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

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Our Financial Journey Three Years In


Last year, right before quitting The Job From Hell, I posted a comprehensive update describing our progress over the two years we'd been working to improve our financial situation. Since then, several things have changed:

    1. I left the hellish job and took a career break. (I have never - not even once - regretted this decision, though it felt like a gamble.)

    2. I started a part-time, no-benefits job that I generally like. It's probably a dead end, but for now, it's a reliable gig that allows me to keep a toe or two in academia. 

    3. We refinanced our remaining student loan.

    4. The pandemic happened. Yayyyyyy such a fun surprise, life. 0/10 do not recommend.

Given these changes, I figured I'd post another update. Disclaimer: I don't know what, exactly, is acceptable to disclose in a global crisis. On one hand, I feel guilty for being in an okay financial spot, and that part of me thinks I should keep quiet. On the other hand, I've had people encourage me to share more. Plus, this blog is a personal record. If I don't write it down, I won't remember it. 

So with all that in mind, here's a peek under the hood of our firmly middle-class, slightly dinged-up financial vehicle. I've included the strategies we're employing in the various facets of our finances along with the changes we've seen over the past year or so.


Debt


Debt three years ago: >$76,000
Debt April 2019: ~$37,000
Debt August 2020: $34,713

Our current debt repayment strategy: Pay the monthly minimum on our recently-refinanced (to 4% interest rate) student loan.

What's changed in the past year: I figured I'd start here because paying off our debt was once the main focus of this blog. We started off with a mix of credit card, auto loan, and student loan debt. For a year or so, we were bringing in six figures from two full-time jobs. For the first time in our lives, we had money to spare. We were able to pay off everything except one student loan (which constitutes about half of our initial debt balance) by January 2019. 

We've slowed our roll since then, in part because our income has dropped by ~1/3 since our period of peak earning and in part because we realized we wanted to save more. In the past 15 months, we've paid off only ~$2K or so. However, after refinancing this past spring, we already see a difference in how quickly we can make a dent even with just the monthly minimum.

While I'd like to get this last debt paid off sooner rather than later, I'm comfortable putting the brakes on if it means that we have more liquid savings at our disposal, especially at a time when so much is up in the air



Savings


Savings three years ago: 0
Savings April 2019: $8500
Savings August 2020: $17,500

Our current savings strategy: Pay our bills, set aside a little money for fun/miscellaneous things, and save the rest. We also save most of every bonus that Fortysomething receives.

What's changed in the past year: We started ramping up our savings last spring because I knew I needed to quit my job. Our "windfall earnings" - bonuses, mostly, and then the stimulus check a couple of months ago - allowed us to squirrel away a lot in a short period of time. Not being able to do much or go anywhere this summer helped, too: we usually splurge on a vacation, and that didn't happen this year.

When we hit $10K in savings at the end of 2019, I remember thinking that we were all set. With a roaring economy, hoarding anything more than that seemed silly to me. But COVID-19 has completely upended my approach to savings. Instead of having three or four months' worth stashed away, I'd love to have a year of expenses on hand. That hasn't happened yet, and it probably won't - not right now. But it's certainly enough to get us through a few months, especially if Fortysomething leaves his job. 




Retirement


Retirement three years ago: ~$1000
Retirement April 2019: ~$17,000
Retirement August 2020: ~$35,000

Our current retirement savings strategy: Increase Fortysomething's employer-sponsored retirement contributions by 1-2% every year. His contribution is currently set to 10%, with a 3% match from his employer. We invest in index funds. Set it and forget it.

What's changed since last year: We've continued to contribute to Fortysomething's employer-sponsored retirement account, although back in March, we were seriously questioning the wisdom of tossing money into stocks. The weird behavior of the market still makes me a little uneasy, although whatever's happening is working in our favor at the moment.

This is a benefit that would truly suck to give up if he leaves his job because a) I don't have retirement benefits through my gig and b) his match increases every couple of years. I have an IRA that I occasionally contribute to, and he could open one, too. But the maximum contribution limits are so much lower than they are for 401Ks.




Net Worth


Net worth three years ago: -$65K
Net worth April 2019: -$13,600
Net worth August 2020: $19,500

Our current net worth strategy: We don't track our net worth regularly, and I try not to think about it too much.

What's changed since last year: We're finally in the green! 

I don't have a net worth graph because when we refinanced our student loan, I deleted the old one in Personal Capital, thereby screwing up our net worth history in the system. But I guess the main point here is that our net worth has increased quite a bit thanks to a combination of savings and investments (and the stock market doing its thing).


The Long Slog


There are a lot of inspiring stories out there about people who went from broke to rich in a span of a few years. Those narratives are motivating. However, I'm guessing there are far more untold stories that look like ours and that reflect years spent moving from a not-great financial situation to a better but not spectacular one. And that's fine! Progress is the key, even when it's not easy. Even when it's mainly gained through many, many small steps over many, many months.

I feel good about the financial improvements we've seen over the last year, although I'm worried about what the rest of 2020 holds. If we have to dip into savings, our situation could change rapidly. But what's the point of building financial security if you can't occasionally lean on it? So we'll just keep moving forward, taking it a day at a time, sharing with other people when we can, and hoping the intensity of the current crises wanes over the next few months.
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12 comments:

  1. We're well-off now, but it took >20 years post-college to get to that point!

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  2. Whoa, that's one hell of a turnaround on all fronts! Congrats! Amazing what 3 yrs and being intentional with money can do. �� Way to go!

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    1. Thank you! And it really did come down to being intentional. That year of high salary definitely helped, but being focused and not spending has really made the difference in the last year.

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  3. This is awesome progress! Congrats, especially on continuing to grow your net worth in the midst of *waves hands* all of this shit.

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    1. Thank you, friend! And thanks, wonky bizarre stock market!

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  4. This is fantastic! I am so proud of you!!

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  5. You're amazing :)

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    1. That's very kind of you! Definitely getting easier now that we've got a little momentum.

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  6. Your progress is amazing! I appreciate your story, since it is a bit more like where we are in our journey. Does your husband have a pension in AZ and do you factor that into your NW? If so, you'll feel better about that figure. ;-)

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    1. What is a pension? Haha. JK. But no - no pension with my partner's work.

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  7. I've been reading your blog for about a year now and I wanted to tell you how much I appreciate reading the financial journey of a couple with a similar financial position as my family. Like you, we are so much better off than we were even just a few years ago, but we worked HARD to get there. Reading other personal finance blogs from higher earners without student loan debt can sometimes make me feel frustrated and inadequate. Thanks for representing us Long Sloggers!

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