Saturday, July 14, 2018

Sometimes You Gotta Get Away: Our Mini-Vacation to Colorado

I went into this summer knowing that even with our deep-seated commitment to our financial goals, we were eventually going to want to get out of town. See some new sights. Traverse some new trails. Try some new beer. Spend some money.

Sure enough, we started getting antsy for a break in mid-June. Obliterating our credit card debt gave us the perfect excuse to celebrate with a mini-vacation. We decided that for just one month, we'd pay the bare minimums on our student loans and use our remaining disposable July income for a much-anticipated getaway, one that would give us a breather from our debt repayment and the daily grind. 

The destination: the mountains of Colorado

We hemmed and hawed for weeks about our destination. Our requirements: it had to be beautiful and within a day's drive (flying was out of the question due to time and financial constraints), and it couldn't be too hot. We considered New Mexico and coastal California before settling on southwestern Colorado and the breathtaking, cloud-skimming peaks of the San Juan Mountains. Fortysomething and I spent time there while I was in college, and we've been wanting to go back for years. Our only concern was that the area was being ravaged by the 416 wildfire, which ultimately burned more than 54,000 acres. With rain in the forecast, we took a chance and decided to go anyway (our gamble paid off: by the time we got there, the fires were largely out thanks to the tireless efforts of fire crews).

The San Juan Mountains of southwestern Colorado

Five days of R&R

Day 1: After an uneventful six-hour road trip, we arrived in the laid-back creekside town of Durango and treated ourselves to a sushi dinner followed by homemade mulberry crumble ice cream (the sushi was okay; the ice cream was scrumptious: creamy vanilla ice cream streaked through with crunchy crumble topping and fat, fresh, tart berries). We moseyed along Main Street and peeked into shops before heading to the store to stock up on groceries and get gas. 

Durango Main Street. It was decked out with HERO signs for the firefighters.
Then we ventured up the highway to our rental, a vacation condo that we booked for three nights through VRBO. Tucked away into the mountainside, it offered a secluded retreat that was still central to everything we wanted to see and do. It featured two bedrooms, access to a swimming pool, amazing views, and a fully-equipped kitchen, allowing us to prepare some of our own meals instead of depending entirely on restaurant food.

Views near our rental
Day 2: We explored the old mining town of Silverton, where we had lunch at a sandwich shop (three sandwiches plus soda = $38...) and admired the Hardrock 100 ultramarathon rock (shown below in all its glory). Free things to do in Silverton are kind of limited, so we hopped back into the car, toodled around, and eventually found ourselves at Andrew's Lake, a gorgeous spot with hiking trails and fishing access. It would have been easy to spend an entire day there, but the troops got tired and cranky so we returned to the condo for a swim.

Silverton, CO: elevation 9,318 feet
Long-distance runners will understand the significance of this painted rock,
which graces Silverton's main street
Andrew's Lake was one of our favorite stops of the entire trip
Day 3: The Kiddo planned our schedule that morning and chose a diesel-powered train ride. In all honestly, this was really not my thing: the train was crowded with people who seemed to lack a basic understanding of personal space, and the whole setup was pretty kitschy. Plus, it was insanely expensive... like, Disney-level expensive (I said yes to the idea before fully evaluating the cost). But we did see some gorgeous whitewater rapids, and the Kiddo enjoyed himself immensely... so I'll call it a win. Afterwards, we drove back to Durango, visited the fish hatchery (it's free!), strolled along the bike path, had homemade tacos full of fresh local ingredients at Zia Taqueria, and enjoyed a few pints at Ska Brewing. (Did I mention that we absolutely love, love, love Durango?)

I'm comfortable dangling this close to the edge of a bridge.
I am not comfortable being this close to so many people.
View from the bike path in Durango
The SuperTaco at Zia Taqueria in Durango was perfection
Day 4: We checked out of the condo and drove north to Ouray, known as the "Switzerland of America" because it's surrounded on three sides by impressively steep mountains. Before we were married, Fortysomething and I spent several days here holed up in a hotel room during a snowstorm. It was very romantic. You can imagine, then, that my memories were of the rose-colored-glasses variety. What we found as we re-acquainted ourselves with our old haunt was a town that, while still charming, seems somewhat tired and worn despite its eyebrow-raising price tags. The vibe was just... off somehow. Whereas Durango felt cheerful and energetic, Ouray felt like it was in need of a nice long nap.

The Kiddo proudly took this shot of Ouray
We ditched the crowds of Ouray and went to the next town over for a picnic lunch in a tree-shaded park. Later, we enjoyed a taco dinner at the delectable Taco del Gnar. Important side note: I would happily eat tacos every day at every meal for the rest of my life.

We stayed at a Comfort Inn that night and... I kind of wish we hadn't. It was fine, but at $155 a night, it was just too expensive. On the plus side, it did come with a full breakfast.

Day 5: I got up early to run at the track in downtown Ouray, and then we packed up the car to leave. A highlight of the trip home was a foray through Monument Valley, which is particularly spectacular when the monsoon clouds start rolling in.

Monument Valley

Breaking down the budget (and what we'll do differently next time)

Last summer, one of my big financial wins was taking a cross-country trip on the cheap. This trip was... not as budget-friendly. In the interest of full disclosure, here's a complete tally of our trip expenses:

Accommodations: $744 
Gas: $53.60
Food (including groceries and restaurants): $396.69
Activities and souvenirs: $188.71
Cat boarding: $102
Total: $1485

We exceeded our trip budget by more than $300, but instead of beating myself up about it (why ruin a perfectly enjoyable vacay by lamenting the budget in retrospect?), I'm just going to consider what we'll do differently next time:

  • The condo rental was comfortable and cozy, and I'm glad we stayed there. In the future, though, we'll pay more attention to fees that get tacked onto the initial cost. For example, the condo was listed at a reasonable $129/night, but the total price was jacked up thanks to an automatic $100 cleaning fee and a $57 service fee.
  • When (not if!) we go back to the glorious San Juans, we'll probably bring our camping gear and camp for a couple of nights to save money. I can handle that. Plus, now we know where the good local camping spots are.
  • We'll try to avoid expensive one-night hotel stays during the tourist season.
  • While I certainly want the Kiddo to help plan our activities and excursions, I'll research costs in more detail before saying yes to what he wants to do.

Thankfully, although we went over budget, it didn't break the bank and we didn't accrue any credit card debt in the process. We had some financial flexibility on this trip, and it felt rather luxurious. I can't remember the last time I went on vacation and didn't low-key panic about what we were doing to our finances.

In short, I couldn't have asked for a better vacation. Sure, I wish it had been longer, but we packed a surprising amount of activity and relaxation and fun into just a few days. I have a feeling that this trip is going to be a meaningful one for my family, one all three of us will remember fondly and talk about for years. 

In that sense, it was worth every single penny.

Friday, July 6, 2018

Our July 2018 Budget and Credit Card Zero Celebration!

First: We did it! We paid off the credit cards!

I'm still in semi-disbelief, but the credit card balances are now ALL at zero. The big moment happened the day before Independence Day:

Actually, it almost *didn't* happen, because the bonus we'd been planning to use for the final payoff didn't show up when it was supposed to. I got impatient, dragged the money over from our emergency fund, and insisted that we eliminate the remaining $1500 anyway. Boom! (Bonus arrived today, so I replenished the e-fund.)

The fact that we managed to meet this milestone, and well before we ever expected to, feels shocking in an is-this-really-happening (or as my former therapist would have coached me, did-we-really-make-this-happen) sort of way. It hasn't sunk in yet. Credit cards have been my ball-and-chain financial reality for so long that the idea of existing without carrying a balance seems... outside the realm of my understanding. And yet here we are!

July budget: Paying the minimums while we go have fun

As we mentioned a couple of posts ago, we're taking the month of July off from intensive debt repayment to celebrate our credit card win. This means that we'll be paying nothing beyond the minimums on our two student loans.  The rest of our disposable income will be used for a mini-vacation to the mountains and some kitchen supplies. 

Vacay means contending with the following expenses:
  • The cat needs to be boarded (because our friends are all away or not interested in hauling themselves across town to feed our charming little beast)
  • We need vacay lodging (I rented a somewhat reasonably-priced place through VRBO)
  • We'll be going out to eat more (but we'll also be eating meals at home in the rental)
  • We'll be doing some fun and not-free activities
Repeating to myself: I will keep it in budget. I will keep it in budget. I will keep it in budget.

Anyway, here's the July plan in all its messy glory.

July 2018 Budget:

Recurring Fixed Expenses:
  • Rent: $2100
  • Student loans: $650 
  • Phone bill: $78
  • Internet: $65
  • Auto and renter's insurance: $73
  • Thousand Trails: $108
  • Netflix: $13
Recurring Variable Expenses: 
  • Utilities: $180 (darn air conditioner... but it's been necessary the last couple of weeks)
  • Groceries: $800 (don't say it... I already know)
  • Gas in car: $150 (higher this month since we'll be road tripping)
  • Very Expensive Feline: $170 (boarding + vet fees - I am probably overestimating this)
  • Miscellaneous: $390
One-Time Expenses:
  • Vacation + home supplies: $1100
Total budget for July 2018: $5,877
Disease Called Debt

Sunday, July 1, 2018

June Goals: Win Some, Lose Some

June didn't work out quite the way I'd planned. Oh well.

I'm starting to think that unless we're making financial goals - on the whole, we're pretty good at meeting those - I should stop making goals at all. Or perhaps a better approach would be to label things as goals AFTER I've achieved them, similar to the way in which I create to-do lists that consist mostly of tasks I've already completed so that I get the satisfaction of crossing them off.

I don't think I'm doing goals or lists correctly. Can anyone relate?

Here's how I did with my June goals:

(1) Dry June: You may recall that I decided to stop drinking for a month. It was a really good idea for multiple reasons, one being that May was boozy and my liver needed a break. Unfortunately, this effort was a total failure. Okay, not a total failure: I made it about two weeks without imbibing. Then Anthony Bourdain died. I'm not sure why his passing hit me so hard; I've always liked him and respected his work, but I've never been one to get obsessed with celebrities. Like when Prince died, I just did. not. understand. why some of my friends were so upset about the death of someone they'd never met. Now I get it.

Anyway, Anthony Bourdain's death seemed to warrant a toast consisting of several beers. Right after that, the shitty news really hit the fan: I was beside myself upon reading that kids were being separated from their parents at the Mexico/U.S. border. And then the end of June brought the revelation that a Supreme Court justice is leaving, possibly endangering Roe vs. Wade... I'd already been panicking about the state of the country, but this month really put that panic into overdrive. Cue that glass of wine with dinner.

In short, I didn't meet the goal. On the other hand, I did drink significantly less than I did in May, so... yay?

New approach: instead of cutting out the booze completely, I'm going to adopt the approach of only drinking on the weekend. That's a goal I can meet.

(2) Paying off Credit Card #3: We planned to pay off our last credit card by the end of June, thanks to a handful of bonuses, a side hustle, and a family gift. As of today, we have a balance of $1500, but we'll pay that off tomorrow when the last bonus hits our bank account. So we didn't meet the goal exactly on time, but... we're still meeting the goal. I'm calling this a win.

(3) Increase in running mileage: This was not a clear, set June goal. I made it up just now. Turns out that I was super consistent throughout all of June, hitting the trails five days a week and logging a total of nearly 150 miles. My highest-mileage week was 40 miles. I suspect the fact that this was a difficult month played a role here, too. Running helps me process and compartmentalize information, and I was in serious need of processing and compartmentalizing. Running helps calm my mind, and since my mind seems to be in a constant state of worry these days, I'm running more.

I also worked on my goal to be more involved in the running community. I volunteered with the Couch-to-5K group on most weeks, except last week when I had to get my kid to soccer practice. I'll be volunteering with this program again in the fall.

Goals for July (if I dare to make them)

My main goal for July is to just enjoy it. I think I can handle that. Next week we're heading out of town for a mini-vacation, and I can't wait. I need a change of scenery. We're taking our son to a place in the mountains where Fortysomething and I have some history and where I feel inspired. When we come home, we'll be outfitting our house with some much-needed kitchen gear. What we won't be doing this month is obsessing about our debt: we'll make the minimum payments on the student loans, but other than that, our disposable income will be used for fun stuff. 

That said, another July goal will be to develop a strategy for debt repayment moving forward. Do we put the student loans on the back burner and build our emergency fund? Do we blaze forward with the loans and leave our little emergency fund as is? Do we try to split the difference? We need some time to think it through.

Lastly, running goals: I'd like to ramp up my mileage a little more (mostly via longer long runs) and select an ultrarun for the fall. For some reason, I've been very hesitant to actually sign up for a race, but given that I'm doing all this training, I need to go for it.

What about you? How did you do with your June goals, and what are your goals for July (if you do goals)? 

Sunday, June 24, 2018

How We Crushed Nearly $25K Of Debt In One Year (Our One-Year Blogiversary Post!)

It's Been A Year

Exactly one year ago today, I launched The $76K Project with this post: Introducing the $76K Project (man, I come up with such inspired titles!) In it, I wrote the following:

I'm putting all this out there in part to help myself stay motivated and in part because I know we're not alone. People don't talk about their debt, and if there's anything I've learned from our experience, it's that the choices we make with our money don't always reflect the reality of our financial situations. We are not the only ones who've spent what we don't have and in the process dug ourselves into a deep hole.

At the time, we were more than $76K in debt and coming to terms with what it would take to get it paid off. Fortysomething was working a sometimes lucrative, but sporadic, contract gig, while my 8-to-5 job paid so little that it barely covered the rent for our small, noisy apartment. We were implementing a budget but struggling to establish realistic expectations. We had a car loan, three credit card balances, and two student loans. Using the What's The Cost calculator, we estimated that it would take five years to demolish our debt.

Budgeting - once we finally managed to crack that nut - helped us reduce our expenses; meanwhile, increasing our income accelerated our initial debt repayment plans. Within the past year, Fortysomething landed a salaried position. I took on a side hustle, and then, after a long and tedious search, I found a new job that paid more. With extra money to deploy, we were able to pay off the car and two credit cards.

That said, we've also encountered some challenges. Last February, the unrelenting noise at our previous apartment became so unbearable that we used our tax refund to break our lease and move into a pricy duplex. It was a move that cost us thousands of dollars, money that could have gone straight to our debt. Instead, we used it to secure the luxury of sleeping at night.

At the end of March, the Kiddo woke up with a stomachache that turned out to be appendicitis. One ER visit, a 40-minute surgery, and an overnight hospital stay later, and we were on the hook for over $6000 in medical bills. We've paid about half of it and are using monthly payments from our HSA to cover the rest. (Admittedly, I have not included this expense in our debt breakdown here because... I don't want to. LOL. The HSA money comes straight from my paycheck, and the monthly hospital fees are withdrawn directly from my HSA, so the bills do not affect our budget.)

Anyway, let's get down to what you're really here for:

How much debt have we paid off over the last year?

Car loan: Initial balance: $1,784. Current balance: $0. Amount paid off: $1,784.

We paid off the car last October. It's our only vehicle, and we enjoy being a one-car family. Even more, we enjoy not having a car payment. Our plan is to drive this vehicle for another few years until it just won't move anymore. Once it dies, we'll either purchase a used car in cash or try to get by with walking, biking, public transit, and Uber.

Credit card #1: Initial balance: $1,553. Current balance: $0. Amount paid off: $1,553.

We paid off this credit card last July. It was our first debt win, and it came at a time when we could have easily lost interest in the process. Instead, it motivated us to keep going.

Credit card #2: Initial balance: $9,667. Current balance: $0. Amount paid off: $9,667.

Paying this one off back in February felt amazing. It was here that we really started to notice the snowball effect of paying off the car and credit card #1. We used part of our tax refund to wipe out the last few thousand dollars.

Credit card #3: Initial balance: $11,067. Current balance: $3,821. Amount paid off: $7,246.

This is the card that we're determined to pay off by the end of this month or the beginning of July. As I've mentioned previously, we had some help with this one. A family member gifted us some money (full disclosure there), and Fortysomething's been earning some summer side hustle cash. His side hustle salary plus his end-of-year bonus should be enough to take care of the current balance (perhaps with a little help from our savings, which I'm willing to dip into in order to get this done).

Student loans: Initial balance: $53,219. Current balance: $49,305. Amount paid off: $3,914.

For the sake of brevity, I've chosen to lump our student loans together. The one in my name has a balance of $10K, whereas Fortysomething's loan is about $39K. As you can see, our debt snowball hasn't touched this debt yet, but we're expecting the payoff pace to pick up come August.

When you add it all up, as of today, we've paid off $24,164.

Cue the fireworks!

I feel good about that. That's better than I could have ever imagined when we started. 

Starting to look at net worth

Recently, several members of the personal finance Twitter community encouraged us to start tracking our net worth in addition to our debt load. Because net worth takes into account both reduced debt load and savings/investments, changes in net worth often occur at a faster pace than debt reduction - thereby making it a rewarding number to track over time.

We've been using Personal Capital to monitor our credit card and loan balances, and I've taken cursory glances at our net worth for the past several months. I'd been fixated only on the fact that that number is very, very negative, but then I dug deeper, focusing instead on how much our net worth has changed. As it turns out, since last November alone (November was when we started using Personal Capital), our net worth has increased by $25K. It's still negative, but it's not as negative, and the rate of increase has picked up.

How did we make this happen?

Again, I would have never - NEVER - predicted that we'd dispatch nearly $25K of debt in the span of 12 months. Reflecting on our journey, I credit our progress to the following factors:

(1) Obsessive tracking. Since February of 2017, I've tracked all of our expenses in an Excel spreadsheet. I'm going to continue doing it. It's tedious, but it's become a habit, and it keeps me in touch with what we're spending on a daily basis so that we can make adjustments as needed. Several people have suggested that I simply use YNAB or Mint. For me, though, manually logging our receipts makes all the difference.

(2) Spending less. We're certainly not the most frugal people you'll ever meet (you can tell by our grocery budget, which continues to be a hot mess), but we've dialed back our spending in a big way since starting this journey. We no longer book last-minute long-distance trips, make random furniture purchases, or replace our clothing all at once. We go out to eat less and participate in more free community events. When we do need to buy a more expensive item, we'll plan at least a couple of months in advance and fit the expense into the budget. 

(3) Earning more. Honestly, this is a big one. A higher salary is what's really allowed us to make such big strides over the past few months. Yes, spending less certainly helps, but on a limited budget, it gets you only so far. We were making so little to begin with that even with drastically reduced expenses, it would have taken us five very austere years to pay off all our debt.

(4) Letting good enough be good enough. We are by no means doing this perfectly. We often come in over budget. Sometimes we go out to eat more frequently than we should. In my opinion, we spend way too much on groceries (I'm not the one who grocery shops, so I'm trying to let this one go). But we also realize that debt repayment is like an endurance sport: the most important thing you can do to ensure success is to just keep going, regardless of what that looks like, regardless of mistakes made in the moment.

(5) Support from the personal finance community. As I had hoped when I wrote that first post, this blog has become a source of personal motivation and an opportunity to share our story with people who are in the same boat. It's also brought me into the fold of the personal finance community, one of the most encouraging groups of people I've ever encountered. The comments I've received here and on Twitter make me feel like we've got an entire team of debt reduction cheerleaders celebrating our every win, however large or small. I couldn't be more grateful. Thank you to everyone who reads this blog and/or follows us on Twitter and encourages us each step of the way.

One year down, and this is only the beginning. Here's to another year of progress!

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.

Friday, May 11, 2018

Winning, May 2018 Edition

I just realized that for the past FOUR MONTHS I have neglected WINNING, a (supposedly) monthly series in which I identify at least three concrete ways we're succeeding and thriving while on this long debt repayment journey. I started this series in part to stay motivated: it's easy to get bogged down by how far we still need to go, so we need to celebrate our small but mighty victories. I also do it because it reminds me to be appreciative of the process instead of getting consumed by the overall goal.

Anyway, Winning is back! And boy do I need to focus on some wins given that our debt repayment has slowed to a crawl and our office is being inundated by explanations of benefits and associated medical bills. They just... keep showing up: surgeon. Emergency room doctor. Anesthetist. Nurse anesthetist. Ultrasound tech. Hospital stay. And let's not forget the mysterious $6000 bill for "supplies."

Actual footage of our stack of bills
But I digress. As my friend in college used to say, Hey whiner, call the waaaaaaaaaahhhhmbulance. Also, this is WINNING, not WHINING.

So. Moving on to the positive stuff:

(1) We're almost 2/3 of the way to meeting our emergency fund goal. Prior to the Great Appendectomy Adventure of 2018, we kept $1000 in reserve just in case. Now we'd like to have $3000 set aside for emergencies. By moving $600 into savings this month and another $600 into savings next month, we'll meet the goal by the end of June.


As a bit of a side note on this topic, there have been some lively conversation on personal finance Twitter recently regarding emergency funds and how much to stash away. Some folks have tens of thousands of dollars in their EFs; others stick to more of a bare-bones plan but have alternative safeguards set in place in case they need to access cash quickly. From a purely mathematical standpoint, we'd probably be better off sticking to small, Dave Ramsey-style fund and sending the rest of the money straight to our credit card company. But from an emotional security standpoint, I feel strongly that we need more than that. I'll sleep better at night.

(2) Including employer contributions, we're putting ~$900 into investments and our HSA every month. Somehow I hadn't fully done the math on this one, and when I finally got around to doing so earlier this week, I was kind of bowled over. If we can manage to do that even during slimmer times when we're not making much progress on debt repayment, well, I'd say we're still kicking some financial butt. It's a different kind of progress than chipping away at our loans, but it is progress. We weren't doing this a year ago. And because these are automatic paycheck deductions, we don't have to think about it or second-guess our decision to deploy our money in this way. Boom.


(3) And back to those medical bills... On the bright side, we've met our deductible and we're close to our out-of-pocket maximum. Thus, even if some doctor does decide to send us a $10K bill half a year after surgery, it's not going to knock us back much further than we've already been knocked back. So... yay?

In all seriousness, I'm incredibly grateful for HAVING health insurance. Yes, this situation has been stressful, and yes, I've had to call the insurance company three times in the last 24 hours to address billing errors, but our medical emergency would have been far more stressful had we not been covered. I've seen the pre-insurance totals. One night hospital stay, no surgery, $19K? No thank you please.

(4) Bonus win, for which we can take no credit but which we enormously enjoy for free: It's spring, and it's warm, and when we're not dealing with forest fires, the weather is absolutely glorious here. Perfect running and hiking weather.

Especially for those of us paying off debt, it's important to recognize and celebrate our victories. So what are your recent wins, financial or otherwise? 

Disease Called Debt

Wednesday, May 9, 2018

May 2018 Budget: Ramping Up Our Emergency Savings

I'm about 10 days behind schedule in posting the May budget, but late is better than never!

This month is shaping up to be pretty standard (aka boring) from a budgeting standpoint. Most of our line items reflect recurring fixed and variable expenses. The only real one-off here is the kitchen table, which we've already purchased, assembled, and started to use. The card table was working okay for meals, but it wasn't particularly comfortable for doing homework or just hanging out. The new one is much sturdier and more user-friendly.

One note about the table: Although it was somewhat expensive, I'm willing to make that work because I'm tired of buying crappy furniture. I'd rather pay more for something that will last than spend very little on something that will fall apart next year.

Another item of note: for the next couple of months, we've limited debt repayment to just over the minimums and will be dumping more into savings. Medical expenses explain part of this. Although I hope to cover most of the bills through our HSA, there's a chance we'll need to dip into savings. I don't want to put any of these payments on our credit cards (well, unless it's for the travel points, but in that case we'd want to pay it off immediately).

But aside from that, I'd feel more secure if we had $3000 in our emergency savings fund. I don't want us to get derailed by the unexpected. (Can you tell that our recent medical emergency has left me feeling skittish? It has!) We're about 2/3 of the way there. Once we've hit that benchmark, we'll return to larger payments on the credit card, which we're still hoping to pay off by the end of the year at the latest.

Lastly, I've increased my HSA contributions by $100 a month. Not only will this help us pay off those hospital bills, it'll be beneficial from a tax standpoint.

May 2018 Budget:

Recurring Fixed Expenses:
  • Rent: $2100
  • Health Insurance: $207
  • HSA Contribution*: $260
  • Retirement*: $282
  • Student loan and credit card payments: $1000 
  • Phone bill: $78
  • Internet: $65
  • Auto and renter's insurance: $73
  • Thousand Trails: $108
  • Netflix: $13
  • Fortysomething classroom budget: $40 (money for classroom supplies)
Recurring Variable Expenses: 
  • Utilities: $165
  • Groceries: $775
  • Gas in car: $50
  • Very Expensive Feline: $125 (higher this month due to upcoming checkup with vet)
  • Savings: $500
  • Miscellaneous: $350
One-Time Expenses:
  • Table: $480
Total budget for May 2018: $6,671

*Not including employer contribution

Friday, May 4, 2018

Doing More Of What I Love

Lately it's begun to dawn on me that I've spent most of my life believing in an employment fairy tale: that for each one of us, there's a job so well-aligned with our interests, knowledge, and experience that it feels more like a passion project than work.

My new job is miles - miiiiiiiles - better than my previous gig. There are many things I appreciate about it, perhaps the most important one being that it doesn't leave me crying in the bathroom during my lunch hour. Then there's the decent pay, the flexibility, not having to deal with back-to-back face-to-face meetings, the lack of commute, my hilarious boss, and the fact that I can take conference calls while cozied up in my favorite (but highly unprofessional) craft beer hoodie. Indeed, there's a lot to like about it.

But I've discovered that this job, like pretty much every other gig I've worked over the past 10 years, is... just a job.  It utilizes my experience and covers the rent, and every now and then I'll receive an email or phone call that inches what I do into the realm of rewarding. But it's not a calling. I know most employers want their employees to be personally invested in the organization, consumed by the mission. I want that, too, because again, I've bought into the employment fairy tale - but the truth is, I've never felt that way about any job where I'm working for someone else.

So lately I've been thinking that I need to spend less time worrying about finding passion in my work and more time doing the things I love outside of work - cultivating those interests, investing in them, enjoying them. Taking some of the brain space currently occupied by work and giving it to my hobbies. Making those interests more significant in my life than my job. Seeing where they take me.

There are two main areas where I want to invest more of my time and passion:

(1) Running: Anyone who's been following for a while knows I am an ardent runner. Fast? No, but damn, do I have heart! I'm particularly interested in ultra running: running distances greater than that of a marathon (26.2 miles). After a year of IT band issues, I'm finally back on the trails and have started to build up my running base. My hope is to run a 50K this year, and I'm in the process of looking for one that is affordable and not too far away.

But besides running for myself, I also want to share it with others. I've been a runner for 20 years, and what the sport has given to me in that time is manifold: it keeps me healthy, allows me to explore the outdoors, and bolsters my confidence. It's also a crucial fixed point for me because I have a mental health condition that sometimes blurs the lines of my self-identity. On days when I don't know exactly who I am because my brain has muddied the waters, I always have an anchor: I am a runner.

Not everyone wants to run or benefits from running, but it can be a life-changer for some people, and so I want to help share it. To that end, I've signed up as a volunteer for a Couch-to-5K program that my running club puts on during early summer for folks who are new to the sport. Every Thursday evening, I'll buddy up with a few of the participants, walk/run beside them, and basically let them know how amazing they are for being out there.

Volunteering with this group is a first step. After that, I'd like to help out with races organized by my running club and get involved with Girls on the Run. In short, I don't just want to be a person who runs in my community. Rather, I want to play a role in supporting and strengthening the local running community.

*Side note, just to illustrate how much I love running:

This is me under normal circumstances:


Like, were it not for the poodle, I could be convinced that that's me as a child.

This is me when I'm running:


2) Etsy-ing: My ultimate pie-in-the-sky career goal is to be gainfully self-employed. It's something I've been pondering for the last three years. The possibility of it excites and energizes me. Although I do have a Big Idea in mind (opening a "base camp" to host runners, hikers, and scientists who visit our area), I don't know how or when that would pan out. I figure now is a good time to assess my interests, build upon my strengths, and curate a toolkit of skills and resources that I can use later on if I manage to transform this nebulous dream into a solid reality.

As a (very) small stepping stone, last week I started an Etsy store to sell plastic-alternative cloth beeswax wraps. Just getting to the point of signing up for an account took months of deliberation. First of all, between work, parenting, running, and blogging, I don't have a ton of extra time. And second, as you can tell from the decidedly un-snazzy nature of this blog, I'm not really into building websites or taking Instagram-worthy photographs. That sort of thing stresses me out, which is why I hemmed and hawed for months about what it would take to build a space on Etsy. Finally I decided to just go for it, even if it looks clunky and even if my product pictures are a little poorly lit. I figure I'll improve it as I go along.

The store's been open a week. Much to my surprise, I've made four sales to the tune of $72. I've spent several gloriously meditative hours scouring the fabric store for remnants, cutting out the fabric pieces, ironing in the wax, and thinking about how much I appreciate each person who placed an order and how cool it is that they're going to use less plastic because of a thing I made. Woot! Worth it? So far, yes.

Don't get me wrong - I don't think my Etsy store is going to pay the rent anytime soon! But it's a good playground for me to explore entrepreneurship at a small scale. Plus, it's one business I can actually afford to take on right now. And it's fun.

What I hope to achieve by doing more of what I love is to stop treating work as the centerpiece of my daily life. If I can re-allocate some of the massive amounts of mental space that I currently devote to my job to the things I love, I think I'll feel more rooted in my own life, and less frustrated by the sense that work is stealing my time.

Disease Called Debt

Saturday, April 28, 2018

Emergency Funds and Medical Bills and Teacher Strikes... Oh My!

My current thoughts on April:


And also


With a little bit of this thrown in:


Thanks for empathizing, rocker panda.

Yes, I'm being a little dramatic - just part of my charm! - but April 2018 shall henceforth be known as The Month That Our Debt Repayment Plan Hit A Wall. Part of it can be blamed on our medical bills from The Infamous Appendectomy of March 2018. We're still in the process of tallying up the total, but the bills have started to trickle in, and looks like we'll owe several thousands of dollars when all is said and done (I'm hoping I can finagle a payment plan that will allow me to cover it all via my HSA).

Part of it has to do with the teachers' strike here in Arizona. As a teacher in Arizona, Fortysomething is currently on strike. Teachers don't get paid if they walk out. We completely, wholeheartedly support the strike, but it's made us realize we want to tuck away more money into our emergency fund - if not for now, for potential future interruptions in pay. We plan to set aside $3000 before returning to a more aggressive debt repayment plan. ($3000 isn't really enough, either, but it would get us through a full month if one of us wasn't getting paid.)

It's fine. We're fine. It could have been a lot worse. We're meeting all of our financial obligations. Between the emergency fund and our investments, we're even managing to sock away some cash. But it's hard to have to slow down on the debt repayment. I feel so impatient to be done with it, especially the credit card.

Wednesday, April 25, 2018

The $76K Guide To Making A Simple Budget

You may have noticed that unlike many other personal finance and investment blogs, this blog doesn't offer much in the way of advice. Frankly, that's in large part because I feel unqualified. "You have student loans and a credit card balance," says the little voice in my head. "Nobody wants advice from you." 

So I usually stick to telling our story, figuring that we can start doling out suggestions and strategies once we ditch our debts.

But the other day, someone on Twitter asked me for advice on making a budget. Taken aback, I burst forth with an array of word vomit that boiled down to, "We didn't know what we were doing so we sort of just tried a bunch of different things and finally after like half a year our budget magically worked. Voila! Good luck!"

Later, when I gave it more thought, I realized that there's more method to our budget madness than I'm giving us credit for. Yes, it took us a long time to iron out the wrinkles, but our general approach was solid. And now that we do have a workable budget, I feel at least somewhat justified in sharing our approach in the hopes that it might demystify the process for others, particularly those who - like us - are trying to claw their way out of debt and need a budget to help keep them on track.

So here it is (drumroll):

The $76K Guide To Making A Simple Budget 

Step 1: Before you make a budget, track your expenses for a month.

This may sound like a drag, especially if you're raring to go, but you can streamline the entire budget-making process by keeping a month-long record of how you're spending your money. Either in a notebook or in a spreadsheet (or with software like Mint that tracks your spending for you, though I personally find that this puts too much mental space between me and my spending habits), write down every single thing that you pay for - bills, rent, mortgage, insurance, random fun stuff, going out to eat, etc. - including the date and the cost down to the penny.

At the end of the month, group your expenses into categories and calculate the total for each category. These categories might include the following:

  • Rent/Mortgage
  • Utilities
  • Groceries
  • Phone
  • Insurance
  • Internet
  • Pet Needs
  • Household Items
  • Miscellaneous/Fun 
And so on. 

As you'll see below, having this record on hand will take some of the guesswork out of your budget. It will also help keep you honest about what you're actually spending (and when it comes to budgets, being honest with yourself and how much you're likely to spend on various items is crucial to your success).

Step 2: Commit to being flexible.

Don't feel like you have to come up with something that you're going to use indefinitely. Especially at first, budgeting is an iterative process. There's a very good chance it's going to change, and you're going to want to be okay with that. Don't get too attached.

Step 3: Figure out how much take-home income you're bringing in every month. 

You might know this number like the back of your hand, but when we were getting started, I did not. If you earn a regular salary, use your paycheck stubs to tally your take-home income. If you work as a contract employee and your income varies each month - which was initially the case for us - you'll have to estimate your expected income based on your past experience and current contracts. Be conservative when making those estimates. (I'd be happy to talk more about budgeting with contract income if anyone's interested.)

Then record your total projected income. We use a spreadsheet in Excel for this purpose (see example at the end of the post).

Step 4: Identify your recurring fixed expenses.

Fixed expenses are those that recur every month in the same amount, and their predictable nature warms my little Type A heart. Our fixed expenses include our rent, phone bill, insurance, Netflix subscription, and debt repayment. (Calculating the amount you can devote to debt repayment is a topic for another post; for the purpose of brevity, I'm going to assume that if you are making payments, you've already figured out what you'll pay each month.) You can include savings here, too, if you're committed to saving a specific amount.

Use your bank statements, bills, and/or your spending record from Step 1 to determine which expenses are fixed and how much they cost each month. Write them down. (Again, see example below.)

Step 5: Identify your recurring variable expenses.

Recurring variable expenses are those that appear every month but that are not the same every month. Ours include electricity, groceries, gas, and pet needs. Our "miscellaneous fund," the money we use for fun stuff like going out to eat or getting random home supplies, is also included in this category. (Other people have a different approach to this, but for us, we learned we were more successful when we gave ourselves some leeway in this area and didn't try to break it down too much.)

For me, this was the most challenging part of budgeting when we first started: recurring variable expenses have a nebulous quality to them. With experience and careful record-keeping, though, dialing them in has become easier.

You can use your spending record to identify what these variable expenses are and ballpark how much you need to allocate for them. Again, be honest with yourself: if you spent $500 on groceries last month, allocate $500. Don't try to convince yourself that you're suddenly going to make do with $300. In future months, you can fine-tune the numbers and try to cut costs a bit. For now, though, set yourself up for success by being realistic.

The good news about recurring variable expenses is that it's here that you'll have some wiggle room to cut costs if you want to - like finding ways to save on the energy bill or slice the fat from your grocery budget.

Step 6: Add in your one-time expenses.

Every month is different. Sometimes your cat is due for her yearly checkup or the car needs an oil change. Sometimes you'll need to buy new clothes. Sometimes you'll need to purchase school supplies. Sometimes you'll be hankering for a sleek new haircut. Again, be realistic about what your needs (or wants) are in a given month, and accommodate them in your budget.

Step 7: Calculate the total and make adjustments

Time to tally it all up and make sure the numbers work. Compare your budget total to your income. If your sum exceeds your income, you're going to have to make cuts somewhere. Your variable recurring expenses - particularly your miscellaneous or fun fund - would be a good place to start. Other folks have found ways to reduce their grocery bills by tens of dollars every month. You can also take a look at your one-time expenses: perhaps some of those can be put off for now.

If your income exceeds your budget, you get to decide how to deploy the extra moolah! For us, any surplus goes towards debt, but if you're debt free, consider socking it away into savings or an emergency fund. Don't create random frivolous line items because you feel flush with cash.

Step 8: Continue to track your spending.

It may seem like a pain, but keep recording your expenses down to the penny. As you pay your bills and make purchases, compare the reality of your spending with your budget. I handle this by creating two columns in our budgeting spreadsheet: one for projected expenses, and one for what we actually spent. Then I compare the two at the end of the month. If I find that we spent more on a certain category than we'd planned, we take note of that and adjust accordingly in the following month.

Here's an example of what the budget looks like:

So that's how we budget. And although the tracking process may seem arcane to some, it really helps us stick with it.

One last thing: for me, budgeting felt completely overwhelming at first, but the longer we've done it, the easier it's become. In our first few months, we had to make repeated big adjustments to the budget. Now the adjustments we make a relatively minor, and mainly for one-time expenses. The moral of the story: it's a messy process at first, but don't give up. Refine, refine, refine.

What about you? What's your budget strategy? What tips would you share with newbie budgeters?

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