A Story About Paying Off Debt and the Obstacles Along the Way

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Six Month Progress Report and An Ambitious New Plan

As I mentioned in a recent post, we've been on our debt repayment journey for the past six months. It was back in April of 2017 that we assessed our debtload, made a budget, and started allocating $1600 a month towards repayment of our $76K+ in credit card, car loan, and student loan debt.

This was what our debt looked like by June, the month I started tracking every single penny (keep in mind that our actual starting amount in April was even higher... but I don't know what it was because I wasn't documenting the total at that point):

Talk about some big, bad numbers.

Six months after setting off on this journey, I can tell you that we've made some major progress, and we're more motivated than ever. Some highlights:

(1) We paid off Credit Card #1. We did this at the end of July, once we realized that we had enough money in savings to make it happen. Although the original balance of $1553 was nowhere near as high as the other CC balances, paying it off felt like a big accomplishment, and it motivated us. Plus, it freed up another $150 for CC#2.

(2) We ditched our car loan! We paid it off last week as my 39th birthday present. With a balance of only $600, I just wanted to say goodbye to this monthly bill. So we shuffled some money from savings to checking, called the bank, and made it happen. That's another $300 we can allocate to CC#2.

(3) We saved some money! Right now, we have an emergency fund of $1000 and a holiday/sinking fund of about $1200. We're planning to continue contributing ~$600 a month to savings. Yes, paying off debt is the priority, but we also want to build a more secure financial safety net. Our savings account is one component of that endeavor.

(4) We increased our incomes by taking on worthwhile side hustles. I'm kind of obsessed with the side hustle concept right now because it's really helped us with respect to saving and debt repayment. We were able to pay off CC#1 and the car earlier than planned in large part because we had those extra earnings available.

(5) In total, between June and now, we've dispatched more than $5900 in debt! If we count the debt we repaid in April and May, that total is >$7000 (To be honest, I'm too lazy to go back and calculate the precise number). Moreover, if we continue with our current rate of debt repayment ($1600/month), we will be completely out of debt by March of 2022:

(5) WE'VE DECIDED TO PUT OUR DEBT REPAYMENT INTO OVERDRIVE! After crunching the numbers again, I realized that if we increase our monthly debt repayment budget from $1600 to $2200 - something made possible by our side hustle income - we could be debt free BY NOVEMBER OF 2020. 

According to the $2200 plan, the payoff schedule looks more like this:

And this isn't including extra cash that could come our way in the form of raises, bonuses, or tax refunds, much of which would go right to debt repayment and further expedite the process.

I'm... astounded. I thought this would be a five-year process.

Of course, this new, ambitious plan depends on us maintaining our side hustles (Fortysomething and I both want to, but the gigs aren't guaranteed over the long term), and who knows what unexpected expenses could derail us, but I think it's worth a shot. Worst case scenario: we'll have to back off a bit if we have some tight months.

Bottom line: I'm thrilled with where we're at after half a year of highly imperfect yet dedicated debt repayment. Now we just have to keep going!

Disease Called Debt
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10 Things We've Learned About Debt Repayment

Although I started writing this blog back in June, we officially commenced our debt repayment journey six months ago, in April 2017. Our financial overhaul was inspired by a sudden, deep desire to offload our $76K in debt (consisting of credit cards, student loans, and a small car payment) so that we didn't have to go through our entire lives with that weight on our shoulders.

Something needed to change. We made a plan, constructed a budget for the first time ever, and dove in. Somewhat miraculously, we've stuck with the process for half a year. We've made plenty of mistakes along the way, but we've also made significant progress, something we'll share in more detail at the end of the month.

Let's face it: debt repayment is a long journey.
Maybe you're at that point, too. Maybe you're ready to take action and ditch the debt. If so, this post is for you. We can hardly call ourselves financial experts, but we do feel like we've learned some lessons that might be relevant to others who are on a similar path or who want to start their own debt-destroying journey:

(1) A long-term debt repayment plan composed of short-term benchmarks is essential. To develop our plan, we took a brutally honest inventory of all of our debt, including credit cards, student loans, and car loans; decided on a general repayment approach (we chose a hybrid of the debt snowball and debt avalanche methods); figured out how much money we could allocate to debt repayment each month (for us, that's $1600); and calculated how long the process would take via the What's the Cost debt repayment calculator

We also identified short-term benchmarks. These include credit card payoffs, payoff of our car loan, and establishment of a basic $1000 emergency fund.

Both the long-term plan and short-term goals are important. Obviously, the long-term plan is designed to get us to our overall goal, but given that it's going to take upwards of five years to achieve full debt repayment, we need the short-term benchmarks to stay motivated.

The Very Expensive Feline does not care about goals. Except nap goals.
(2) Budgeting is key. It's key for us, anyway. It helps us plan out our expenses and avoid accidental overdraft of our bank account (something we used to do on a fairly regular basis). It took us a while to configure a workable budget - the first two months or so were admittedly a bit of a mess -  but nowadays, we know what our monthly bills entail and when they're due, and we're taken by surprise far less often.

(3) That said, a budget is also a constantly-evolving entity. When I made our first budget back in April, I was under the impression that it should be the same from month to month, which led to frustration early on. Then I realized that a successful budget is a flexible budget, one that we can adjust depending on season-specific needs and one-time expenses. For instance, back in June when we had our fans running almost constantly in our hot little apartment, I budgeted for a higher energy bill. In October, I budgeted for the purchase of winter gear.

(4) Debt repayment requires difficult, sometimes painful decisions. As it turns out, when your salary is limited and you have debt repayment goals, you can't have everything you want. For instance, Fortysomething would love a new iPhone to replace the cheap flip phone he bought when his old phone died, but it's just not in the budget right now. (He's a total tech geek, so the whole flip phone thing is quite un-fun for him. I don't blame him a bit for feeling that way.) Vacation to a distant locale next summer? Probably not. New work clothes to replace my worn and fading work shirts? It can wait until the new year. Rental car when we visit relatives over Christmas? Nope, we'll just have to ask my dad if we can occasionally borrow his minivan. Fewer dinners out? Just the way it is now.

We're not suffering from real scarcity, so I can't complain much. But when you're used to getting what you want when you want it, putting the brakes on immediate gratification can be challenging. It can be tough to say no even when you know it's the right thing to do.

Exotic vacation? Nope. Just a trip to the local lake.
(5) Free activities are more abundant than they might seem. We were used to paying for entertainment - movies, festivals, concerts, etc. - so we thought relying on more free activities would be difficult. As it turns out, it really isn't. We've ditched anything with an entrance fee and have spent more time hiking and running outside, seeking out free movies and fairs, and hanging out with friends. The local paper offers a running list of no-charge activities, so we keep an eye on that and attend the events that look most appealing to us. 

Library books: always free.
(6) A side hustle can be a game changer. I've written extensively about our side hustles, gigs that brings in a few hundred extra dollars each month. Our regular income doesn't leave much room for savings - so instead, we use our side hustle earnings to beef up our savings account (once we reach our savings goal, the extra cash will go to debt repayment). It's a lot of extra work, and it's totally decimated my beloved evening Netflix veg fests, but I regret none of it. Aside from generating extra income, it gets my mind off of my regular job, gives me a chance to do something I love, and makes me feel more job secure. I highly recommend a side hustle if you're paying off debt.

(7) Even if your ultimate goal is debt repayment, you still need savings. We're determined to pay off our debt as soon as possible, so it's tempting to take any and all extra money and throw it at our credit cards. However, we realized early on that we also need a financial buffer in the event that an unexpected expense lands in our laps. We started by building up $1000 in emergency savings, then decided to add on a holiday/sinking fund. This way, if we do find ourselves saddled with an unforeseen expense, the monthly budget won't get derailed or sink us further into debt. We'll just cover it with savings.

Big recent win for us: we used savings to pay in full for new tires.
(8) For maximum effectiveness, everyone in the household needs to get on the same financial page. We've found that unless we're all working towards the same goal, it's easy to get derailed. So we talk a lot about debt repayment and how it will benefit us in the long run in an effort to constantly motivate ourselves and each other. Everyone (even The Kiddo, though to a less specific degree) is aware of the budget and where we're at each month with respect to earnings and savings. Both Fortysomething and I are devoted to this debt repayment process and hold each other in check when it comes to planning and spending. Again, we don't always do it perfectly, but we're making progress.

Disclaimer: the VEP does not care about being on the same financial page.
She's kind of a rebel like that.
(9) Comparing yourself to others can be a debilitating mistake. I say this, and yet I have to admit that it's something I struggle with on a regular basis. It's all too easy to look around and think that everyone else is in a better financial situation than we are: they have their own houses, they take more interesting trips, they have more flexibility in terms of how they use their time... Every time I fall into this rabbit hole of comparison, however, I realize that it's completely unhelpful and enervating (and, because appearances can be deceiving, it may also be utterly inaccurate). So instead of playing the comparison game, I try to focus on everything our family has in terms of resources and opportunities. 

(10) You have to celebrate your wins. I try to do this each month in our "Winning" posts (recent examples here, here, and here). Celebrating our accomplishments - however small they might seem - helps us stay motivated and positive. They also counteract that tendency I have to compare myself to others. Debt repayment is a long road, so it's essential to acknowledge every benchmark and every example of habit change.

Onward to the next six months! I'm excited to see how much progress we make and what we learn in the process.

Disease Called Debt
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Keeping It Real: Job Struggle

Dearest Blogosphere:

I am going to be very honest with you, despite the fact that this may come across as a load of privileged whiny whining.

I am struggling with my job.

Really struggling.

Like, I cried before work this morning. And two mornings ago. I also kind of cried in my cubicle around 10 AM today, but I mopped myself up before anyone saw me.

I feel so anxious that I can't sleep without taking a sleeping pill. I've never had to do that before.

To be clear, there is nothing wrong with my work environment. My coworkers are categorically wonderful. My boss is understanding. I have a standing desk, a double monitor, an ergonomic chair, an office plant, and access to a decent coffee maker, all of which make my work life pretty comfortable. Nobody gives me a hard time when I take a sick day. Although the salary isn't great, the benefits are outstanding. People don't walk away from benefits like these. They just don't.

So this is not a complaint about my employer or the people I work with.

The problem is me. My job is essentially a customer service job in that the primary job function is to assist customers - via email, phone, and in person. At least half of my day is spent in back-to-back meetings with people. While my gregarious, extroverted coworkers thrive in this environment, my introverted self wilts within the first hour. I literally lose my words. I struggle to talk, or sometimes even breathe. Cue panic attacks. (Have I ever mentioned my mental health issues? Yeah... I'll get to that sometime.)

Also? As it turns out, cubicles make me feel claustrophobic.

I keep landing jobs like this because I genuinely do like people. I genuinely care about their well being. But... I've come to realize (it's only taken, like, 15 years) that I mostly like and care about people from a distance. I need my space. I don't want to be in a job that requires constant in-person human interaction. Or really any face-to-face communication. Can't we all just do our thing and check in via email? Maybe Skype in a pinch?

In this job, I am like a water buffalo trying to pass as a giraffe. I feel like I am the wrong person for this job, and it's exhausting. 

What keeps me going is a) the health insurance and b) our debt repayment plan, which relies heavily on my paycheck. I want this debt gone, and if this is what it will take, I'll do it. I'm trying to keep my eye on my "why".

Again, I don't mean to whine, but if only for my own records of this whole financial overhaul, I want to keep it real. Doing things I don't like is, I suppose, part of this whole debt repayment thing.

So tell me: have you ever struggled with a job? How did you handle it - especially if you're a fellow introvert? (Also, please be kind, because putting this out there isn't easy.)
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Winning, October Edition

I almost wrote a post entitled Debt Sucks And I Want To Kick It In The Groin* - that's the headspace I've been in over the last few weeks - but then I decided to turn it around and focus on the positive. There IS some good stuff happening in the 76K Project financial world, and I want to take a few minutes to acknowledge it.

(1) We used allocated savings to pay for new tires. Total cost: around $800. We'd squirreled away this money several months ago, knowing that the tires on our little sedan were worn down and would need to be replaced before the winter. This is a massive departure from our former M.O. in situations like this: we used to toss every big, unbudgeted expense onto the credit card and then look away. Far, farrrrr away.

New tires = less stress when traveling to our favorite places.
What I like best about how this went down is that although the tires were pricy, we didn't have to fret about the bill. There was no stress involved because we were, for once, prepared. All we did was transfer the money from savings to checking (actually, we *did* put it on our credit card so that we could get the points, but then we immediately paid it off). 

Speaking from maaaaaany past experiences of this nature, trying to pay for something expensive... that you absolutely do need... when you absolutely don't have the money for it... is frustrating, exhausting, and demoralizing. To be able to avoid that emotional turmoil this time around is an amazing feeling and a huge win for us.

Bye, old tires!
(2) We still have money IN SAVINGS! Thanks to our overestimation of the cost of the tires and our continued side hustle revenue stream, we'll still be well on our way to meeting our Emergency/Holiday Travel/Sinking Fund goal, now set at a nice round $3000. 

On the topic of the savings account: due to some possible changes in the new year, we've decided to hold steady on debt repayment (for which we allocate $1600 a month and will continue to do so) and build up our savings account to several month's worth of expenses. Paying off the debt is critical, but so is having a financial cushion when life takes you in a new direction. More on that later, if and when the time is right to share. /vagueblogging

(3) Something I realized this morning: six months into our family finance overhaul, we're really committed to debt repayment and gaining more financial security. Evidence of this commitment:
  • Since April, we've created a detailed budget each month and tallied every single expense. 
  • We've cut way back on impulse spending. Gone are the days of last-minute Target purchases, impromptu runs to Starbucks, and every-other-day restaurant meals.
  • We have an emergency fund, holiday fund, and sinking fund now, and bit by bit, they're growing.
  • We're taking the long view when making decisions. There are things we would like to be doing RIGHT NOW, but we recognize that waiting and saving will make those things more doable and less stressful down the road. 

*I still want to kick debt in the groin, so maybe that's a topic for a future post.

Disease Called Debt
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Hard Week; Budget Adjustments

A note on this past week: It was tough. Like many of you, I was left reeling by the shooting in Las Vegas. I didn't know anyone who was killed or injured, but the senselessness and horror of what the killer did and our inability to get a handle on gun violence in this country have left me feeling depressed. Getting through the last few days has been like running through taffy: I'm defeated and exhausted. Based on what I saw from you guys via Twitter, I'm not alone. These are difficult times (understatement), and I know many of us are mentally exhausted. Let's take care of ourselves and each other, okay? And let's do what we can, whenever we can, to make the world a better place.

*     *     *
Moving on to much more mundane things, our financial situation and budget changed a bit this month. Here's why:
  • Fortysomething's health insurance kicked in at his new job. His employer covers his health insurance almost entirely, and thus, I was able to take him off of my insurance. Our total monthly premium dropped by a little over 1/3. Savings!...
The Very Expensive Feline loves savings.
  • ...But. My employer started putting 11.5% of my pay into the state retirement fund. Don't get me wrong: I know this is a good thing in the long run, especially because I get an employer match (although the big caveat here is that I only get this match if I stick with the organization for 25 years, which seems like a stretch, so...) That deduction leaves a big dent in my weekly paycheck, something we definitely feel given the high cost of living around here. Even with the offset in health insurance savings, my take-home pay is still about $140 less per month. 
VEF pondering budgetary changes. She's thinking real hard.
  • We increased our weekly food budget from $150 to $175. The Kiddo is like a bottomless food vacuum. He eats everything, and then he's still hungry. He and Fortysomething lobbied for $25 more per week in the grocery department, and because this whole debt reduction thing will only work if everyone is on board and satiated, I agreed. I'm okay with it as long as we eat all of the food we buy. If there's food waste, it's back to the old budget (says the stern money dictator).

  • We created an "Other" line item in our budget. I got tired of trying (and generally failing) to anticipate every one-time expense at the beginning of each month, so this time around, I allocated $450 to  a general fund that should cover all of our October extras: household items, birthday dinner, new jacket for the Kiddo, etc. I'll need to be careful, though, because my tendency when I have wiggle room is to spend more than I anticipated.
Sometime in the next week, I'll try to do a "How'd We Do" post for September... but frankly, we totally blew the budget and I'm not exactly champing at the bit to give all the details. 

Disease Called Debt
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