Monday, June 18, 2018

Why We're Taking A (Short) Break From Debt Repayment

Time for a little R&R

Time for a little break


A few days ago, I shared that Fortysomething and I will likely be able to pay off our third and last credit card by the end of the month. We're over halfway there: "only" $4300 to go. To be honest, I am nothing short of obsessed with getting this done, to the point where I am needlessly checking account balances twice a day.

In the meantime, we've been going back and forth on what to do next: immediately go all-out on paying off my $10K in student loans? Stock up the emergency fund, then focus on student loans? Ramp up investments?

After much discussion, we still haven't made a firm decision. My guess is that we'll probably try to knock out my student loan debt as quickly as possible, then increase savings as we pay down Fortysomething's student loan, which currently stands at a little less than $40K. We *may* also start shopping around for a home loan, just to see whether we could find a mortgage with a lower monthly payment than our rather exorbitant rent; if that's the case, we could be looking for a house by the end of the year.

So the specifics of our long-term plan are up in the air, but what we have decided is this: in July, we're going to take one month off from all-out debt repayment. We'll still be making our overall minimum payment of $600, of course, and we'll still be adhering to a budget, but for just this short while, we're not going to be quite as aggressive in our quest to be debt-free. Instead, we're going to deploy our disposable income elsewhere.


Here's why:


(1) We want to celebrate paying off the credit cards. When we started this journey last year, we had over $22K in high-interest credit card debt. Getting rid of that ball and chain is a big deal, and we need to take some time to high-five ourselves for the achievement. So what's the celebration plan? Well, I've asked for a few days off work, and we're going to head to the mountains for a little R&R at an inexpensive Airbnb. We'll try to be as frugal as possible - cook most of our own meals, find free activities - and of course we won't be racking up additional debt in the process. But yeah, it's time for a mini-vacation. I am so ready.

(2) We have a list of things we've been waiting to purchase, and now is the time to do that. In particular, we're low on kitchen supplies, which is kind of inconvenient for people who cook most of their meals at home. Our wish list includes some plates, a pizza stone, a wok, and a saute pan. We also want to stock up on some home essentials - toiletries and the like - that are less expensive when bought in bulk.

(3) We just need a mental break from the debt repayment grind. Don't get me wrong. I'm thrilled we're ditching our debt, and seeing our net worth increase month by month is exciting and rewarding. But for more than a year now, a huge chunk of our lives has been about debt. Frankly, it's tiring: tiring to always be tracking expenses to the penny, tiring to have to say no to so many things, tiring to constantly be reminded of our mistakes. We need some time away from this whole process so that we can re-energize and gear up for the next phase.

(4) We want to be strategic as we move forward. From a purely financial perspective, the best next step would be to throw all of our disposable income at our student loans. But here's the thing: even if we put every extra last penny towards those loans, it'll still take between two and three years to pay it all off. That's a long time, and realistically, I don't think such a rigid, unforgiving plan is going to work for us. We'd like to build a larger emergency fund, and we'd like to increase our investments, especially because we're not in our 20's anymore and need to make up for lost time in a serious way. Taking a breather in July will give us a chance to figure out what to do next.

So that's the plan! If you've been paying off debt or have paid off debt in the past, have you ever taken a break from the process? What were the pros and cons?

Saturday, June 9, 2018

Luck. Or, How We're Going To Pay Off Our Last Credit Card By The End Of June.

We got lucky


I can't quite believe it yet, but it looks like we might be able to eliminate our $9000+ in remaining credit card debt by the end of this month. This is our third and last credit card. Our original plan was to pay it off by mid-autumn. This is turning out to be an unexpectedly auspicious month for us, though, and so we're putting those payoff plans into overdrive.

Here's how our financial stars aligned in June:

(1) Fortysomething received a generous work bonus. The school he works for offers bonuses as a way to supplement low-ish salaries and incentivize teacher retention. We knew he would receive one at the end of spring term, but the amount varies each year, so we had no idea what that would look like. This year happens to be a good year. Every single penny of the bonus will go towards paying off the credit card.

(2) Fortysomething is side hustling like a boss. He was initially planning to relax for most of the summer, but when a former employer offered him a short contract gig, he took it. We're kicking those paychecks to the credit card, too.

(3) We received family help. A family member sent us a monetary gift when they found out about our medical bills. We decided to put it towards our highest-interest debt. This is absolutely a privilege and we fully recognize that. Part of me feels like we're cheating, but at the end of the day, the goal is to be debt free. If someone offers a helping hand, I'm going to take it with gratitude - and promise to pay it forward.

Luck = Preparation + Opportunity


I realize this post screams WE GOT REALLY LUCKY. The fact is, yes, we got really lucky, and it's humbling.

We're lucky that Forty's school values its teachers, wants them to stick around for the long term, and recognizes the need to compensate them appropriately.

We're lucky that Forty has strong, long-term connections with a contract employer who appreciates his skills and is willing to wait until the summer to send work his way.

We're lucky that someone gave us a gift that will give us a leg up out of this debt hole.

But I also want to give us a little credit (so to speak, ha) for doing right by these windfalls. Two years ago, this money would have been in our pockets for all of a hot second before we booked a vacation, bought new gear, and treated ourselves to some fancy food. Trust me, we would have spent it quickly, and little to none of it would have gone towards debt. Our choices now reflect a complete overhaul in mindset.

They say that luck is a combination of preparation and opportunity. In our case, this month is flush with both. The lessons we've learned and the progress we've made over the past year have prepared us to make good decisions at a moment of prime opportunity.

At the same time, yes, this right here is an example of privilege, and I'm not going to deny that. I worry that in posting this, I'm going to come across as smug or spoiled. But I want my blog to be an honest, complete account of our journey, so I'm putting it all out there.

Monday, June 4, 2018

Why I'm Doing A Dry June

For the past few months, I've been tossing around the idea of taking some time away from alcohol. Apparently this is a popular phenomenon in Britain, where millions of people every year commit to Dry January as a way to recover and reset after an alcohol-soaked holiday season. The idea is to give the liver a break while stepping back to reflect on one's drinking habits. I first read about it a few months ago. The seed was planted, and over time, I had a growing sense that this was a challenge I wanted to take on.

What can I say? I love wine and beer... but I'm ready for some time apart.
I'll start by saying that although I could be totally deluding myself, I don't *think* I have a drinking problem. I mean, yes, I am obsessed with craft IPAs. That is true. But alcohol doesn't impair my job or relationships. I don't imbibe during the day, I never binge drink, and I've never made poor decisions like drinking and driving (just the thought of being impaired while behind the wheel terrifies me). All in all, I keep myself in check.

However, I've fallen into the habit of doing what a lot of the people in my friend group do, which is to get to the end of the day and immediately grab a cold beer or pour a glass of wine as a way to take the edge off and relax. It's something I find myself looking forward to in the early afternoons when my email has piled up or I've had a frustrating conversation: Just five more hours and then that glass of Merlot is yours! The daily drink has become a habitual reward.

I don't think a drink a day is necessarily bad or wrong. However, I'm the kind of person who (for better or for worse) doesn't like to feel controlled by anyone or anything. I was starting to have the strange sense that I was obligated to quaff that happy hour beverage. It became something I just did, no questions asked. That worried me. Who was in charge: me, or the booze?

So that's my main reason for embarking on a Dry June: to break the daily drink habit, be more in control of my choices, and find other ways to decompress. 

Aside from that, I also want to build speed and endurance as a runner, and I've heard that ditching alcohol can support that goal. Alcohol causes dehydration; dehydration impairs running. I already live in a dry climate where I'm constantly struggling to consume enough fluids, so drinking beer and wine does me no favors in that respect. If I'm being completely honest, I'm also hoping that I'll naturally drop a couple of pounds now that those empty calories are out of the picture. I don't diet, ever, and I don't care about losing weight to meet societal standards of how a woman should look, but if I'm a little lighter, I'll be a little faster and a little less prone to injury.

Plus, May was a boozy month. As I wrote in my May budget recap, several of our friends came through town, and our activities included brewery-hopping and imbibing. I feel the need to reset. My liver will appreciate a vacation. 

Lastly, I'm hoping to save some money. I estimate that we spend somewhere between $60-$100 on alcohol every month, depending on how often we go out to restaurants. Not drinking means we can accelerate our savings or debt repayment. Another win!

So here's how it's going so far: 

I started Dry June a few days before the beginning of June. Even though we still had half a bottle of wine on the counter and a couple bottles of IPA in the fridge, I felt ready to go for it - so I did. I'm now on day eight and so far it's been much easier than I thought it would be. I was expecting to feel a bit lost without my nightly beverage, but so far that hasn't been the case (except for yesterday, when I satisfied my craving with some kombucha). I've been distracting myself with other things like making dinner, reading, and running. I know that this might get more difficult if I'm out with friends, but so far I've managed to avoid activities that involve drinking.

The Dry January articles I read all touted the myriad benefits of ditching alcohol: less bloating! Weight loss! Clearer skin! So far I don't see evidence of any of that, but what I did notice almost immediately was improved sleep. Throughout the past few months, my sleep has been pretty crappy: at times I've had trouble drifting off, and at other times I've found myself waking up multiple times during the night. But over the past week, I've been waking up less, having more vivid dreams, and feeling more rested and alert during the day. I'd forgotten how great good sleep feels.

I'm also digging this opportunity to pursue another personal goal and to push myself out of my comfort zone. It's not just about the alcohol. It's about growth and challenge. I've been craving that lately - challenge in my personal life. A chance to learn more about myself.

If you've ever done a challenge like this, let me know how it went. And if you haven't, what do you think? Would you ever do a dry month?

Friday, June 1, 2018

A Look Back At May: Beer, Budgeting, and Debt Reduction

Oh May of 2018. I shall remember thee for your non-stop sunshine, the opportunity to see three - THREE! - different friends as they rolled through town on their late-spring adventures, and the beer.

So. Much. Beer. I blame the visiting friends who insisted on hitting up every brewery in town.

Okay, fine. That might have been me. *I* might have insisted on hitting up every brewery in town. I can't help it. I love beer, I especially love our local beer, and I love to show it off to people who haven't had the pleasure of trying it out. And when the weather's as nice as it's been the past few weeks, it's glorious to sip away on a sun-soaked patio while catching up on each other's lives.


So when I tallied up our expenses this morning, I was fully expecting to find that we'd exceeded our budget for the Miscellaneous fund (the fund we use for spur-of-the-moment purchases throughout the month), and I was fully prepared to blame it on myself. My sense was that we'd (I'd) gone out to eat way more than we (I) normally do and spent way more than usual on food and drinks.

I crunched the numbers and lo and behold, a miracle!: we were under in that area by nearly $15. I gave myself a big pat on the back.

Then I saw the Groceries line and stopped congratulating myself:


Yikes. I'm not quite sure what happened, but as you can see, we blew the grocery budget by $157. I suspect some of that is due to a glut non-food purchases, like toilet paper and mouthwash, that we sometimes buy at the grocery store (that's... a lot of toilet paper). Some of it might be related to the fact that we had friends over for a party, and we bought all of the food for said soiree. Some of it might reflect - you guessed it - more beer (don't worry, I'm doing a dry June, so this will give me an opportunity to see how much we can save when we avoid alcohol). I'm a bit befuddled, as $775 certainly seems more than sufficient for a food budget for three people, but we'll pay closer attention to food expenses in June and try to eliminate any excess.

We were also over budget by $20 on the table we bought from Wayfair. I'm not going to sweat it too much because a) we like the table and b) the order miraculously arrived with all necessary tools and parts, which is a total anomaly. I'll take it.

Other than that, it's worth noting that we had a couple of surprise expenses this month. One was our Amazon Prime subscription, one of the last remaining subscriptions we hold. We order from Amazon frequently, and the amount we save on shipping alone makes it worth the cost. The other was $141 for two fillings at the dentist. Fun. Thanks for never failing to be crappy, teeth.

So where are we with debt?

All told, we reduced our debt by another $706 last month, bringing our total debtload down to $58,831. Since June of 2017, we have paid off a total of $18,458! That's about a quarter of our total initial debt. As I mentioned in a previous post, we expect to ramp up the rate of debt repayment this summer. Evidence of this will come later this month when the first round of job bonuses hits our checking account. In short, I can't wait to see what these numbers look like at the beginning of July!

So how did you do on your May budget? Any surprises? Any "oops" moments? And if you're paying down debt, how was your progress this past month? 

Disease Called Debt

Tuesday, May 29, 2018

Waiting On A Raise, and Credit Card Plans

Tomorrow, Fortysomething will find out if he'll get a raise next year, and if so, how much. I'm going to assume they'll give him at least a cost-of-living raise, but we'll see. This is his first year in this position. We don't know exactly what to expect. But even a small raise would be appreciated, and a more significant raise of a few thousand dollars would go a long, long way towards us getting out of debt faster.

Ready-for-summer vibes
Speaking of which, I am JONESING to get the last credit card paid off. The current balance is at a little over $9100. We've been making payments of $405/month for the past couple of months while we build up our emergency fund. I see the balance decreasing, but the rate at which this is happening seems soooooo slowwwwww.

The pace should pick up soon, though, because Fortysomething has some summertime side hustles lined up to the tune of ~$4000. There's also a decent chance I'll get a small bonus of $500 or so in July, and rumor has it that Fortysomething will land a bonus soon, too. Like the raise, the details are fuzzy, but I'll estimate another $500.

All told, between summer work and bonuses alone - not including our regular monthly payments - I'm hoping we'll be able to reduce our total credit card debt to at least $4000 by the time school starts up again in the middle of August. At that point, our emergency fund will be in good shape, and we'll be making regular credit card payments of $1000 a month.

That means that all of our credit card debt should be gone for good by the middle of autumn. I CANNOT WAIT. 

To me, this particular credit card (which we unlovingly refer to as Credit Card #3) constitutes the most difficult part of our debt elimination journey. It has the highest interest rate of all our remaining debts, and of our three credit cards - two of which are now gone! - it has the highest balance. Of course we'll still be dealing with student loans once the credit cards are obliterated, but we'll be able to make a dent in those at a much faster pace, especially if we can refinance Fortysomething's student loan and reduce his interest rate by a few percentage points.

Also, for those who have asked, we ARE considering a balance transfer to a 0% interest credit card. Chase Freedom Unlimited looks particularly promising, so if you have any experience with this one, let us know.

Friday, May 25, 2018

Planning Our Summer Staycation

Now that the Kiddo is a week away from wrapping up the school year, I'm finally planning out summertime activities and tallying related expenses. Most of my mom friends organized their summer activities, like, three months ago, so I feel behind. But let's get real: since we're not really going anywhere, it probably doesn't matter. How much preparation can a low-frills staycation require?

Summertime = berry picking time!
First, the kid-related expenses: Our son will be participating in the county's summertime soccer league, which carries a registration fee of $85. (I remembered to sign him up the day before the deadline. THE DAY BEFORE! Look at me go!) He's also an avid recreational swimmer who likes to suit up at least five days a week over break, so we'll be buying a two-month pool pass for $150. Lastly, I'm thinking about sending him to day camp for a week. He went last summer and seemed to enjoy it, but that's another $150, so I'll have to see how interested and invested he actually is. (Update: The Kiddo has informed me that day camp is for little kids, not mature and worldly people going into sixth grade, and he would rather stay home and play video games thank you very much, so... maybe that takes care of that.)

Next up, camping and running expenses: Although we're not embarking on any grand cross-country or international travel, we intend to camp fairly regularly. We're all set with tent, sleeping bags, and sleeping pads, but because we don't have a car that can handle the roads leading to free campsites on BLM land, we'll probably have to pony up for campsite fees. These usually range from $10 to $40 a night, depending on how popular the campground is. I'm anticipating a monthly camping cost of approximately $150.

We have great camping options near us.
As for running, I'd like to sign up for at least one area race this season, possibly two. My goal is to use them as stepping stones to a longer ultra run in the early fall. If I aim for small events close to home, I can probably limit registration expenses to less than $100.

Lastly, going-out expenses: I'll be working from home all summer. Fortysomething will be side hustling from home all summer. All three of us, plus cat, will be spending an awwwwwful lot of time in close proximity... all summer. To stay sane, we're going to need to get out of the house on a fairly regular basis. Again, being realistic, some of that going out will be to restaurants, breweries, and the bowling alley, because we enjoy all of those things as a family. We may ramp up our miscellaneous fund by $25/month to accommodate.

Fortysomething will be making some extra cash this summer, and we can use a small portion of it to cover these costs. Obviously we want most of it to go towards credit card debt. That's the ultimate goal - to knock out as much of that debt as possible, as fast as possible. But getting along and not going stir crazy are also crucial.

I like local craft beer. I like it very much.
Free stuff: We're close to several national parks and monuments, and we'll use our national parks pass to visit them for no additional cost as the weather and crowds allow. Our town also hosts a free outdoor movie series every week so we'll try that out. And of course we have plenty of opportunities to hike (though due to drought, huge swaths of the forest are closed to the public for the foreseeable future).

National parks and monuments are the best.
Being realistic: I've done staycations before, and to be honest, they make me a little stir crazy. I like going places! I like getting out of town! The likelihood that we'll go the entire summer without some sort of special, short excursion is low. If Fortysomething ends up getting a rumored bonus, we'll probably budget in a few hundred dollars for a two- or three-night trip somewhere within a day's drive. We'll have to see if that pans out.

What about you? What are your summer plans, frugal or otherwise? What are you most looking forward to?

Wednesday, May 23, 2018

We're Still In Debt, But I Don't Worry About Money All The Time Anymore

Looking at my Yoga Cats wall calendar the other day, I was struck by two things: (1) disbelief that it's already the end of May (how?) and (2) the realization that I've been blogging here at The $76K Project for nearly a year. (Sidenote: come June, there will be a couple of celebratory giveaways in the works, so stick around!)

I started to run through the list of the changes we've made and the accomplishments we've achieved since this blog was born in June of 2017:

We've created and honed a budget.

We have an emergency fund.

We've started to invest (we had some meager investments a year ago, but now we're actively cultivating our retirement accounts).

We've increased our household income.

We've weathered some financial emergencies, including an expensive hospital stay.

We've paid off over $18,000 in credit card and student loan debt, and we no longer have a car payment.

I'm proud of all of that. Every one of those wins was hard earned. Personally, though, perhaps my biggest financial accomplishment is in the realm of the mental/emotional: I don't worry about money all the time anymore.

A few years ago, we were living paycheck to paycheck, always one large bill away from disaster. Not that anyone knew. By appearances, we had it together: We owned (well, held a mortgage on) a well-kept house. We had two cars. We took vacations every year, some of them to rather expensive locales.

But like an iceberg, there was so much going on beneath the surface that other people had no way of seeing. I had a chronic aversion to checking our ever-paltry bank account, which meant we went into overdraft on a regular basis. Bills would sit unopened on the kitchen counter for weeks. I'd make impulsive purchases without calculating whether we could actually afford them. Our monthly credit card and student loan payments rarely exceeded the bare minimum. Emergency fund? Ha. We didn't even have a savings account.

Not surprisingly, despite our efforts to ignore them, financial worries hovered in our lives like a specter. 

Nowadays, we don't own a house (perhaps more accurately, we don't have a mortgage). We're down to one clunker of a car that gets us around town. And vacations - for the foreseeable future, anyway - consist of camping out within a couple hours of home.

We still have a long, long way to go to get to where we want to be. Debt-wise, we're on the hook for almost $60K, including nearly $10K in credit card debt, and we have some major ground to make up with respect to retirement savings. Our net worth is very much in the red. We still feel the pinch when it comes to saving up for pricier one-time items like wedding presents, new running shoes, race entries, or household furniture. Sometimes I see my friends doing things that I know we can't afford to do, and I feel jealous (yes, I'll admit it).

So yes, we're getting our act together, but don't be fooled - this is no quick fix.

And yet, now I know exactly how much money we have, where it's going, and when it's going to go there. Our finances have started to run like clockwork, especially given that many of our bills are set up on auto-pay. It's true that sometimes our bank account runs low - we're currently at $150 for the next four days - but because our budget is dialed in, I don't worry about that, either. We have enough money in our emergency fund that we can cover at least one large-ish unexpected expense.

In other words, we have some safeguards in place now, and I sleep easier because of it.

So the major win after year one isn't being debt free, or being well on our way to early retirement, or having an emergency fund that would cover us for a year in the event of a job loss. None of that has happened (yet). We need another few years to reach those big goals.

But the major win right now is more peace of mind, and that's pretty much priceless.

Why We're Taking A (Short) Break From Debt Repayment

Time for a little R&R Time for a little break A few days ago, I shared that Fortysomething and I will likely be able to p...