New debt totals posted! By applying our June savings of $2,859.90 to my student loan on top of our monthly minimum payments, we saw a reduction of $3,292.17. But the most exciting news is the side by side comparison of where we started last year on July 1, 2011. Since that time, we have managed to reduce our debt by $24,900.84!!! If you would have asked me a year ago if that was possible, I would have laughed. It seemed so far fetched of an idea. By embarking on our spending lockdown(to see our list of spending guidelines, click here), we took control of our life and money. There was nothing fancy to our strategy. It was simple, we just cut out the excess spending that was draining our bank account. And we are not talking one major expense, we are talking countless mindless minimal expenses that emptied our wallet week after week. We have many friends that still say they want to do something like this, and I encourage them, but it’s important to remember—personal finance is 20% head knowledge and 80% behavior(a common Dave Ramsey quote). And that’s the most difficult part of the task, changing your behavior with money.
Now that we have officially ended our yearlong spending fast, what do you think we did to celebrate? Favorite restaurant? Movie? Concert? New clothes? Umm, sorry to disappoint, but none of the above. Instead, this weekend, we took a trip to Trader Joe’s and the local produce stand to stock up on our regular groceries for the week. We also made sure to use our cash envelope which has our allotted amount for food during the month of July. In fact, since ending our spending lockdown, we’ve been talking a great deal about how to budget ourselves through the next year. We are living in possibility.
Closing in on these final months of our year long Operation Debt Reduction, we feel the need to set a dollar amount goal for our debt payoff from July 1, 2011 to July 1, 2012. Initially, we didn’t want to give a specific number so we wouldn’t feel defeated if we were nowhere near reaching it. Last summer, when Brad and I set about this challenge to change our spending behavior in an effort to pay down our debts, we honestly had no idea what we were even capable of saving on a monthly basis or paying towards debt. We were newbies to the world of saving. However, we feel now that we can aim for a set number knowing how much time is left in our spending lockdown. Having already paid down nearly $20,000 in just over 9 months, we believe we are capable of paying off $25,000 by July 1. What an achievement it would be to say we paid off $25,000 in 1 year just by changing our spending habits. So there it is, our goal is set.
My favorite thing about creating our budget for January, was that I did not have to include a credit card payment. In the beginning of our debt snowball in July, we were paying close to a $200 minimum monthly payment (which decreased as we paid down the balance). Even if we didn’t have any savings for the month, we still had to pay that minimum. Having that extra money to float around in our monthly budget is giving us more freedom this month - like a hair cut, oil change or budget travel money. Can’t imagine what it’s going to feel like when we get rid of our $750 monthly minimum payments on student loans.
(Art source: thingsweforget.blogspot.com)
I can’t think of a better way to kick off 2012 than to say farewell to our joint credit card! We literally cut up the plastic on New Year’s Day in an official goodbye commemoration. Not only did we get to pay off the remaining balance on the Visa, but we still had over $2000 from our December savings to pay on my student loan. Our plan is to attack this debt with the same energy we used on our consumer debt. Although the student loan balance is much larger, the new figure doesn’t seem as daunting now that we’ve paid $15,634.41 on total debt over the past 6 months. We’ve proven that we can do this if we stick to our spending guidelines. On the other hand, we’re not kidding ourselves—the hard work hasn’t even begun. If you’re new to us or need a refresher, check out our Debt Snowball month to month reduction here.
We Saved by the Bay is breaking a monthly savings record for December! Yes, you’re seeing it right, we saved $5,944.30. And I bet you’re wondering how on earth did we accumulate this much savings in a season of spending?
First off, I worked 40 hours of overtime this month which translates into overtime pay. Secondly, I received a holiday bonus from my company since we had record breaking sales. Lastly, we stuck to our spending guidelines—no gift purchases, no restaurant dining, no movie theaters, no coffee shops, no fancy smart phone monthly fees, no cable television, no clothes shopping, and on and on. And if you think for one second that we are sacrificing too much, then I have a suspicion you may not understand the elation of what it feels like to pay off a big chunk of debt with your own hard earned money.
What I find fascinating about our record savings is the fact that my husband and I were terribly worried in the fall that we would be unable to save money in December. We knew his freelance contract was ending at the end of November, and he knew it would be a slow month for finding more work. Our skepticism made us brace ourselves for the worst, and as predicted, he didn’t pick up any work in December. However, due to my company’s unexpected seasonal increase in sales, I gained extra work. Can we somehow trace this back to That Whole Law of Attraction Thing?
At the beginning of the month, I definitively said that all I wanted for Christmas was to kick Visa to the curb. Lo and behold, we’ve done it. After making our minimum credit card payment this month, we are paying the remaining balance of $3,608 today! Buh-bye! The remaining $2,336.30 will be applied to my student loan. New debt totals will be posted next Tuesday after the New Years holiday.
And the debt snowball continues to roll!
We’re back from our break and feeling surprisingly refreshed! No post holiday blues for us. The best gift we received this Christmas was a trip back to the southeast to visit both sets of family.
This was pretty much an all-expense paid for trip. We didn’t do anything lavish, most of our time was spent at home with home-cooked meals. On the few occasions we actually ate at a restaurant, our parents graciously picked up our tab. They are extremely supportive in our money saving endeavors and want to see us pay off our debt even more than we do.
So due to the generosity of family covering our travel expenses, we did not have to dip into our savings this month. If you’ve been reading along lately, you know that I’ve been working a whole heck of a lot. I’m a textile designer for a USA manufacturer in the home decor and gift market, and this was our busiest holiday season EVER! For the first time in a couple of years, we were permitted unlimited overtime hours, which equals BIG overtime pay. I seized the opportunity, and although my hours were grueling, all I could think about was paying off our Visa. It’s important to note that I could not have managed this without the help of my husband. He fortunately took charge of all basic household duties so that I could work without worry. This month, I truly saw the great partnership we have when we just put all the petty arguments and negative emotions aside that creep into any marriage. December revelation - let’s do this ALL the time!
Did we manage to break a record with savings this month? Will we be able to pay off the remaining $3,686.49 on our joint credit card? I will reveal our December savings tomorrow!