Tag Archives: Delayed Gratification

Walden on Wheels #1 : Vanquishing the Debt

Wipe our Debt

Wipe our Debt (Photo credit: Images_of_Money)

$32,000 in debt after 5 years of college. For a certain age group among us, that probably sounds laughable. Not that any debt is a laughing matter; but it could be so much worse. Why – I haven’t met anyone with a “Craftsman house-sized student loan debt” since this morning.

One year’s tuition, room and board borrowing can easily run between $26-$52,000 in the 21st century. The average student is graduating with $35,200 in debt in 2013.

The book Walden on Wheels, is one man’s story of debt freedom. I will divide the story into two posts-how he discharges his undergraduate debt and how the author pays for graduate school. I am not sure most of us could do what he did, as it involves three difficult accomplishments:

  1. Delayed gratification
  2. 99% less spending and embracing isolation to do it
  3. Severe behavior modification

The hero of this story (author Ken Ilgunas), begins in a Puritanical place:

“I didn’t see work-at least my line of work as a virtuous undertaking. Rather I saw it as nothing but a penance for my sins, for the profligate decisions I had made as a clueless eighteen year old…To make the best out of a bad situation seemed like an act of resignation. Instead I embraced my bitterness and hatred and ungratefulness.”

In order to direct his dollars from a new job in Alaska (in Coldfoot), Ken adopts the idea that his debt is “a villain that needed to be vanquished”.

“I bought nothing and kept nothing in the bank. I squealed with pleasure when I tortured it [the debt] with payments, like  a sadist plucking legs from a captured mosquito.”

The Happiness Project, this book is not. Or is it? You tell me.

In various, low wage, isolated jobs, Ken goes about reducing his debt-the book chronicles his success job by job, while contrasting his situation with his good friend Josh, also in debt for his undergraduate education. Josh’s nut is $66,000 however.

Would you give up salon haircuts, all your “electronic gizmos”, new or ‘new to you’ clothes, shopping, the gym and isolate yourself at a minimum wage job in the middle of nowhere to meet your goals? PS he had free ‘room and board’. I think many of us wouldn’t be able to do this, but it is a mesmerizing tale. There might be a technique, or a mind-set, or a tale in this book that will inspire you!

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Filed under Be Prepared, Debts

Payroll Tax Holiday to end in 2013

I read that line about the “payroll tax holiday” last year  in my hometown newspaper. Holidays have to end, after all.

Why do people like to complain about Social Security and the payroll tax?  Some of them are free-market purists, Libertarians, lobbyists, and others who believe that everyone in America can succeed without any government support whatsoever. If you believe that all taxes are ‘confiscatory”, please read no further.

However, I haven’t met any people over 65 yet in the last 25 years who are not claiming their Social Security benefits. Well, there is that one family member who believes that people make rational decisions, all the time. But I digress.

The sub-headline could also have read:

Americans to resume full contributions to Social Security accounts in 2013.

Most of the people I speak to professionally are very appreciative of a lifetime annuity plan, with a cost of living increase, where they don’t have the worry of investment management. (Yes, Virginia, Social Security is that). For many older baby boomers, it will be the only plan like that they ever have.  Continue reading

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Filed under History, Lifetime Annuity Income

Delayed Gratification and the Cupcake ATM

When reading about delayed gratification, the sweet item that usually comes to mind is marshmallows. You know, the famous Stanford study on children and delayed gratification?

English: Marshmallows

I prefer the David Brooks column as a reference, but you can also insert the words in your favorite search engine for the story. Or check out this video of adorable children wrestling with the one now or two later question.

When I heard about a new 24 hour Cupcake ATM (@CupcakeATM)  this week, I was appalled, but looked nevertheless!  Here is the video.

For those of you who remember the automat, the only thing new about this is the price and the dispensed product. If you have late night cravings, this is classier than going to a convenience store.

Red Velvet 1 Red Ropes 0

But I digress. Here is a definition of delayed gratification from the Encyclopedia of Psychology:

The ability to forgo an immediate pleasure or reward in order to gain a more substantial one later.

For all of my professional life, I have worked in intangibles and the concept of delayed gratification is inherent in the practice of money management and financial planning. However, in doing some research, I learned that delayed gratification is present in other areas of study as well. David Brooks covers the link to brain research, and we also have religion. Apparently St. Augustine prayed:  Lord make me chaste — but not yet!

One may as well say, “Let’s go to the ATM!”

M Scott Peck, author of the book The Road Less Traveled, described four aspects of discipline: one of which is:

  Delaying gratification: Sacrificing present comfort for future  gains.

Peck says that these are “These are techniques of suffering”. This is not of much use on a day-to-day basis – come study with me and I will make you suffer!

Cupcake ATM 1  Study and Suffer 0

                             What really works to instill delayed gratification?

Advice     My recommendation is pretty simple but not necessarily easy.  I created this list:

  1. Awareness; then Acceptance of what you are doing right now. Some would argue against acceptance, but you must have a moment of it to move forward without internal “shaming and blaming”.
  2. Then Balance the current behavior against your desired goals. At $4 a pop, it would only take 6.25 foregone cupcakes to add $25 to your mutual fund or credit card payment each month.
  3. Then Change your behavior to meet your goals. Be Compassionate with yourself while doing this.

Awareness/Acceptance/Balance/Change = ABC

I haven’t yet resorted to taking away my client’s marshmallows [or cupcakes], however, at $4 per cupcake, gratification delayed is money in your pocket!

Wallet 4, Cupcake ATM 0

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Filed under Learning About Finance