- His house is financed at 6%+ with more than 25 years left to pay. I suggested he refinance his house (interest rates are around 4.5% now) and chop the term down to 20 or even 15 years. Even though he shortens up the term of the loan, the payments shouldn't be too much more than he is paying now because of the drop in interest rate and because he would be cutting off years of interest payments.
- His employer will pay for a metro transit pass for him each month. Currently he drives to work, and pays for insurance, parking, and gas. Since he lives on the bus line, I explained that taking the bus can be a much better option than driving. The pass would be free, he could save parking fees, possibly lower his insurance, and could possibly even get rid of one of the family cars. Even though he would have to get up a bit earlier to ride the bus, this would give him a bit of exercise when walking to the bus stop, he read or play with his smart phone on the way to work, and the bus would drop him off practically at the doorstep of his office.
- He added that he was waiting for his girlfriend to get off of work so they could go out to dinner since it was her payday. I can totally understand wanting to reward yourself for a couple of weeks of hard work, but the restaurant they were going to go to is expensive! I suggested that they keep up their every other week date night but that they choose a cheaper alternative. The hubby and I used to eat out every day, for nearly every meal. Now we eat out maybe once every two weeks or so and we usually end up splitting a $5 subway or going to Wendy's for a baked potato and chili ($4 for the two of us). I know from experience that cutting back on eating out has saved us a ton of money.
- He still has debt. IRS debt, legal debt, and some old credit debt. Currently he is paying the minimum on these debts and feeling overwhelmed. Making the minimum payments on debt can make you feel overwhelmed and make your efforts feel futile because often the minimum payment barely covers the interest charge. I told him we have been able to pay off quite a bit of debt over the last couple of years by picking the smallest debt and hammering away at it. We have had garage sales, sold gold, sold furniture...basically anything we could do to get extra money to throw at our debts (smallest to largest). This has helped us pay off debts much faster than we ever thought possible.
- Since he has turned his life around, he has been free of the legal system for more than five years. I can't begin to figure out how much money this has saved him. Even minor legal problems usually end up with court costs, attorney fees, fines, etc. He told me how one year, when he first started getting his life back together, he didn't have any way to pay his fines so the judge let him work off all of his court fees...to the tune of over 900 hours in community service. Wow. For quite a few months his full time job was community service and his part time job paid his minimal living expenses. Avoiding legal problems all together is a much better option and saves quite a bit of money.
- My friend has goals. When I first met him, he had a low wage job that barely paid his bills. At the time, he had a goal to get a job with a major employer in our area. I didn't even think it was possible because of his comprehensive and lengthy police record but he kept his goal in mind while he worked towards the things he needed...good references in the community, a couple of years of good work history, no police problems, etc...and before you know it he had an entry level job with this company. Now after about three years he has got raises and better jobs within the company at a startling pace. Amazing.
Overall my friend is doing really well and I am really proud of him. With a few more tweeks to his already pretty good life, he should find his way out of debt and he should end up with more money than he ever dreamed possible.