Saturday, April 14, 2018

Our First Year of Debt Repayment In Review

One year ago, we decided to finally get our financial house in order. I can't remember what, exactly, prompted our shift in mindset: there was no single crisis or issue that brought us around. But the balance in our bank account was persistently paltry, we worried constantly about unexpected bills, and we really had no idea where our money was going. We would buy things and just hope we had enough to cover the purchase. It was scary.

Around the same time, I started watching re-runs of Til Debt Do Us Part and Money Moron. While I didn't want to put myself in the same category as the people being coached/yelled at by Gail Vaz Oxlade, the truth was that I could fully relate to their choices, experiences and fears. I saw myself in them. I devoured as many of these episodes as I could, taking note of the advice on budgeting and debt repayment plans. Then I announced to Fortysomething that I was ready to make some changes.

Last April, we finally started the long, slow process of turning this ship around. We've made an enormous amount of progress since then. Here are some of the highlights:

April and May 2017:
  • We took a full inventory of our debt.
  • We made a debt repayment plan.
  • We opened a savings account.
  • We finally made a budget. Here's what it looked like:

    (At the time, our debt included our car loan ($300/month), our student loans ($600/month), and three credit cards on which we were paying the minimum, for a total of $700/month).

June 2017: 
  • We started this blog as a way to track our journey, record our story, and engage with the personal finance community. Check out our first post: Introducing the $76K Project.
July 2017:

August 2017:
September 2017:
October 2017:
November 2017:

December 2017:
January 2018:
February 2018:

March and April 2018:
So there it is: one year of persistent, sometimes frustrating financial work! I'm amazed at our progress and by how much we have learned, and I can't wait to see what we can accomplish in another year.

Tuesday, April 10, 2018

Debt: Nobody Said It Was Easy

Money in the $76K household is tight. We're awaiting medical bills related to the Kiddo's appendectomy, and although it's possible that the total cost of surgery won't be as high as I'm expecting it to be, I'm still very much on edge about it and want to keep a tight grip on the budget until we know where we stand. At the same time, we're determined to make a significant credit card payment this month ($1000) and plan a small but fun birthday celebration for the Kiddo.

Although we're paying all of our bills on time and making progress with debt repayment, there isn't a lot of room for extras and non-essentials:
  • We still don't have a real kitchen table. We're eating off a tablecloth-adorned card table and sitting in folding chairs. 
  • We've had to delay the purchase of other furniture, such as bar stools for our kitchen counter. (The horror!)
  • We're not going out to eat as often this month.
  • We're being more selective about paid activities. The Kiddo's summer soccer league is a go. The running series is not.
I'm not complaining about any of the above items. The card table serves its purpose, we make tasty enough food at home, and I can walk out my front door and run for free every day. We're good.

However, we've come to the realization that our uncompromising budget will necessitate one difficult sacrifice: we'll likely need to cancel the trip that Fortysomething and the Kiddo were planning to take back east this summer. The original idea was to have them fly out, rent a car, and spend two weeks with Fortysomething's parents, siblings, and other relatives. It's something Fortysomething hasn't done in several years. The Kiddo barely remembers what his cousins look like.

Needless to say, nobody is happy about this, especially my son and his grandparents. But the trip seems financially ill-advised given the likelihood of steep medical expenses. The price of plane tickets will be in the hundreds of dollars, even if we're able to offset the cost with our limited Southwest points. Then there's the car rental, the gas, and the inevitable restaurant meals and kid activities. We just can't afford it, is the truth.

Fortysomething is fine with canceling. As usual, he's Mr. Logical: we don't have the money, thus we can't go, end of story. Me? I feel tremendously guilty. I know how much his parents were looking forward to seeing both of them, and as they're getting older, I want them to spend time with us. Life is fleeting, and we need to make time - and sometimes spend some money - for the people we care about.

But is it worth accruing more debt at this particular time? I don't know. I don't think so, but in this case, I'm not 100 percent sure. Either way, it feels like a risk. A part of me is holding out hope that the medical bills will be miraculously low and we'll be able to book the trip anyway.

As anyone who has ever tried to dig out of debt knows, this process is full of ups and downs, triumphs and frustrations, successes and setbacks. Life is damn expensive. Even though we have the  best of intentions, and even though we're armed with the confidence that comes with paying off $17K in less than a year, it would be incredibly easy to backslide - not because we're buying lattes, avocados, bar stools, and fancy vacations, but because life is unpredictable and full of gray areas. 

I'm not complaining, but I will say this: times like this emphasize just how debilitating debt can be. Debt sucks. I'm sick of the way it limits us. I'm sick of having to make sacrifices for it. Situations like this just stoke my determination to get out of debt as soon as we possibly can. I can't wait.

Wednesday, April 4, 2018

Five Goals For April

I recently made a comment on Twitter that people need to live more in the moment and stop focusing so much on the future... but the truth is, I'm kind of a hypocrite in that respect. I find that I'm more grounded in the present when I'm anchored by some clear, achievable goals.

So in April, here's what I hope to accomplish:

(1) Write six blog posts. In March, I managed to publish five. Not bad considering that it was a hectic month, especially at the end. Writing is a valuable outlet for me (I'm writing this while on a much-needed mini-break from working today), and writing here keeps me motivated to pay off our debts. My longer-term goal is to move the blog to a different platform and expand on content, but for now, I'd be thrilled to simply hit the "Publish" button more frequently.

(2) Update my blog roll. I've been meaning to do this for weeks. Several folks on my current list seem to have disappeared, and I want to start following several of the PF bloggers I've met on Twitter. (Tell me if I should add you! I will!)

(3) Find a way to pay our recent medical bills without going further into debt. I have absolutely no idea how much we're going to owe on my kid's recent appendectomy. Between urgent care, the ER, surgery itself, anesthesia, and one night in the hospital, not to mention the toothpaste, socks, and breakfast the nurses insisted that we take (anyone who has ever been to a U.S. hospital knows you will be charged for every single item of this nature), I expect that we'll be looking at a total bill of a few thousand dollars, even with our insurance. My out-of-pocket cap is $4000, but we just don't have that much cash on hand right now.

Regardless, I am unwilling to put any of this on credit cards. We will pay what we can via my HSA, and then I will call each vendor to insist on a payment plan. Worst case scenario: I will ask my family for a loan.

No. More. Debt. The end.

(4) Drink more water. We live in an extremely dry area. When I don't drink enough water - and, well, I never drink enough water - my skin dries out and my running suffers. That's got to change. I'm not going to force myself to drink a specific amount (so, yeah, not a particularly measurable goal), but my water bottle is going to become my new BFF. I'm going to drag it everywhere with me.

(5) Do two strength training workouts per week. I have absolutely no trouble meeting my weekly running goals; I so enjoy being out on the trails that it's easy to motivate myself. That's not the case with strength training. Although I see it as a vital aspect of being a healthy runner, pushups and squats and the like just aren't that much fun for me. However, I think I can commit to two 30-minute workouts a week, especially if I schedule them before I start work in the morning.

We'll see how this goes.

What about you? What are some of your current goals, financial or otherwise?

Saturday, March 31, 2018

March Budget Review: How'd We Do?

Happy end-of-March, beginning-of-April, early spring! How are your budgets looking?

Springtime at the Grand Canyon
To be honest, ours is a bit worse for the wear. Although we didn't totally break the bank this month, we did come in over budget by about $60. I'm cringing because this was a three-paycheck month and I feel like we should have been able to stick to our plan.

Let's break it down (see end of the post for a comparison of budget vs. what actually happened):

Where we aced it: Rent, insurance, phone, Netflix, debt repayment - we're all good here. I'm giving us an A+ for taxes, dental bill, new bed, and savings, too. Some of our expenses - the bed in particular - were pricy, but they were also planned.  Go us!

Utilities and Internet *look* like they're on the money, but in reality I didn't have the budget for these set in stone until the middle of the month. That's because we were paying for both the old apartment and the new place, and until the bills actually rolled in, we were in the dark about how much they'd cost.

Note that our budget for debt repayment was lower this month to offset other costs such as our insanely high utility bill and to accommodate lingering moving expenses. In April, we'll be allocating $1600 to debt repayment, with $1000 going towards credit card debt. Woohoo!

New House Views
Where we strayed: We exceeded our grocery budget... again. By over $100. I feel I need to put in a disclaimer that we actually do eat everything we buy, and that we tend to purchase healthy, fresh food. We also use coupons pretty religiously. Three reasons we're struggling somewhat in the food department (excuses, excuses!):
  • Food is expensive here. We're not a prime agricultural area - the growing season is short and the soil is poor - so much of what we find in the grocery store is imported from other parts of the state or country, thus ramping up prices.
  • My husband and son eat a lot. Fortysomething walks/runs at least 50 miles a week. The Kiddo is in a growth spurt. Both seem to be bottomless pits of caloric need.
  • We could put more effort into looking for deals. We don't shop around much; we use one store and call it good.
Before anyone waxes poetic about the wonders of Aldi, we don't have one here in the great state of Arizona. Trader Joe's, you might ask? Nope. Not in our city. It's an enduring mystery: why would you not have a TJs in a hippy-dippy college town?

The fruit bowl never stays this full for long.
We were also over by $68 in our "Other" category, the one we reserve for dinners out and spur-of-the-moment purchases. Miscellaneous buys in March included Dominoes pizza, a father-son IHOP breakfast, some minor work-related expenses, clothes for the kiddo, a haircut for Fortysomething, two more expensive meals out (admittedly, that's where we took the biggest hit), and a few odds and ends. No question we could be more frugal here.

What we'll do differently next month: Now that we are fully moved into our new place and have adjusted to our new pay schedule, I expect that in April we'll find our financial footing again. Our Internet and utility bills will be lower, and we're not planning to fork over cash for any big expenses (except medical bills for the Kiddo's recent surprise appendectomy - more on that soon! - but my HSA should cover the cost of most of our initial payments). We're going to be more restaurant-averse and go out or order in only when we have a coupon or gift certificate. Most importantly, we'll be back to our regular debt repayment plan.

Friday, March 23, 2018

Dollar Dilemma: To Sign Up For the Race Series, Or Not

It's been almost a year since we started our debt repayment journey, and there's nothing that better illustrates my change in mindset than a current budget dilemma I'm trying to work through. Your advice is welcome!

Here's the situation: Our town hosts a summer running series. A blanket fee of $262 (applicable until the end of this month, at which point the price increases by $50) grants entry to seven races, including a one-miler, a couple of 5- and 10Ks, a half marathon, and a 15K.

As I've shared in the past, I am an avid runner: if there's one activity I'm passionate about, it's this. A nagging IT band injury sidelined me for almost the entirety of last year, but thanks to a careful, patient recovery, I'm all healed up and ready to hit the trails with the local running community. This summer series sounds tantalizing.

The me of early 2017 would have pulled out my credit card and signed myself up without a second thought. The me of early 2018, however, has been hemming and hawing about this for days. Is this a good use of $262?

Let's review the pros and cons:

  • The price per race is a good deal, especially for the longer races. Racing is expensive! Fees for half marathons often range from $60-$100. For this running series, the average entrance fee is only $37.
  • Every race in the series supports a good cause. Proceeds will go to the city's chapter of Big Brothers Big Sisters, a local hospice, and a community education organization. One could also argue that the races support the local economy.
  • A couple of my friends are already signed up, so it would be a fun friend activity throughout the summer. Given that I'm a staunch introvert who works from home, the opportunity to spend time with my friends is important.
  • It's a chance to hone my skills and get faster. Sure, I don't need to race - putting on my sneakers and hitting the trails is something I can do for free on a daily basis - but in the past, racing has helped me reach new goals and become a better, more consistent runner. 
  • My family is supportive. Fortysomething thinks the running series is a great idea - mostly for my mental health - and is encouraging me to go for it.
Pre-race prep
  • The running series isn't really in our budget. Not for March, and not for April (especially because April is the Kiddo's birthday month, so any "extra" money will be going towards birthday festivities). My attitude has clearly evolved in this respect: in the past, I had no problem shoving the budget aside, doing what I wanted to do, and telling myself I'd worry about the cost later. Now, I take our budget seriously: it tells us the unwavering truth about our financial situation and what we can afford.
  • Thus, we'd need to take the money from our savings account. At present, we have about $1800 in savings. $262 doesn't make a huge dent in that total, but we need to use some of our savings to cover a portion of summertime travel costs (Fortysomething is going back east to see his family). We expect to deposit a bonus or two into the account by end of summer, but the bonuses are not guaranteed.
  • That's over $250 that we could put towards debt, which is a top priority for us. At least to some extent, we're willing to make sacrifices to pay off that debt.
So, personal finance community, what say you: YAY or NAY to the summer race series? What would you do in this situation?

Disease Called Debt

Tuesday, March 20, 2018

We Choose To Do The Hard Things: On Debt Repayment and 50-Mile Runs

I ran across this circa-1962 JFK quote yesterday, and although I've seen it many times before, it resonated with me in a fresh way:

"We choose to go to the Moon! We choose to go to the Moon in this decade and do the other things, not because they are easy, but because they are hard; because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one we intend to win..."

Thinking about it, this as much as anything is why we are working so diligently (though imperfectly) to pay off our debt: because it is hard, and we want to see if we can do it. Because it requires long-term strategy, consistency, and determination. Because we are willing to accept the challenge and see it through. Because we are unwilling to postpone it. Because we want to earn the achievement of being debt-free. We're doing it not because it's easy but because it is pushing us.

Moreover, I chose to call this The 76K Project for a reason: my intention is for this process to be something my family works on together, something we all take satisfaction in and ultimately will take credit for. I want it to be one of those things where we look back as a family and say, "Remember those three years when we went on fewer trips and bought less stuff so that we could pay off the student loans?" I want it to be something my son takes notice of so that later, he'll use it as an example of concerted effort paying off.

I've also decided to do another hard thing, a new project, something that will organize and measure the best of my energies and skills: run a 50 miler. I love running long. I've run several marathons, completed a 36-mile stage race in the backwoods of Tennessee, and gotten 2/3 of the way into a 50K that I would have finished had I not missed a cutoff time by four minutes. Running big distances is tedious, time-consuming, and almost always painful. It takes massive amounts of preparation and training. Yet I can't think of many things that will measure the best of my energies and skills more than that. (I haven't picked a race yet. Stay tuned.)

It's no moonshot, but it's a big challenge. I want to see if I can do it.

What about you? How are you pushing yourself and challenging yourself lately? Do you do things just to see if you can do it?

Thursday, March 8, 2018

Staying Motivated When You've Got a $%&@load of Debt

When you're looking at months or even years of debt repayment, how do you stay motivated?

The scenario: You're saddled with tens of thousands of dollars of debt. That's the bad news. The good news: you've conducted an honest audit of your debts, figured out how much you can repay per month, and mapped out a responsible long-term repayment plan. (Massive kudos if you've done this: those are not easy steps to take.) 

The bad news, part two: It's a three-year (or four-year, or five-year) plan, because you've got a boatload of money to pay back.

In other words, you're going to be forking over your hard-earned money - money that could otherwise be padding your retirement, travel, or savings accounts - to your creditors for a very, very long time.

The $76K family first assessed its debtload and made a repayment plan in April of 2017. We've calculated a payoff date of November 2020. One year down, 2.5 years to go. It's a long road, and there are no shortcuts. Every month it takes a kick of determination to stick to the budget and make the payments we planned to make instead of sending in the bare minimum and using the rest for something fun and tangible.

So how do we stay motivated and committed to our plan when we're not even halfway there?

Although our path has veered somewhat, the following strategies have helped us generally stay the course:
  • We constantly remind ourselves that the faster we pay off our debt, the sooner we can deploy that money for things we really care about. At present, we devote about $2000 a month to debt repayment. That's a lot of cashola - almost $24K a year! Once our credit cards and student loans are gone, we can use that money to increase our retirement contributions, bolster our emergency savings fund, and (my personal carrot) plan some amazing trips to other parts of the world. That enticing vision keeps us going.
  • We want to set up our kid for success. The Kiddo is a major and constant source of motivation for us: we never want him to have to take on our debt, nor do we want our debt to hinder his opportunities in any way. By being open about our debt, we hope to instill in him the importance of financial responsibility so that he doesn't end up in our shoes later on. And by sharing our financial goals with him, we're allowing him to hold us accountable: if we tell him we're going to be out of debt in 2.5 years, we'd better make sure we're out of debt in 2.5 years. 
  • We're addicted to smashing debt. Every time we've met a goal - paid off the car loan or a credit card, or reduced our total debt by a certain amount - it's been a huge rush. That feeling is addictive, and we're always looking for our next opportunity. It's like climbing a peak, standing on the summit, basking in our success, catching sight of an even higher peak on the horizon, and immediately wanting to charge on so that we can do it all again.
  • We've built up momentum. They don't call it the Debt Snowball for nothing! When we first started paying off debt, our progress felt sooooo sloooooowwwwwwww. But once we obliterated our first credit card balance and applied that money to our car loan, we felt our pace accelerate. With every payoff, we're able to devote more and more money to our remaining balances, which means we see bigger and bigger chunks of debt fall away every month. It did take some time to get to this point, but it was worth it because that momentum carries us even when we feel ourselves getting tired of this entire process. In this sense, debt reduction gets easier with time.
  • We've got a whole community behind us. Are you following #personalfinance on Twitter? No? Go do that right now! Whereas the rest of Twitter is a raging dumpster fire of despair, the personal finance community offers support, advice, and encouragement. Every time I have a question, every time I want to throw in the towel, someone is there to help or share their own story. That makes a huge difference. You can have this community, too!
Yes, 2.5 years is a long time, and yes, we sometimes feel intimidated by the road ahead. But our motivation is strong and multifaceted, and I'm confident it'll propel us to our ultimate goal. 

What about you, fellow indebted people who are in the process of obliterating that debt? What keeps you going? 

Our First Year of Debt Repayment In Review

One year ago, we decided to finally get our financial house in order. I can't remember what, exactly, prompted our shift in mindset: th...