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:

Pros:
  • 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
Cons:
  • 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? 

Sunday, March 4, 2018

76K Life Update: A Move, A New Job, Debt, and Homework Wars

Fair warning: this post is going to be neither eloquent nor well-edited. Sometimes I think it's better to get something sincere and substantive out there than worry about the way it's presented. Also fair warning: this post is not all about debt repayment, saving, or money. Mostly it's just a life update.

Here's what's been happening in our lives:

(1) We moved. If you've been following us here or on Twitter, you're already aware of that, and you're probably praying that I won't bring up our old neighbors ever again. No worries! I'm not rehashing that horror show because my body and mind are now firmly ensconced in our new home, which is 10 thousand times better and for the following reasons:
  • The availability of actual counter and cabinet space.
  • Quiet.
  • An in-unit washer and dryer OH MY GOD HEAVEN.
  • Hardwood floors (well, okay, laminate - but it's not carpet, so I'll take it).
  • Location adjacent to a nature trail.
  • Did I mention the quiet? 
  • And as a result of the quiet, I no longer need my sleeping pill prescription.
  • THE BLARING SILENCE.
(2) I have a new job. And so far - knock on wood, because it's a little scary to say it - I'm enjoying it. I no longer go to bed dreading the next day. It helps that I'm able to set my own hours and no longer start work before 9 AM. This gives me an opportunity to drink coffee, grumble and mutter in peace, and transform into a semi-sociable human being before I have to communicate with anyone else. Know what else helps? Being able to work in my pajamas. A strong company culture. Earning a fair wage - that helps a lot. Also the fact that my cat is a fantastic coworker.

(3) We paid off $4000 in debt in February! Look for a debt update soon (tomorrow, if I can get my act together). We were hoping to pay off even more with our tax refund, but we used most of that windfall to break our old lease and get into this new abode. That's okay. That's what I call a worthwhile trade-off.

(4) Oh, homework. Let's face it: the 76K family is ridiculously, overwhelmingly lucky. Yes, life has been a whirlwind of change lately, but all of these changes have been positive. 

The biggest stressor in our house right now is homework. I will admit that as a child, I was a workaholic who made up my own homework if my teachers didn't assign me enough. In fact, my parents regularly tried to bribe me to work less. My kid is the complete opposite. If left to his own devices, he will simply not do it, rewards or consequences be damned. 

Do I expect him to be like me? No, but... I do expect him to do his work. Trying to find a way to help him that won't drive me crazy or guarantee his need for therapy later in life has been challenging. This sounds like such a small thing - and certainly is in the grand scheme of things - but I also know that there are other parents who have gone through this phase who know exactly what I mean when I say that it is hard.

Look it up online like I did, people: there are no easy answers to this conundrum.

Thoughts? Advice? LMK.

So that's us: 96% great, 4% needing a big old glass of wine. 

Tell me how you are: what's going well? What's been more stressful? And what kind of homeworker were you when you were a kid?

Monday, February 26, 2018

When Is Renting The Better Choice?

I counted it up today and realized that in the span of our 20-year relationship, Fortysomething and I have moved no fewer than 10 times. It's as if we can't get enough of the stress. Every single time we decide to do it, we tell each other it'll be no big deal. Every single time, I drop a couch on my foot, lose the hardware to a bedframe or table, and yell at Fortysomething in a parking lot, usually all within the first hour. Every single time, it ends with me swearing that we're never moving again. 

What did we do last week? 

We moved. Again. Big #10.

View from the new front porch
Moving happened not because we really wanted to, but because we were desperate to get out of our previous apartment. Our original plan had been to stay there until we were ready to buy a house and make that one last big move. Sure, the place was dim and ugly with circa-1985 kitchen cabinets that clung to the wall with a few rusty screws. Yeah, pot smoke would waft in through the vents from the adjacent apartment and turn our bathroom into a veritable hotbox every weekend. But it was affordable and ideally located, and we wanted to make it work. 

Then, last fall, new neighbors moved in below us and made our dilapidated but cozy abode almost unlivable. Our evening hours turned into a predictable cacophony of music, yelling, and door-slamming. To get some shuteye, I'd have to take a sleeping pill and blast white noise through my headphones. We had some hope when our apartment manager listened sympathetically to our complaints and directed us to call the cops so that he could start the eviction process. We did, but the only result was that the noise got worse and the people downstairs became more belligerent. We decided we needed to break our lease and go.


We started looking around and quickly received a reality check. At the moment, the local house-buying landscape is sparse, cutthroat, and expensive (the average price of a single-family home exceeds $400K!) and getting more so with every passing month. Every halfway decent listing on Zillow receives multiple offers, often sight unseen. It's common for listings to be posted and taken down within the span of a few hours.  We know from friends who have taken the buying plunge that even the "average-priced" homes are far from being turnkey. Many of them need substantial work in the form of new siding, new roof, new air conditioning system, and/or mold removal. In other markets, those issues would bring down the cost. Not here. 

The idea of taking on more debt to the tune of hundreds of thousands of dollars, competing with multiple other bidders on what would likely be multiple offers, and then, upon finally having the winning bid, shelling out even more cash for repairs and updates on a potential money pit sounded less and less appealing the more we considered it.

Combine that with the fact that a) we still have consumer debt and b) our down payment would be meager, and all signs seemed to point to Now Is Not The Time To Buy.

While we were debating home purchase pros and cons, we happened to take a tour of a rental duplex down the street. It became available just as we were tearing our hair out over the neighbor situation. The rent seemed borderline astronomical, but it had almost everything we wanted, including a big kitchen with lots of cabinet and counter space, an abundance of natural light (an absolute must for me), lovely views, and a centralized location. 




And here we are! It's a warm, bright space, and it already feels like home (even though we still have boxes and boxes to unpack).

Renting again wasn't in our plans, but we do acknowledge the benefits. If something breaks, on-site maintenance will be here within hours to repair it. We don't have to fix the roof, clean the gutters, or paint the siding. We can spend our weekends on our hobbies instead of our house projects. And this place is more turnkey than any home we could ever hope to buy here.

That said, in the interest of full disclosure, I'd be lying if I said I'm not a tiny bit disappointed that we're not purchasing. I grew up at a time when it seemed as though buying a home was the thing every adult naturally did as soon as they had a steady paycheck. There's a part of me that is still vehemently attached to that ideal and expectation, even though I know it's unrealistic for many Gen Xers, Millenials, and beyond. 

Will we ever purchase our own place? Honestly, I hope so. I really do. We love it here, and we're compelled to put down roots. But the steep up-front costs and almost certain inflation are always going to be enormous challenges for us. Only time will tell, but for now, renting is clearly the right choice for us.

Saturday, February 17, 2018

Here's What Our Financial Recalibration Looks Like

One thing we've realized over the past 10 months is that budgets and debt repayment plans require periodic recalibration. Emergencies happen. Cars break down. Jobs come and go. Living situations change. Financial situations fluctuate, meaning that the achievement of our long-term goals depend in part on our ability to adapt and be flexible.



When we started this process in April of 2017, we were working with the following constraints:
  • One of us had a somewhat unpredictable contract job
  • One of us had a regular but low-paying job
  • We were repaying three credit cards, two student loans, and a car loan
At that time, we were able to allocate a total of $1600/month to our debts and had calculated a Debt Freedom Date of March of 2022.

By last September, our situation had changed:
So we decided to ramp up our debt allocation to $2200/month, giving us a modified Debt Freedom Date of November 2020.

Now our plan and budget are changing again, and for several reasons:

  • We paid off Credit Card #2, which leaves us with one more credit card and two student loans
  • We broke our lease (via our tax refund) so that we can move from our raucous, sleep-inhibiting apartment building into a quieter but more expensive duplex 
  • My new job pays more...
  • ...but my health insurance is more expensive...
  • ...and we're putting slightly more money into both retirement and an HSA


So what does all of this mean in terms of actual numbers? 

Here's our totally transparent breakdown of the old budget versus the new one:


In sum: rent and health insurance are going up. We'll be contributing slightly more to long-term savings. Our debt repayment allocation is going down. 

Sidenote: We are well aware that the rental is expensive, though for our ridiculously-priced city and given its ideal location (right by a trail and within walking distance of school and work), it's considered reasonable. I'll write another post in a few days that explains our decision to keep renting instead of taking the leap into buying.

Here's what all of this means for the big-picture debt repayment plan:


This new plan is only a couple of months off from the old one in terms of the projected payoff date.

Of course I'm hoping that we'll be able to pay it all off sooner than that, and I think we will, especially if we receive work bonuses. But regardless, this new plan seems reasonable to me because it reflects goals and values that have become increasingly important to us over the past year:
  • Even though it's expensive, we love our community, and we're willing to pay the price to live here.
  • Our home is our haven. We value a quiet place where we can truly relax.
  • We want to become more dedicated to saving for the future.
  • We're determined to pay off this debt.
No doubt all of this will change again at some point. It's probably inevitable - because life - and that's okay. We can be flexible. We can adjust. Our pace of debt reduction might fluctuate, but we're moving forward nonetheless.

What about you? Have you recalibrated your finances lately, and if so, what prompted you to do so?

Friday, February 9, 2018

The Biggest Monster Debt Payment Yet

Yesterday was a big day in $76K Land, and here's why:


The above graph is a Personal Capital-generated visual of our credit card debt (y axis) versus time (x axis). Actually, it's incomplete: it shows our consumer debt load since November 2017. In reality, we started paying off the credit cards last April, back when the total balance was more like $23K.

Here's a more complete (though no less awkward) graph. This one starts in June 2017:

The arrows indicate where we just made a monster debt payment of $3000 (thanks to a big side hustle for which I finally received my check, and yes, we put every single dime of it towards debt), bringing our balance from $14,700 to $11,700! We've made some big payments before - when we paid off our car, for instance, and when we ditched Credit Card #1 - but this is the largest one to date.

Here's where our credit card balances stand now:

CC #2: $1,524
CC #3: $10,218

We should be able to pay off CC #2 within the next few weeks via our normal repayment schedule. As for CC#3, we're waiting on a tax refund that should dispatch a major chunk of it. The goal is to bring our total credit card balance to zero by the end of April. 

Sidenote: I feel compelled to point out that the first phase (i.e., nearly a year) of debt repayment was painfully slow and uneventful. The balance has decreased so incrementally that it's sometimes been hard to celebrate the small victories. Only after we assessed and stabilized our financial situation, established a workable budget, took advantage of some side hustle income, and built up some snowball-y momentum did we start seeing some real progress. It feels amazing.

With our student loans, we still have a long way to go... but the journey seems doable now.

Tuesday, February 6, 2018

Anatomy of Our Current Housing Dilemma

If you're following us on Twitter, you know that we're currently dealing with loud, inconsiderate neighbors in the apartment below ours. They blare music at night, hold thunderous conversations, interrupt our sleep, and basically make our home feel like a place we want to avoid. Our lease ends in June, so we're looking at another five months of living on edge.

If you've ever gone through something similar, please accept my sympathies. Having your space besieged by noise, especially when you're thisclose to drifting into dreamland, is both physically and emotionally exhausting. 

I have little control over what my neighbors decide to do: we've talked to them, we've contacted management repeatedly, and we've filed a complaint with the police, so we've kind of exhausted our options. Thus, I'm trying to focus instead on what we can do and what our options are.

The first thing we're trying to figure out is whether we want to stick out our lease or break it early. 

If we stay, I will probably continue to have nightly heart palpitations as the music starts blasting through my floor just as I've closed my eyes (or - probably a better choice - I will force myself to take up yoga and meditation). Money-wise, though, it's a strong option, and lately I've been surprised at just how motivated I am by our financial goals. So sticking it out is certainly not out of the question.

If we break it early, we'll have to pay rent until the landlord finds a new tenant. We're fairly certain he'd be able to do so within a few months at most. Our apartment is in an excellent location, has some gorgeous views of the surrounding hills, and is reasonably priced (all huge reasons we decided to lease this abode in the first place, and all reasons we were hoping to stick around for several years). But we'd be on the hook for up to $7000 in rental payments, and that's... a lot of money.

Regardless, we know we'll be out of here by June, so the question at that point is whether we should rent elsewhere or purchase a house.

The argument for purchasing is that we're committed to living in this town: we're not going anywhere. It's likely that a mortgage would be equivalent to (or possibly even less than) what we'd be paying in rent. The problem is that the housing market here is limited, expensive, and exceedingly competitive. The average price of a single family home is around $400K, and many folks offer to pay in cash to sweeten their bids (that is so far outside the realm of my own experience and abilities that I can't really wrap my mind around it). Our credit scores are excellent, our income is solid, and we're eligible for a VA loan, but we don't have a lot of money for a down payment. If we do decide to buy, we're likely looking at months of searching, multiple offers, and multiple rejections.

The whole thing sounds like a complete circus, and not in a good way. Part of me is so annoyed with the current housing market that I don't want to deal with it at all.

If we opt to rent again, we'll definitely be looking at townhouses or single-family homes. No more shared walls on all sides for us. Rent for such properties is expensive, and for what we need, it's likely to exceed a mortgage payment. There's no doubt that rent would increase on a yearly basis. On the other hand, we won't have to deal with maintaining or fixing up a new home, and we can find something that comes with all necessary appliances. 

Sometimes I wish we weren't so invested in such an expensive community, but here we are. We love our town. These are the choices.

If you have advice for us, I'd love to hear from you. Have you ever been in a similar situation? What was your course of action?

Sunday, January 28, 2018

New Job, New Income, New Benefits

My new job has started! In-person new hire training took place at company headquarters all last week. I came home on Friday. It's Sunday evening. I'm still trying to recover. Who knew job transitions could be so draining?

The upshot is that this post isn't going to be particularly clever or eloquent. 

Still, I wanted to share a little more about the details of my new pay and benefits because they pertain to our finances and our debt repayment plan. If you're uncomfortable with income talk, then this post is probably not for you. I'm putting it all on the table for a couple of reasons: first because I'm a big fan of transparency, and second because it's easier for me to discuss the implications of this job change if I don't have to be coy about the actual numbers.

Here's the rundown of the Big Three (income, health insurance, and retirement):

Income: My new work-from-home income is $58K per year, plus possible bonuses. My previous job paid $35K per year (of course, that was before taxes, health insurance, and a required - required! - 11.5% contribution to my retirement fund... so my actual take-home pay didn't leave much room for things like, you know, paying the rent). Needless to say, the pay bump will have a major effect on our debt repayment. Once I start receiving a biweekly income, we'll be able to increase the amount budgeted for credit cards and student loans from $2200/month to at least $2500/month. 

I was initially planning to devote more of my pay to debt repayment, but then I heard about the company matching for HSA and retirement and realized I couldn't pass up free money. See below.

Health insurance: As I did at the end of last year at my previous job, I chose a high deductible health plan with HSA. Fortysomething still has comprehensive health coverage through his work, so my plan covers myself and The Kiddo. The plan has a $2600 family deductible and a $6500 family out-of-pocket maximum. The health insurance itself, including dental, comes out to about $175/month. I'll also contribute $173/month to my HSA, which my employer will match. Yay matching!

Retirement: My company offers both traditional and Roth 403b retirement plans. I selected the traditional 403b for tax purposes. Regardless of my contribution, my employer automatically contributes the equivalent of 3% of my salary. They offer an additional match of up to 3%, which of course I'll take full advantage of. I plan to contribute $185/month to my retirement fund. (Once we have more of our debt paid off, I'll invest more.) Can you tell that I'm pumped about the matching?

When all is said and done, the pay increase won't affect our budget that much because most of our "extra" earnings will go straight into debt repayment. Lifestyle inflation is not an option. If we stick to our adjusted plan, our credit cards will be paid off by August at the latest... and by the end of May if my tax refund calculations are correct. Then we move on to student loan repayment, which will take another two years (uuuuughhhhh).

Don't get me wrong: this isn't all about money for me. I'm excited about the job and the opportunity to help the people I'll be working with. But I'm also incredibly grateful to be able to ditch this debt more quickly and start getting more on track in the savings department.

Wednesday, January 17, 2018

Tips for a Sustainable Side Hustle

Last September, determined to ramp up the pace of our debt repayment, I decided I needed to make more money. My regular paycheck was consistent, but it was also relatively meager. Forget the credit card bills - it barely covered the rent. When a search for more lucrative employment initially yielded few opportunities, I took a popular page from the personal finance playbook and leapt into the world of side hustling. (A side hustle is basically a part-time job designed to supplement other employment, and at present, it's a much-touted way to plump up your income.)

Faster than I expected, I landed a position as an adjunct online science instructor. The first term went well: My students were engaged and enthusiastic. The workload felt reasonable. The material was interesting. Best of all, the extra cash made a satisfying dent in our debt. Side hustling FTW!

Soon I was invited to take on a second class. I said yes immediately, eager to maintain momentum. Then an editing job landed on my plate. I wasn't super excited about it and didn't know what to expect, but I said yes to that, too, because if one side hustle was good, then surely a second one was even better!

It was a lot, to say the least. The last two months of 2017 found me burning the candle at both ends: working 8 to 5 at my regular job, spending a few minutes with my family at dinner, and then digging into two side hustles before crashing into bed around 10, only to repeat the same process the next day. Oh, and searching for another full time job and trying to have a social life, too. What started out as a positive experience slowly morphed into one that made me grumpy and frustrated on a daily basis, especially when I realized that the editing gig was a poor fit for me.

Now I'm putting the side hustles on hold. My new job has a one-year non-compete clause, for one thing. For another, I was more than ready for a break. I just plain wore myself out.

Although I'm not saying never again, the next time I pick up a side hustle, I'm absolutely going to do some things differently. Here's the advice I'd give to myself and to anyone else venturing into the realm of side hustling:

1. Don't pick a side hustle that you don't enjoy. I genuinely enjoy teaching, so I didn't mind logging into the classroom for two hours every night. It was fun to talk science with my students and see their interest in the topic grow over time.

The editing gig, on the other hand, was a slog from day one. I regretted it almost immediately. I quickly discovered that it would require way more time than I'd initially anticipated and that what I was being paid wasn't reflective of the amount of work I was putting in. The instructions were haphazard and vague. While completing my tasks, I regularly felt the urge to cry and/or pound my head on the keyboard - but it was too late to back out.

It seems obvious, but it's worth reiterating: because a side hustle involves work in addition to your regular work, often during your "free time" when you might rather be hanging out with your friends or family, make sure you choose a gig you like. Be a little picky! Preferably, choose something that feels more like a hobby than a job and gives you an opportunity to employ your skills and strengths.

2. Calculate your pay per hour, and assess whether the compensation is appropriate. From personal experience now and in the past, not all side hustles pay fairly. Talk to others who have worked similar gigs, and use sites like Glassdoor.com to research what the going rate is.

Many side hustles pay a set fee instead of an hourly rate. Fortysomething and I suspect that some companies go this route because it allows them to hide the fact that the pay is actually pretty underwhelming. If you've been offered a fee for service, don't let yourself get carried away by the big shiny number in the offer letter until you have a chance to do the following:
  • Estimate how much time you'll need to devote to the project (easier said than done in some cases, but try to ballpark it).
  • Calculate what you'll make per hour after taxes. 
  • Assess whether that hourly rate is fair.
Example: Let's say I'm offered $1000 for a project. That sounds like a lot, and it is, but whether it's actually worthwhile depends on the amount of time I'll need to complete that project successfully. If the project takes 20 hours, that's $50 per hour. Sign me up! If it takes 80 hours, that's $12.50 per hour.  Probably a no-go.

Only you can decide what qualifies as fair pay for you, but just remember that your time is incredibly valuable, especially given that you're using time that would otherwise be spent on more personal endeavors. Your side hustle should be worth your time. 

3. Pace yourself. When you have a big financial goal - paying off debt, saving for a vacation, stocking up your kid's college fund, getting off the paycheck-to-paycheck hamster wheel - it can be tempting to take on every opportunity that comes your way. That's what I did because more side hustles mean more money, and more money means less debt, and faster.

The danger in taking on too much at once is that you'll quickly burn out. Instead, start with one side hustle and make it your only one until you're comfortable with what it entails and how much time it's going to require. If things are going well after a few weeks or months and you're still hankering to take on another job, then give that a go. But build up slowly so that you can figure out what your limits are. Otherwise, you may find yourself feeling so overwhelmed that you can't finish all of the projects you signed up for.

Also, don't compare yourself to others. There will always be people who seem to turn 24 hours a day into 48, who can work multiple jobs without losing steam, who seem to thrive on a few hours of sleep a night. I'm not one of those people. Maybe you're not, either. And that's okay. Run your own race!

Pacing yourself is particularly important if you're using your side hustle to dig out of debt and/or stop living paycheck to paycheck. In both instances, consistent and slow progress is more sustainable than a set of hustles that have you working nonstop and exhausting yourself in the process. Note to self: it's okay to go slow as long as you're moving forward.

4. If you start to feel bitter and angry about the time you're devoting to your side hustle, ditch it. This goes back to Tip #2: life is short. It's too short for wasting your time on things that make you feel bad on a regular basis. If your side hustle is constantly stressing you out, making you bitter, or igniting frustration, consider cutting back... or maybe even cutting out. It doesn't mean you have to walk away forever. Just take a break.

If you've side hustled before, what advice would you give to others? In particular, how do you manage your time when you're working multiple jobs?


Sunday, January 14, 2018

New Job = Ch-ch-ch-CHANGES

It's no secret that I'm over-the-moon excited about my new job. If you follow us on Twitter (you don't follow us on Twitter?! Join us at @The76KProject!), you know that I was live-Tweeting my last week of work and that I was going slightly bonkers because time seemed to be approaching my final day in an excruciatingly slow, asymptotic way. I was convinced that Friday at 5 was never going to arrive.

(Spoiler alert: it eventually did.)

Now my desk drawers have been cleaned out, my access card has been deactivated, my power strip is off, and I've said goodbye to the most wonderful coworkers on the planet. This former employee has left the building for good. Time for my next adventure: a full time work-from-home job.

With the new gig comes a series of big changes for me and for the whole 76K Project family, cat included:

(1) Goodbye cubicle, hello "home office": Whereas my previous work took place in a building that bore a terrifying resemblance to the office in Office Space, the new job is an entirely work-from-home position. Goodbye, cubicle, and good riddance. Instead, I'll set up shop on my "desk" (aka card table) in our "home office" (aka our second bedroom) with my new "coworker" (my cat, who I'm guessing will sleep most of the day except for conference calls, when she'll likely jump on my computer and stick her butt in front of the camera). 

Am I concerned about being in my house all. the. time.? Well... yes. That does worry me a bit. However, one of the best things about my previous job was that it offered me an opportunity to meet people in my community. I've made friends and joined organizations. So even though I'll be spending a loooooot of time in my house, there's no excuse for me to become a hermit.

(2) A bigger paycheck: Honestly, this was one of the most appealing things about the new job. Not because it means we can buy more stuff, but because it means we'll have more money to allocate to our debt payments. Come February, we'll ramp up our monthly debt payments from $2200 to $3000. Look for an upcoming post on how this will affect our debt payoff timeline (if you're interested in our current timeline and how we came up with it, you can find that here)

The higher income will also be helpful in that we're starting to think about purchasing a home. The location of our current place is as perfect as it gets, but we're tired of sharing walls with noisy neighbors, and we need a little more breathing room. Given that there's not a big difference in mortgages and rent prices here, purchasing seems like a reasonable step - if we can get a good deal. We'll see. But the bigger paycheck will definitely help in this respect.

(3) Less comprehensive benefits. My previous job came with outstanding, affordable health insurance coverage and an 11% retirement match. My new job comes with a decent but more expensive health insurance plan and a match up to 6%. Given that my family's in decent health (knock on wood), I'm okay with the insurance changes. As for retirement, you can bet that I'll take advantage of any free money that's on offer. 

(4) No more side hustle: My new job comes with a one-year non-compete clause, so I'm giving up my side gigs. I'm fine with it. I'm burnt out on side hustling. Working a regular 40 hour job, helping The Kiddo with homework, keeping the house reasonably clean and the family reasonably fed (of course Fortysomething contributes to these tasks, too), AND devoting hours of my nights and weekends to part-time work turned out to be too exhausting to be sustainable over the long term. 

Don't get me wrong. The side hustle was a great experiment, and it certainly helped us kick our debt repayment into overdrive. But it's no longer manageable, so it's time to set it aside - with the understanding that it may be an option again somewhere down the road.

(5) No more walking to work (but I'll still be walking!) Last spring, I decided to leave my car at home and walk the 5 miles round trip between my house and my office. Those walks turned out to be one of the best parts of my day. I looked forward to the time outdoors and the opportunity to transition between home and work, work and home.

There's no place I'd rather be than outside, so even though I'm losing my commute, my goal is to still walk and/or run five miles every day, ideally in the morning. It's good for my health and good for my mind. 

What about you? If you've changed jobs, what was that transition like? What changes did the job shift entail?

Friday, January 5, 2018

Why I Decided to Quit My Job and Find a New One

The best present I received this past holiday season was one I've been eyeing for months: a new job. After weeks of interviewing, reference-requesting, and nail-biting, I finally received the offer the day after Christmas. When my new boss called with the good news, it was all I could do not to jump up and down and scream as if Publisher's Clearinghouse had just showed up on my doorstep. (Don't worry, folks, I played it cool. Or cool-ish.)

Pursuing a new job - scouring the job boards, revamping my CV, putting myself out there, knowing that I might only get a few bites, if any - felt terrifying. There was a big part of me that wanted to just stay where I was at for the sake of convenience and comfort - the devil you know vs. the devil you don't and all that. Plus, I can't deny that my current job comes with several attractive perks, including a competitive benefits package and plenty of vacation days. I'm rarely asked to work outside of the 9 to 5, and even when I do, I'm awarded generous flex time. Most importantly, my coworkers are some of the most genuine and empathic people I've ever met.

Given all the positives, I told myself to just stay put and adjust my attitude. And I tried. I really did. I pep talked myself every morning on my walk to work. I reminded myself of all the things going well in my life. Who was I to complain?

But despite my best efforts, I was so. damn. unhappy. with the job. I tried to hide it at first, but eventually my negativity started to seep out around the edges. Getting up on weekdays began to feel intolerable.

Finally, I took a deep breath, tossed the fear aside, and committed myself to a full-on job search. And that, as it turns out, was a very good life choice.

Ultimately, there were four factors that prompted me to get past my fear and seek out another job:

(1) Lack of advancement opportunities: Looking around, I saw that even my most dedicated, knowledgeable coworkers, people who had been there for years, hadn't been promoted despite their talent and innovative ideas. Advancements were few and far between because leadership roles were few and far between. The same seemed to be the case for professional development opportunities. When, after months of mustering up the courage, I asked about the possibility of attending industry workshops or conferences, I was told that there just wasn't enough money, and besides, nobody really needs that stuff to be successful in the job. The message I received was, Hey, this gig's not hard, right? We won't ask too much of you, but in return, don't ask too much of us.

I tried to picture myself in two years, or three years, or five years if I stayed with that organization, and the image never changed: it was just a vision of me in the same cubicle, doing the same stuff, over and over again. And that felt suffocating to me. I've always pictured myself in a career that offers plenty of room for professional growth.

(2) Low pay, with no raise in sight:  I've written before about what an expensive city we live in. The disparity between my salary and cost of living was so great that without Fortysomething's income, we wouldn't be able to afford to live here at all, not even in the smallest studio apartment. When recently asked about the prospect of raises, my institution's administration was forthright in sharing that no pay increase of any kind - not even a cost of living increase - was imminent. 

I calculated what I was making per hour, an exercise that was as enlightening as it was depressing. The question that started to float across my mind on a regular basis was, Am I willing to give out my time for such a small sum? And increasingly, the answer became obvious: no. It's not all about the money. It's about how I use my time, and time is far more valuable than what I was receiving for it.

(3) My mental health: As a die-hard introvert and reluctant empath, customer-facing jobs (especially those that take place in person) are challenging for me. And my current job is all about customer service. During our busiest times, I'd meet with up to 16 people a day, back to back, with only a short break for lunch. Like a human sponge, I'd soak up whatever potent mixture of anxiety, worry, depression, frustration, anger, and/or excitement each individual brought into my office. The thought of hiding under my desk started to sound more and more appealing.

It was exhausting, and yet as the months wore on, I slept less and less. I just couldn't seem to shut work out of my brain. Every night, I felt overcome by a breath-taking anxiety. Some nights, I didn't sleep at all. I ended up missing a bunch of work, using up all of my sick time and part of my vacation time, and going to the doctor for sleeping pills. She gave me a prescription, but my anxiety was so through-the-roof that she also advised me to quit my job as soon as possible. 

Perhaps due to sleep deprivation, I also felt increasingly depressed. What was supposed to occupy my mind for only 8 hours a day started to become a waking obsession and thought spiral: I don't like this job. What should I do? What's the answer? What's the best course of action? Get with the program! Try harder! Stop whining!...  I don't like this job. What should I do? On repeat all day, every day. Not productive, fun, or healthy.

(4) An atrophying skill set and knowledge base: When I accepted this position, I went in knowing full well that it was in a different field than that of my previous career. But what I couldn't predict was how much not utilizing my background and experience would bother me and how panicked I would feel as I realized that concepts I'd once known like the back of my hand were starting to atrophy thanks to lack of use. 

That wasn't my employer's fault, of course. And overall, it's been a good thing: being in this job has helped me better understand what I really want to do, and the field I really want to pursue.

The new job fits the bill perfectly.

So here's the advice I'd now give to the me of three months ago, or anyone else who's unhappy in their job: searching for a job is hard work. It's work on top of the work you already have. It feels like it takes forever to even just get an interview. It's scary. It's full of uncertainty and waiting.

But your job shouldn't be creating 40 hours of weekly unhappiness. You deserve to have a job that doesn't make you lose sleep, that offers decent pay and opportunities for growth, and that harnesses your knowledge, experience, and passion. You shouldn't settle for less.

It was an exhausting experience, but so well worth it, and I'm excited to see what I can do with this new opportunity.

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...