A couple of weeks ago, Mr. Money Mustache received a request for help that threw him off balance a little:
Dear MMM,
I just found your site from lifehacker. Your articles are very good. But I did notice that they are all written from the perspective of someone with assets.
I would like some advice. I’m only 22, I’m upside down on my car, I have recently lost my job and can’t seem to find another one. I’m recently married, and my savings just dried up. I have a few hundred left of wiggle room on my credit card.
I’m not particularly skilled with much, but I’m good with computers. How am I to build myself up financially in this crazy world and down economy when even fast food jobs seem hard to come by? This next part sounds bad but I want to do it rather quickly. Zero to hero asap kind of thing. My wife’s studies are rather expensive.
Wow.. this guy is right. I have been writing mainly from the perspective of people with jobs, and fairly reasonable starting points, financially. But what do you do when you have fairly low expenses and debt, but an even lower income? So I wrote back to this guy and asked him for a few more details. Here’s what I learned:
Other Details:
Monthly Cost broken down into categories:
Debt: $223, Insurance: $120, Rent: $800 Phone: ~$90 Internet: $52
Gas: $60, Gym: $60 (Use it 5 days a week) School: ~$200
We currently get food assistance from the state @ $220/mo.
“Useless spending” (i.e. shopping) is kept to about $109/mo.
The only income we have right now is $590 every two weeks.
Skills: photography and part of a computer science degree.
Area:Portland OR. Wife’s parents live nearby.
For our area, we have decent rent. $800 is a bit expensive, and when looking at this from a purely financial standpoint we should find a cheaper place. Unfortunately if we move our transportation costs go up exponentially. My wife walks to work and uses free public transportation to go to school. She also doesn’t have a license and there’s no parking by her work unless we pay.
OK. Let’s add it up: Monthy income: $1400 including food assistance. Monthly expenses: $1934 assuming the $220 food assistance is equal to the food expenditure. Debt: not specified.
Let’s focus on the spending first, since I see a dangerously carefree mentality that could lead to problems down the road. If your expenses are greater than your income, it is AN EMERGENCY!!! That means everything goes out the window until you are back on track. For example, a $60 per month gym membership would be a decadent luxury even at my level of wealth. That’s why I work out at home. For a struggling person, even if you use your gym 7 days a week and steal free rolls of toilet paper, it’s more than you can afford. Pick up some cement blocks and an old rope from an alley and tie them around your shoulders, then start running the many steps of Portland during the rainy nights. Do concentration curls off of the concrete railing of the waterfall bridge as you look to the sky and bellow out your determination to get rich. Rocky Balboa Style.
You aren’t rich enough to afford a car yet. Unfortunately, you bought one when you also couldn’t afford it (hence the loan). Since the lien on the title might prevent you from selling it until you pay it off, I’d at least take it off the road to save the insurance money, and pay off the unfortunate loan as soon as you can.
If your family will let you move back into a basement, do it – and pay them a few hundred of rent if they need the cash.
Drop the cell phone plans and use prepaid phones and voice-over-internet like Google Voice when at home.
I also notice the debt payments sound very high, at $223 per month. At 5% interest, this monthly payment would service the interest payments on $53,520 of debt. If your debt is just a few grand on high-interest credit cards, see if you can get a family member to pay them off for you, then you responsibly pay the family member back ASAP with 5-6% interest.
It should go without saying that you will never carry even a $1 riding balance on the credit card for the rest of your life, and if you don’t think you can achieve this, just cancel the credit cards and never hold them again until you’re ready. Credit card interest rates, unless they are below 6%, are predatory and thus should never be paid.
Now that the mandatory tough talk on spending and debt is out of the way, we can move on to income. This reader sounds like a smart and capable guy, being a lifehacker and MMM reader, as well as having a high school diploma and some University education. So he needs to put the brain to work.
I’d advise him to avoid minimum wage jobs if at all possible, just because they suck up much of your time for very little reward. Instead, he could check out the Jobs section of the Portland Craigslist. Focus on things demanding as much, or slightly more, skill than you currently have. In computer or office work, or even in skilled trade construction. Then make up for any skill shortage with incredible professionalism and responsiveness with the prospective employer. Despite what they state in the job postings, every hiring manager or company owner is not hiring a collection of skills, but rather a person to solve their business problems.
I have hired people from Craigslist in the past myself, and I find that 90% or more of the responses are messy or disorganized or represent an incorrect understanding of my request. Your job is to beat out the first 90% of your competition with a fantastic, instantaneous response to the employer with good grammar and meticulous attention to the detail of their posting. If you do this for 50 job postings a day, I bet you’ll have a job at least doubling minimum wage within a month. Hopefully much more. You can also check other online job postings like Monsterboard and network with everyone you know who currently has a good job, to try to ride in on their coattails.
As a retired man, I admit I am a little rusty at getting jobs, but during my working years it was always one of my favorite parts of our wonderful capitalist economy. It’s like an exciting hunt, or an elaborate courtship dance, getting your prospective employer excited about how well you can solve their problems and take a load off their mind. I remember the thrill of each interview, and the feeling of that magic moment about halfway through the chat when you could sense the employer decides they want to hire you. At this moment, the conversation shifts from “are you good enough to work for my company?”, to “here’s how great my company will be to you, if you would be so generous as to come and work for us”. I am far from being the world’s most desirable employee, but yet this attitude towards interviews has helped me get every single job I have ever interviewed for! (For the record, I’ve had 15 job interviews and 15 offers in my life, and I have accepted and worked 10 of those jobs. I still miss the thrill of this hunt and may return to the job world someday if a meaningful opportunity arises and I ever run out of stuff to do in retirement. Unfortunately, I’m busier than ever at six years into it, so jobs will have to wait).
I’d like to wish my Portland friend the best of luck in getting out of the little financial gutter he’s in right now, and if any of YOU have advice for saving more money or winning in the current job market, share it with him in the comments!
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