhere. But then – we enter the last category – which is “I can’t believe I am paying for this”. This can really range the gamut, from an old gym membership to an old newspaper subscription. We kill those silent killers. Today, we know what we pay for each month – and that helps us only pay for what we need and love. More importantly, that helps us save and build wealth. Recurring costs are savings and wealth killers in the form of death by a thousand cuts. Kill them before they kill you.
3. If We Have to Finance It, We Can’t Afford It: It’s truly gotten out of hand – they (aka the Big Bad Lenders) are making everything “affordable”. Finance your bed, e-bike, Christmas gifts, phone, toothbrush, surfboard, shoes, clothes, furniture, vacations, etc. for just $X per month. They whisper, “Don’t worry – you can afford it. Just pay us later – over the next two years. Buy it. It will feel good.” This is what really happens – we use the thing in two months and pay for it for two years. To pay for something you have already used is psychologically a demoralizing torture and financially (see #3) a wealth killing recurring cost. So we keep it simple, if we can’t afford the sticker price today – we can’t afford it today. We save up and buy it outright. Who knows – we might not even want it by the time we save up. Or maybe there’s something shinier or newer that we want. Either way, when buying things outright (not with debt) we are able to feel the true inertia of the purchase and more importantly maintain some semblance of financial hope for the future. There are two areas we generally make exceptions for in favor of financing (i.e. taking out debt): 1) A house / mortgage for a primary residence and 2) Education. More to come on why we “appreciate” these life purchases more than others.
4. Use a Budgeting App: We’re kind of old school and like to make a budget in Microsoft Excel. Snowball’s chance in hell that’s going to catch on with the masses. So alas, this is the 21st century and there are way better budgeting options. Our personal favorite is the app, Mint. Mint is not only great for setting a budget and tracking our spending but it even categorizes our purchases so we can see what areas we spent too much in each month. Another close second is the app You Need a Budget (YNAB). Check ‘em out and see which one you like better. We’re not perfect in keeping to our budget – but we have one and we know when we blew through it. And once in a while – we even save a bit. 😊
5. Do Your Diligence: What Does That Mean? SUGGESTION: STOP BLINDLY TAKING PERSONAL FINANCE AND INVESTING ADVICE FROM YOUR BARER/HAIR DRESSOR, CO-WORKER, WAITER, PERSONAL TRAINER, AUNT, ETC. If they were financial geniuses – they wouldn’t be working. It’s way safer to assume they are wrong than right. It is absolutely astounding to us how many people, with no finance background or MONEY, give and take personal finance and investment advice from each other in rehab/recovery centers. DUMBFOUNDING! For personal finance and investment advice, we refer to: 1) financial advisors / professionals and 2) reputable financial informational sources / websites. As financial students and skeptics, we love referring to Investopedia for the many terms and things we don’t know about personal finance and investing. They have fantastic posts and videos that explain, in layman’s terms, what just about every personal finance and investment term, product or strategy means. Investopedia gives amazing explanations to all of our financial questions (that we may be embarrassed to ask out loud) from: “What is a debit card?”, “What is a credit card?”, “What is a credit score?”, “What is a stock?”, “What is an investment?”, “What is speculation?”, “What is the stock market?”, “What is a cryptocurrency?”, “What is real estate?”, “What is a mortgage?”, “What is an interest rate?”, etc. No matter what we hear people confidently spewing about as the greatest financial advice since sliced bread, we do our own diligence (with Investopedia) and ask the people we trust with credible, legitimate financial backgrounds. If we don’t know a word, we look it up. If we don’t understand something, we don’t act until we actually understand it. This allows us to make educated personal finance and investing decisions with faith rather than in fear.
6. Bank Accounts, Debit Cards and Credit Cards: We look to Nerdwallet when considering which bank to open a bank account with (which will also be your debit card provider) and especially when choosing a credit card. They do a wonderful job of comparing the pros and cons of different banks and credit cards to help us find the right ones for us. Personally, we started out with Discover credit cards to build credit. Today, we bank with Chase and use American Express for our credit cards. That’s what works for us. But that’s probably not what works for you. If you already love your bank and credit card – great! If you are considering who to bank with or a new credit card, we suggest finding what works best for you on Nerdwallet. Lastly, we would remiss not to make this warning – pay your credit card IN FULL every month. It is not free money. It is the most expensive money you can borrow if you don’t pay it back, in full, every month. We have been in credit card debt – big time. The things we owned ended up owning us. We were debt slaves. It left us financially paralyzed and hopeless until we were able to slowly claw back to financial freedom in sobriety. Save with a bank you like, build credit with a card that is right for you, steer clear of debtor’s prison.
7. Credit Scores and Improvement: What is a credit score? Per Investopedia:
A credit score is a number between 300–850 that depicts a consumer's creditworthiness. The higher the score, the better a borrower looks to potential lenders… Lenders use credit scores to evaluate the probability that an individual will repay loans in a timely manner… There are three major credit reporting agencies in the United States (Experian, Equifax, and Transunion), which report, update, and store consumers' credit histories. While there can be differences in the information collected by the three credit bureaus, there are five main factors evaluated when calculating a credit score:
How do we check our credit score, credit report and improve our credit score? We use Experian which is one of the three major credit reporting agencies. We’ve heard good things about Credit Karma too. With Experian, we can easily see our credit score, what shows up on our credit history (i.e. cards, debt, collections, etc.), and tips on how to improve our credit. They even have a “Boost” feature that can boost your credit just by making regular credit card payments. In the last year, we have improved our credit score ~75 points from the 600s to the 700s. We’re sober now – why not build and have good credit?
8. Appreciate Assets [Things] That Appreciate; De-Appreciate Assets [Things] That Depreciate: In sobriety, we have changed our financial lens to appreciating (i.e. spending more money on) things that appreciate or go up in value over time and de-appreciating (i.e. spending less money on) things that depreciate or go down in value over time. We also consider healthy lifestyle choices as an asset that appreciates because these decisions improve quality of life over time (and the reverse holds true for unhealthy lifestyle choices). Here is our major buckets of “appreciating assets” versus “depreciating assets”:
Appreciating Assets (things that we spend more on because we expect them to go up in value)
Depreciating Assets (things that we spend less on because we expect them to go down in value)
9. Investing Versus Speculating: We ask ourselves before we put money into anything – are we investing or are we speculating? The fool is not the one who invests or speculates – the fool is the one who does not know the difference. Investing and speculating are NOT the same but are way to commonly both called investing. The most common “investment” advice we hear in the sober community is in some no-name crypto currency that’s a “sure bet”. There’s a lot wrong with that advice but let’s just stick with the most wrong part – that is speculating (or gambling), not investing. Let’s make sure we are calling a spade a spade before we deem ourselves “investors”. We’re not saying one is wrong and one is right. We make more tradition investments with the majority of our money and have some fun speculating on ideas that might go to the moon (but more likely to zero). But the key is – we know when we are investing and we know when we are speculating. Per a post on Investopedia:
Whenever a person spends money with the expectation that the endeavor will return a profit, they are investing. In this scenario, the undertaking bases the decision on a reasonable judgment made after a thorough investigation of the soundness that the endeavor has a good probability of success.
But what if the same person spends money on an undertaking that shows a high probability of failure? In this case, they are speculating. The success or failure depends primarily on chance, or on uncontrollable (external) forces or events.
The primary difference between investing and speculating is the amount of risk undertaken. High-risk speculation is typically akin to gambling, whereas lower-risk investing uses a basis of fundamentals and analysis.
10. Our Order of Operations (Save --> Kill the Bad Debt --> Invest --> Homeownership): Below is our personal philosophy on the order of where our money goes to build personal wealth. First, have a minimum amount of savings. Second, pay off old debt. Third, invest. Fourth, buy a house. We didn’t pay down our debt before having some level of savings. And we didn’t invest before paying down our debt and having some level of savings. We’re still not at the homeownership point but we’re working on it.