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Posts tagged with: staying motivated

3.5 Years Into Debt Repayment: Reflections & Looking Ahead

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Let’s get brutally honest. I never thought I’d still be blogging here right now.

When I first started blogging back in February 2014 (see my introduction post here), my goal was just to get out of credit card debt. At the time I had nearly $150,000 in total debt, and that amount seemed totally insurmountable. (See my first ever debt post here or read about what lead me to start my debt-reduction mission here). I had over $10,000 in credit card debt, so that was my original goal when I started blogging here. With a household income of about $45,000/year, I thought it would likely take 12-18 months to pay it all off.

I shocked everyone (myself most of all!) when I somehow managed to pay off my final credit card (over $10k in total credit card debt), in just shy of 3 months!!!! 

Where had all that money come from? It didn’t even seem mathematically possible, but the second I put my mind to it, things just started happening. Hubs’ got some big checks, I got some big checks, and we absolutely slashed our spending and expenses  down to next-to-nothing.

We ended up paying off over $25,000 of debt (+interest) in 2014.

We went on to pay off over $26,000 of debt (+ interest)  in 2015. 

And we kept the train rolling, paying off over $30,000 of debt (+ interest) in 2016!

Source

After just shy of three (long and hard-fought) years to get to this point, I finally reached the half-way mark in my debt-eradication journey in February of this year.

I received a lot of encouragement around that half-way point:

“The debt will just start melting away”, they said.

“It will start going so rapidly”, they said.

“It will feel so easy in comparison to the start”, they said.

“They” lied. Or maybe not lied, per se. But they were wrong. It’s not any easier. The debt is NOT falling away. And I do NOT feel like it’s a downhill run, easy in comparison to the start of the journey. If anything, it’s the hardest now that it’s ever been.

Why? What’s changed?

At the beginning of the year I’d set some pretty lofty financial goals for 2017 and beyond. My goals included:

  • Pay $30,000 toward debt
  • Fully fund a Roth IRA ($5,500)
  • Take a Mom & Dad Getaway trip

One goal about debt eradication, one about saving, and one that’s just a total splurge.

Guess which of the three actually happened? Just the splurge. That’s it.

We will likely have nothing to put into a Roth IRA this year. No extra money for savings of any kind really* (*caveat: my employer requires a mandatory 7% retirement contribution and provides a full match,  so I do have a pre-tax retirement account that’s being funded. But no additional savings of any kind – no liquid cash in a savings account, no Roth, etc.).

In terms of debt, we’ve managed to actually increase our debt burden. Things have been rough since April – first discovering a HUGE tax liability we had (still have), and then when my part-time job ended, hubs’ work ended, and the entire summer (May-August) we kept on spending like we had this phenomenal income (we’ve grown used to an income around $10,000/month), but my first full-time paycheck at my new rate of pay indicated that I’d likely only be bringing home around $4,500/month. It was a HUGE wake-up call. HUGE.

We’re still making pretty hefty debt payments, but it’s to the IRS and credit card companies in addition to the student loans I’d finally thought were starting to get under control. We’ll still have paid a good amount toward debt this year, maybe $20-25,000. But I doubt we’re going to hit that $30,000 mark that we’d planned on. Oh yeah…..and now we’re starting off in a worse place than we were at the start of the year because of all our new debt that’s been tacked on for the ride.

I have lots more to share about how our debt increased – all the over-spending we’ve been doing (and some unavoidable medical expenses, as well). But I’m going to save the nitty-gritty details for another post.

Right now, I just wanted to reflect on where we’ve been, where we are now, and where we hope to be in the future.

Getting out of debt is hard work. Especially with the amount of debt that our family was grappling with. $150,000 is no joke. No small stuff to scoff at. It’s the real-deal, legitimate, takes years and years and lots of hard work and persistence type of debt to get out from under.

Life continues to happen. Life doesn’t care about our financial goals and our hopes and dreams and what we’ve got planned. Life just comes right at you full-force with job changes or job loss, unexpected health issues, costly car repairs, etc. Kids grow up! When I first started blogging here my twins were 18-months old! Now they’re five and entering kindergarten! Life doesn’t just “pause” and allow us to get out of debt real quickly so we can take our kids on fun trips, make lifelong memories, and  allow them to participate in all the activities and extracurricular that I would prefer None of that stuff happens.

Kids grow, parents age, emergencies (of the major + minor kind) occur. All while just trying to scratch and claw and slooooooowly climb out of the giant hole of debt that is our financial life. It’s tough. And it’s not fun. But I also cannot wait. I want to scream it from the rooftops: I CANNOT WAIT TO BE DEBT FREE!!!!!

Back when we made our financial goals for 2017 we were anticipating being debt free by early 2018.

Sorry to say, but it’s going to be longer than that, folks.

Hubs is back in school (= no income currently and only the possibility of part-time employment at best) and my income is pretty well “set” without a lot of room for flexibility. I just got a huge raise, but had to sign a non-compete for the next 3 years (lucky I love my job and where I’m at, but it means no chance of additional or outside employment in my current field for the time being). Without a chance for any significant increase in household income for now, our only option is to get our spending down. Spending, which has been a HUGE issue this summer.  This, to undoubtedly be the topic of several blog posts in the future.

I have to be honest. I don’t feel as much excitement as I used to. I don’t feel the same level of passion and enthusiasm. Right now, I’m just worn down and tired. We slacked off big-time this summer – I must admit. So it’s not like we’ve been living the rice-and-beans life for the entire 3.5 years. We did for the first 2 years, but our spending as of late has been unacceptable. So there’s certainly room for improvement.

But that doesn’t make it any easier.

So right now I’m just going to put out the big “pie in the sky” type of goal. We’ll get around to all the numbers and the concrete financials. But for now I just want to declare: 2018 will be our year!!! I don’t know that it’s possible. In fact, I think it’s likely a mathematical impossibility right now. But so was that $10,000 of credit card debt. And somehow, someway we managed to pay it off in 3 months. So I will keep the hope. We may not be done in early 2018 as originally projected, but I’m going to make it a personal goal to figure out how to sell any and everything of excess, how to totally scrimp and save and cut out all unnecessary spending and once and for all just GET OUT OF DEBT BY THE END OF 2018. December, I’m looking at you! What a wonderful Christmas present it would be to our family and ourselves to make a final debt payment in December 2018. It’s happening, folks. This debt is going down!

Who else is with me?

What are your current debt-reduction goals? When do you plan to be fully debt-free?


First Paycheck = FAIL!!!

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I received my first full paycheck at my new rate of pay. I was shocked that it was much lower than I had anticipated (even after using a couple online calculator programs to try to accurately predict take-home pay).  My expectation was that I’d earn somewhere between $5-6,000/month take-home.  The reason for the large range is that I have a LOT of money coming out in pre-tax deductions, including:  medical and dental insurance, Flex Spending Savings accounts for health and dependent care, and 7% retirement investment (required and matched by my employer). In total, I have 20% of my check removed pre-tax. Taxes remove another 20% of my paycheck. So when looking at my base weekly salary compared to my take-home pay, I’m only actually bringing home 60% of what I earn (to be fair, I’m saving money by being able to pay a portion of medical and childcare from our FSA with pre-tax dollars, but our FSA has caps that we exceed, so some of those expenses are still paid out of my take-home pay post-tax).

After all deductions, my first full paycheck was for a total of $2269. I get paid bi-weekly, so we’re talking about $4500/month for most months (except for the odd month with 3 pay periods). This was a huge shock, given that we’ve been quite accustomed to budgeting for literally double that income amount.

I’ve never shared exact income numbers before on the blog because it made my husband feel uncomfortable for his business earnings to be shared and analyzed. But now that he’s shut his doors down and it’s all me – I feel fine with sharing my personal income. Guess what, y’all….my salary is $95,423/year. That’s with my big raise. I was originally hired at $55,000 two years ago. I guess there’s some disconnect in my brain or something because I thought $95k sounded like “BIG MONEY.” When I got my raise I was overjoyed – I was expecting a huge, wild difference in my rate of take-home pay. Under $5,000/month was NOT what I was expecting. Call me spoiled or privileged of whatever else you want (and I own that I am some of those things – I’m lucky to have the job I do), but this was a huge shock.

So although it feels like “starting over” (although it’s not!!! We’re still down nearly $80k in debt over the last 3 years), it’s definitely a come-to-Jesus moment. Hubs and I have had to totally start over on our budget with fresh eyes. Thinking about how to continue making progress on our debt reduction journey while simply surviving (here, we thought we’d be “thriving” with this huge raise). Some tough realizations have been made:

  • Hubs must keep earning an income somehow. Hubs has run a successful flooring business for almost a decade, but recently quit to go back to school. Many people have commented that he should keep his business going for some side-income, but it just doesn’t work that way. Unless you’ve owned a business in the construction trade before, you probably don’t realize how expensive it is just to maintain the proper insurances, licenses, etc. Hubs is NOT the type to do business under the table without the appropriate certifications. It’s a big problem in his industry (and where we live, in particular), and he was not about to go that route. But to just keep his insurances and licenses up to date cost several thousand a year. When we looked at what he was bringing in part-time versus the costs to keep the company legal, it just wasn’t enough to make it worthwhile. And, maybe surprisingly, the flooring trade is not as flexible with a school schedule as we need. Hubs’ first semester back was this past Spring and he had many stressful calls from employees (or worse, home-owners) with issues that demanded immediate attention, while he was still stuck in class for many hours to come. All in all, this was a losing proposition for our family. So now we’re trying to think of more flexible and accommodating ways that hubs can earn some side-money while in school. So far brainstorming has included: driving for uber or lyft, doing some type of food delivery, and perhaps trying to become a personal trainer. Remember – hubs has been big into health and fitness the last couple years, so the latter is his preferred method, but it will also take the longest to get started and requires additional research first. Any other ideas?
  • Food consumption has to get under control. A friend recently posted on facebook to inquire about how much her friends’ families pay per month for groceries. The most common number I saw was $250/week. I have to say, for the past couple of years since I’ve been working 2 jobs, our food budget has been way over $1,000/month (including groceries + eating out). I mean, $1,000/month was a GOOD month. But remembering back to when I first started blogging, it hasn’t always been this way! In fact, my original grocery budget was only $400/month!!! And I stuck to it! To be fair, it was never easy. I would spend a TON of time researching sales, carefully planning meals around sale items and food we already had in our pantry or freezer. I would easily have to go to 2-3 stores per week to get the best priced items (Walmart does their ad matching, but our local Walmart doesn’t have great quality produce). I’d also make a ton of items from scratch. Everything from breads and homemade granola bars to fruit leather and yogurt – even baby wipes I made myself for cheaper than could be bought bulk at Costco. Between ad searching, meal planning, grocery shopping, food prepping, and scratch baking, I probably spent a good 10-15 hours/week on my efforts. It paid off big-time in terms of money saved, but I just simply lacked the time when I started working full time (plus kept my part-time job, on the side). When I accepted my big raise I had to sign a non-compete so I had to leave my part-time job. So even though I still work full-time, I have significantly more time in the early morning/evening/weekend hours to try to devote to some of my old grocery-saving ways. I don’t know that it’s reasonable to get back to only $400/month. But I think if I shoot for $550-600/month (again – that’s for all food: groceries + eating out), it would be a huge savings over our current spending. I’m going to give it an honest effort for the month of August and see how I do.
  • The budget, in general, needs to be slashed. It’s scary how easy it’s been for things to creep up over time. When I first started blogging all our gifts were in the $10-15/range. Recently our gift-giving has been closer to $25-35+/gift. Hubs and I have both rejoined a gym. It’s very important to hubs (and he spends legitimately a ton of time there), but maybe I’ll cancel my own membership to try to save some money since I’m perfectly happy to run outdoors for free as my preferred form of exercise. I also had a friend recently mention that some health insurance companies offer discounts for gym memberships? I need to call Blue Cross, Blue Shield to inquire about this. Spending across the board needs to come down.
  • Debt payments??? Probably the hardest thing to accept is that our debt payments are going to drastically decrease. We’d grown accustomed to throwing thousands a month toward debt! I’m talking many months where we were paying $2500-$3000/month toward debt!!! Obviously if I’m only bringing home $4,500, there’s no room for a $3,000 debt payment. It’s just not possible. So we have to adjust expectations, adjust our 2017 financial goals, and just keep plowing forward, making as much progress as possible with what we have to work with.

So, ultimately, we need to cut our expenses AND try to find a way to increase our income. There’s not much wiggle room for me (since I can’t pick up side work in my current industry), but I think we can try to find solutions to get hubs some part-time side gigs. My focus will be best spent on trying to reduce our food expenses, since that tends to be our #1 monthly expense (cumulatively speaking. And yes, I know how ridiculous that sounds, but it’s true).

So there you go – I’ve laid it all out on the table. Next up will be formulating a solid budget plan and figuring out how to juggle our debt payments. Especially now that we owe $1,000/month to the IRS from our poor planning last year. Ugh! But baby steps here – if I think about everything at once I become overwhelmed so it’s one thing at a time. We now have a solid “income” figure so we know what we’ll be working with in terms of take-home pay. Now it’s time to figure out how to make our outflow match with our inflow and to find additional areas to cut back.

 

How much does your household spend per month on groceries (and how many people are in the household)? How do you save money on your food budget?


Ashley’s October 2015 Debt Update

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I don’t know if I’ve ever been more excited to share a debt update with you guys! Check this out:

PlaceCurrent BalanceAPRLast Payment MadeLast Payment Date Original debt, March 2014
Capital One CC-17.9%-Paid off in March 2014$413
Mattress Firm-0%-Paid off in May 2014$1381
Wells Fargo CC-13.65%-Paid off in May 2014$7697
BoA CC-7.24%-Paid off in June 2014$2220
License Fees-2.5%-Paid off in April 2015$5808
Navient - Federal Student Loan$156926.55%-8.25%$332October$17507
ACS Student Loans$86336.55%$20October$8215
Navient - Dept of Education student loans$662796.55%$636October$63254
PenFed Car Loan$69512.49%$3800October$24040
Balance Transfer student loan (Former Navient 1-01)$35120% (through April 2016)$700October$5937
Medical Bills$59860%$25October$9000
Totals$107,053 (Sept balance = 112,171)$5513Starting Debt = $145,472

First, let’s have a moment of silence to appreciate and fully take in the mammoth-sized debt payment this month! $5513 was put toward debt this month!

This is one of the largest debt payment months we’ve ever had, only rivaled by a few months around summer 2014 where our income really skyrocketed for a minute (before crashing down for awhile in 2015. The joys of a variable income).

You’ll see 2 higher payments, specifically:

  • $3,800 went toward the car loan this month! This is insane!! We’ve had months this year where we’ve made less than this, total! We’re very thankful to have had a good month and be able to really knock the car loan debt in the mouth!
  • Over $1,500 went toward student loans this month! This is WAY higher than my monthly minimums. But because my minimum payments don’t even cover my interest I’ve been trying to pay extra so I can continue reducing the principal. Also, I made a large payment toward Navient loan 1-06 this month to pay it off in full (Note, this figure also includes my payment to the balance transfer loan, which was originally a student loan).

Perhaps equally as exciting as this month’s stellar payments, I had a realization as I made October’s debt table.

If we’re able to continue making our expected debt payments (which is really contingent upon hubs’ income the next couple months), we will officially dip below the $100,000-mark in December!

That means in December we will simultaneously be reaching 3 insane milestones:

  1. We will officially pay off our car loan. This will make us consumer debt-freeeeeee!!!!!!
  2. We will have reached out 2015 financial goal of paying $30,000 toward debt this year.
  3. After nearly 2 hard years of chipping away at our debts, we will have finally rounded the corner and officially owe less than $100,000!!!! 

I want to pinch myself! Only 2 months ago I was admitting defeat on my 2015 goals and now (eeek – fingers crossed!!!) we could be reporting some huge accomplishments in the next 2 months! How quickly the tide can change. I only hope and pray things remain on the ups!!


Debt Repayment: Ashley’s 6-Month Reflections

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It’s been 6 months since I started the concerted effort to pay down debt ASAP (truth be told, we had already been paying down debt prior to this, but at a much more relaxed pace). In some regards it feels like it has been much longer than 6 months, but in others it feels as though this journey has only just begun!

I’m hugely proud of the progress I’ve made. I’ve mentioned before that in January 2014 I made a list of goals for the year and one of the goals was to have my credit card debt paid in full. Not only is that goal accomplished, but it was accomplished months ago, only 3 months after starting on this wild journey. So in that sense, I’m blowing my goals out of the water.

At the same time, the more debt I pay down the more looming and monstrous the student loan debt appears. I feel like I had just put the student loans out of my mind while I was focusing on paying down other things (and they sat in deferment and continued to grow, and grow, and grow…). But now that they loom high on the horizon, the intimidation and fear-factor is real. It feels like an insurmountable obstacle. I know I can do it and I know it will be done. One day we will be debt free!!!! But at the same time, it feels like such a distant future that isn’t quite tangible at this time.

(and now I’m going to be a weirdo and do a little Q&A interview with myself, heh).

What’s been the hardest part?

The hardest part has been putting some of my wants on the backburner right now. I remember starting this journey and others talked about how difficult it would be to cut back travel. I didn’t think about it much at the time, but I realize now just how often we did travel (it didn’t feel like it because it was just going to visit family – not exotic vacations or anything – but we did travel pretty frequently). I’ve had to forego my expensive hair cut/coloring, traveling to visit family as often as we’d like, and just many of the pleasantries in life that I used to do without a second thought (biggest one = eating out!!! I still struggle with this!) So it’s basically just learning to make do with what I’ve got and delay gratification until the future.

What’s been easier than you thought?

Honestly, once I really started sticking to a budget (which I’ve always made but used to be more of a guideline than a rule), everything just fell into place. I’m not saying I’m perfect because there are certainly budget categories that I struggle with, but having the accountability from you all has certainly helped. And now that I track every dollar, it’s just so easy! I don’t even have to think about spending money because I already know where each dollar is allocated. In a similar vein, I think that starting to live on last month’s income has hugely helped the budgeting process, making it much easier to track and stick with.

What’s keeping you going?

When I talked about balance I told everyone I was going to stay nose-to-the-grind until March 2015, at which point I’ll let up steam a little. I think having a one-year time frame is really good for me. Of course we won’t be debt free by that point, but I don’t think I’d be able to stay as super-intense-focused as I need to for the full 3-4 years (or however long full debt repayment will take). Having a realistic deadline is really helpful. Whenever I’m feeling mopey about not buying something I want, I think that I can totally make it another 6 months. Of course I can!!! (Side note: I don’t want this to sound like I’m going to throw caution to the wind and spend-spend-spend come March 2015. But I do think it will be a nice breaking point to pause and reassess some goals and timelines for debt repayment. And FYI I am very proud to be credit card debt-free and will NEVER GO BACK into credit card debt again!!!).

What would you tell others?

Definitely, for sure, blog away your debt! Lol. I joke, I joke. But seriously, I feel like having this platform has been a game changer for me. Having all of your immensely helpful suggestions, as well as your gentle chiding when I go astray has been incredible. There’s nothing like a public forum to keep you accountable, and I feel fortunate to have the opportunity! For most people (who don’t publicly blog about their debt), I would say that the written budget is key. And, also, there’s something that has to change inside you. I’ve heard Dave Ramsey talk about this and its so difficult to explain or quantify, but its like a switch has been flipped from “it would be nice to get out of debt so I’m just going to think about it and mull it over and complain about it” to “I AM GOING TO GET OUT OF DEBT…NOW!!!” I don’t know how you reach this point, but I think everyone has to get there. If you’re not there, it’s not going to work.

Thank you all for being a part of my debt-repayment journey the past several months! I appreciate you all more than you know! I owe you all a debt update. I admit that some of the looming student loans have made me less-than-thrilled to add up the numbers (because the growing interest is just sickening and I don’t even want to see it!). But its been over a month (last debt update here), so it’s time. Be on the lookout for a debt update soon.

Happy weekend!!!


Visual Motivation: Debt Thermometer

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We have had a couple conversations lately where I’ve asked for tips on how you stay motivated in the debt-payoff process.

I received so many great tips and ideas and I thank you for them all!

One thing that I thought would work well for us was to have a visual image of our debt lowering every month.

I’m a little “old school” in some ways and a 3-D physical paper seemed to appeal to me more than a graphic on a computer screen.

So, I made a Wells Fargo CC Debt Thermometer!

IMG_3130

My arts and crafts skills leave much to be desired.

I have no idea why I did such random increments (increments of $1,000 in some places and only $500 in others), and I’m positive its not to scale. But I try.

On the right side I have the amount paid listed, capping out at $7,000 (for reference, I owed just under $7700 when I first started blogging in March); on the left side I have the amount due remaining. After my $800 May payment plus the $1,000 snowflake payment from March’s surplus, I’ve been able to color about $3,000 of debt paid off.

I am so excited to figure out how much we can put toward Wells Fargo from our April surplus! If our earnings stay steady, I should be able to have the card paid in full in less than 4 months (!!!!!!!) This is HUGE! And staying on this track will have us paying off our final credit card (Bank of America) by November or December (remember my “official” goal was March 2015, so this is really early)! CAN NOT WAIT!!!

 

I was originally going to make a debt thermometer with ALL of our debts, but I think I’m only going to make them 1-at-a-time for whatever debt we are currently focusing on. It makes it so much more motivating to see huge payments every month, instead of only small minimum payments being made. Plus, it will be fun with each new “debt focus” to make a new debt thermometer as a way to track our progress.

Thanks for all the suggestions and support along this process!