Millionaire Mind vs. Debtor Brain: A Must-Read Q&A

Scott at Debtkid.com admits on his site that he was essentially the “stupidest kid ever.” He recently told MainStreet that day trading “risky stuff like Forex and high risk options” threw him into more than $350,000 of unsecured personal debt. Ouch!

Alan Corey, through a combination of skill and extreme frugality, accrued over a million dollars by the age of thirty. (He writes about his saving strategies in his popular book, "A Million Bucks By 30.")

So what makes these two human beings so different? Armchair psychologists that we are, we asked both of them to respond to our questionnaire. Their answers may intrigue you:

You find a $100 bill on the street. What do you do with the money?

Alan: If I had debt, it would go to that first. Otherwise, I just wouldn’t go to the ATM that week and continue on as normal.

Scott: I'd keep the $100 bill in my wallet and vow not to spend it. There is something about having a large bill on hand that makes me feel secure. Plus, it's a great mini-emergency fund.

Is there a structured approach to debt payment that you advocate?

Alan: Definitely at least 10% of all income should go to pay off debt. Minimum. I usually do 25%, but I understand that’s not always possible. But no matter how hard things get, it’s never less the 10%.

Scott: Knocking off my smallest debts has worked best for me (a la Dave Ramsey's snowball method). Especially if your credit cards, for example, are all similar interest rates, tackle the lowest balance card first.

Do you live within a set budget?

Alan: Oh yes, and I love it! I created a way to budget that has a reward system and doesn’t require saving receipts which I hate to do. I go to the ATM every Sunday morning and withdrawal $100. I have 7 days to spend $100. I only spend what’s in my wallet and I make sure to pay cash for everything. I don’t go back to the ATM until the following Sunday, no matter what. If I’m out of money, I’m out of money. If I have some green in my wallet Saturday night, I spend it all whatever way I like as a treat for staying on budget. It’s a reward to me for being budget conscious. Additionally, I know I spend $400 a month every month without doing any formal accounting.

Scott: The word "budget" has such a negative connotation to it. So many people have tried, and failed to keep a "budget." I have a "spending plan" that keeps me in check in terms of my savings goals, date fund, debt fund, etc.

What do you spend on lunch on an average week day?

Alan: I pack my lunch each day, so considering my grocery bills and the variety of foods I use I’d say this averages out at about $3.00 a lunch, if not less. Plus, I find my lunches are healthier than eating out which hopefully means less money spent on health care bills in the future. If cravings start to kick in, I always have my hefty sack lunch nearby. I pack extra to avoid paying for snacks from the vending machine during the day.

Scott: Too much! I'm terrible at packing a lunch, so on average I'd say $5-6 a day.

How do you treat yourself?

Alan: Well, last weekend I treated myself at a sports bar. A luxury I would love to have is NFL Sunday Ticket which allows me to watch every NFL game from the comfort of my own home. Well, that requires a satellite and ridiculous surcharges that I will never agree to pay. Luckily, my local sports bar doesn’t have such a problem. Refillable ice teas and well-spaced out appetizers earn me the luxury of watching football at the bar for most of the afternoon. If the Atlanta Falcons win, I buy myself a beer. That’s about four hours of entertainment for $20.00. Paying $5 per hour to watch out-of-market football games is a treat to me!

Scott: My favorite, and frugal way to "treat" myself is a chocolate frosty and fry combo from Wendy's. The hot/cold, salty/sweet combo is delicious.

What was the last financial sacrifice you made?

Alan: Well, I sold my car. Well, make that a school bus. I bought a mini-school bus for $850 in May. Yes, a yellow short bus with a stop sign and the works and used it as my main form of transportation all summer. We went on summer road trips, camping, IKEA, grocery stores, etc. with that thing. It was awesome. But I was paying $64 a month in insurance plus fuel in something that I didn’t really need. It was a summer toy. I listed in on Craigslist last week and sold it for twice as much as I bought it for.

Scott: The large big sacrifice I made was living in my office for 2 months while I saved up to get my current apartment. I showered at a gym, and kind of made the whole experience into an extended urban camping trip. That was about 2 years ago now. Recently, I've been weaning myself from expensive energy drinks and brewing my own coffee at home.

Where do you take dates… do you prefer expensive places or cheaper ones?

Alan: My wife is my date, so luckily she still likes parks, food festivals, outdoor concerts, museums, picnics, parades, Netflix and house parties just like she did when we first started dating. Sometimes it feels expensive but really no one is noticing that not much money is being spent.

Scott: Definitely cheap. Hang out at a bookstore. Play board games. Go for a walk. See a movie at the $3 theater. My girlfriend and I are pretty frugal when it comes to dates.

Do you believe in buying lottery tickets? How about gambling?

Alan: Lottery winners rarely end up well financially. Many people play lottery to make up for the fact they are poor at handling money. Those bad money skills don’t change when you are given more of it to manage. An example would be if you don’t know what a sacrifice fly is but you are forced to manage the NY Yankees: you can bet things are going to get ugly fast. I’ve never met a gambler that seemed like a real good guy. I like to surround myself with good people… and my money.

Scott: No, and no. Except maybe penny slots.

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