Derek Sall is passionate about personal finances. That's why he started Life and My Finances, a website dedicated to helping others achieve the level of financial health they deserve.
Sall believes useful information is powerful when it comes to paying off debt, building wealth, and erasing the dependency many people have on material possessions. This information helps to empower individuals to do away with the needless things that stand as roadblocks along the journey to financial freedom.
In this interview, Sall provides the many tips, tricks, and tools he uses in his daily life and offers to others looking to rise above debt, let money work for them, and be free from the stress of spending.
Life and My Finances offers tips on how individuals can get out of debt, save money and be rich. In what ways does the website help individuals achieve those goals?
Mainly, Life and My Finances helps people get out of debt, save money, and become rich by feeding them useful information on a regular basis. When you're in the trenches trying to duke it out against debt, you can really get worn out. By checking out the site day in and day out, you will find success stories from those that have ditched their debt and are telling you how amazing it is to be on the other side. In addition to this, there are countless "how to" posts that give the readers all the information they need to succeed. All they have to do is go out there and do it.
What do you think are some of the biggest challenges that people face that prevent them from getting out of debt and saving money?
In my many years in this business, I have seen two very clear challenges for people as they try to fight their way out of debt and into wealth: (1) Society and (2) Lack of Entertainment.
As we watch TV, catch a glimpse of those billboards, and even as we look around at our neighbors, we get a certain understanding that everyone has it better than we do. It seems like all of our friends have nicer cars, bigger houses, and go on nicer vacations. If we want to fit in and be happy like everyone else in society, we must also live like they do. I used to think this way, but now that I am nearly on the other side I can see the lies, the desperation, and the unhappiness.
Secondly, people are entertaining themselves to death and they just can't stop. If they would want to get out of debt, that would mean that they would need to sell their boat or cut their cable. *GASP!!* Not cut the cable! How would you live? Hopefully you're catching my sarcasm ... Everyone is so used to countless hours of entertainment, they just couldn't imagine cutting back in order to save money.
How did you manage to pay off your debt in such a short amount of time? What made you decide to minimize your debt while maximizing your overall financial capacity?
If all goes well, I will have paid off $54,500 this year alone and will be completely debt free. I did this quite simply actually. I figured out how much extra money I would need each month, cut down my expenses quite dramatically, and then made up the difference by working odd jobs outside of my full-time work. By constantly tracking my progress, I was able to course-correct often and never let the overall goal out of my sights.
Many people think I'm a fool for paying off my house debt, but I think it is absolutely brilliant (naturally, right?). By getting rid of all my debt, and therefore all my monthly payments, I am able to live on only 20% of my monthly earnings. This provides a HUGE opportunity for me to invest and continually increase my passive monthly income. And, most importantly, these actions will give me options to do whatever it is that I want. Instead of feeling trapped at my work like the majority of the population, I could choose to switch to a job that made me happier. Or maybe I would rather have no job at all. With the passive income, I could make that choice quite easily. Doesn't this sound like fun to you? In my opinion, it is certainly worth a couple years of sacrifice.
While having debt is not ideal, some forms of debt seem like they are inevitable (like a mortgage). What do you think makes some debt better than others?
Looking back on my life, I wish that I never even learned about debt and its "positive" uses. In my opinion, debt is for the needy and the lazy. For those students that really want to attend college, there are many paths that can be taken to get through without acquiring any debt whatsoever. You might not attend the best college in the nation, and you might have to hold a full-time job while you attend, but it can certainly be done.
Owning a home is a similar story. Why do we need to take on debt to buy a house? Why not just rent a crappy place for four or five years and then pay for a starter home with cash? It certainly beats making payments to your bank for the next 30+ years!
For those that can't possibly live this "extreme," here is my hum-drum "I'd really rather not give this response" response: Home debt and student debt are the better forms of debt because your home will likely increase in value and your student debt will likely increase your income. Any form of debt taken on depreciating assets should NEVER be considered.
Paying down debt is something it seems many people want to do, but for some reason can't seem to do. How do people manage to pay down debt and build a savings?
Basically, they need to do one thing incredibly effectively: ignore everyone. Ignore their stuff, ignore their advice, and ignore their terrible spending habits. If you want to pay down your debts, you need to make a plan for yourself and stick to it. So often, people just feel strange because they are going against the grain and are actually saving. This is a good thing! Be weird!
What do you recommend to individuals looking to live a low-cost life?
I would first have them take a look at their home and their car. Many times these two items are costing an individual an insane amount of money. The mortgage payment, the property taxes, the insurance, the car payment, insurance, and maintenance all add up very quickly. If you want to live a low-cost lifestyle, I would first downsize to a smaller house (that you could hopefully pay cash for) and a 10-year-old Honda. These two simple moves will likely save you over a thousand dollars every month!
Do you think sacrifices are necessary for someone living a frugal lifestyle?
Of course! But are they worth it? Totally! And the sacrifices are really not that severe. Instead of vacationing in a 5-star resort, you'll have to tent in the campground. Instead of spending $150 on an extravagant dinner, you'll be making dinner at home. This may seem extreme, but life is all about relationships and experiences with people, not about how much money you can spend on a bunch of extras.
What are some of the biggest tips you can offer to someone looking to become more financially secure?
1) Pay off your consumer debts
2) Start a simple business to earn an extra $1,000 a month (e.g., detailing cars, cleaning houses, etc.)
3) Pay off your mortgage
4) Invest heavily and let your stress leave your body, because your job no longer owns you
What are your thoughts on investments? Do you have any tips regarding investing in property, real estate, etc.?
I am currently investing in my 401(k) and plan to invest in real estate (with cash) soon after I pay off my house. By purchasing just six properties, I could be financially free with the passive income. Just remember that you want to earn a passive income, not an earned income. In other words, with your money or with upfront work, you want to set up a business that will continue to pay you without your active effort. This way, you can continue to add to your investments over and over again - your earnings are limitless!
Please share anything else you would like individuals to know about Life and My Finances.