Some Backstory

The truth is, I’m partway into my debt-reducing challenge. We’ve been in deferment or paying the minimum on our student loans since we graduated from grad school (more than 10 years). Although I knew it was a lot, I honestly had no idea how much we owed. Instead of facing the monster, I stuck my head in the sand for a number of years. Occasionally, typically right as I was trying to go to sleep, anxiety would start creeping up on me. But for the most part, I just told myself- well, I’ll be in debt forever, might as well just not worry about it!

In August 2017, it hit me. I was actually just checking on my bank accounts online, and happened to find a “spending and budgeting” tool that indicated that, in the past year, our household had spent slightly more than we had earned. Whoa. How was that possible? We had moved to a new home just the past year, and had had a number of expenses related to that. But we certainly weren’t extravagant spenders…. or so I thought.

I started going through our spending line by line, and what I saw was really a shock. $1100 a month on groceries for a family of three?! $600 eating out a MONTH?! We might not drive BMWs or go on luxury vacations, but there was no question we were spending frivolously. My husband and I make a good income- but when you combine that with huge student loan payments, mortgage, car payments, health insurance (we pay privately), child expenses, and more, not thinking about where our money was going was digging us deeper into a rather large hole we were pretending we weren’t in. Something had to change.

So, as I tend to do when I get interested in any topic, I started reading. Personal finance blogs and books became my obsession. What I learned was fascinating, and also empowering. Other people have conquered their spending, gotten rid of debt, and built wealth, and been the better for it. Couldn’t I find some willpower and do it, too?

So I went into action. First, I tried to get the husband on board. This took a little doing, but I can be persuasive. So now, he is totally on board with the plan to attack the debts, though we still differ on various methods to do so (topic for another post!). For the most part, though, Husband lets me take the reins on our budget. And I went into slash mode.

First, I started making lunches and snacks for the husband and I every single day. I knew that if I didn’t do so, the temptation would be too great to just grab something on the go, and $600 eating out every month simply couldn’t stand. I then broke up with Peapod, the grocery delivery service, and made friends with Market Basket, the discount grocery store. I also had a traumatic breakup with my hair stylist, and have started (with variable success) to color my own hair. I cancelled various subscriptions, such as online newspapers and even cable (I’m a news junkie, so these REALLY hurt). And so on.

Although there were no major changes- no move to a less expensive home, or even selling our two cars (both with car payments at that time)- these smaller changes added up to a shocking degree. This was exciting! I started making more goals.

Husband and I had very little in retirement accounts, and as we have just entered middle age, this is a major problem. So I made the decision that we would max out our work retirement plans, a simple IRA for each of us, at a limit of $12,500 each per year each (no employer match, sadly). This would be savings we didn’t have to think about, and pre-tax to boot. Plus, it would lessen the amount of money coming into our bank accounts, which (I hoped) would help to limit spending.

Then, I decided that as a monthly goal, I would try to save 40% of our income (including what we save in retirement). The non-retirement savings for the month would be allocated to various other goals. First up, paying off one of our two car loans, that had a higher interest rate (other loan is at 0%). I’m happy to save that we quickly reached that goal, and paid off the car to the tune of about $4,000, in October! That also freed up about $430/month, to ideally be put towards savings/debt. So far, we’ve been able to save 35-38% of our monthly income since September. I’ll give more specifics on how we do with this in monthly updates from hereon in.

So, already, we’re off to a pretty good start!