This post is by staff writer Honey Smith.
Last year’sÂ August update was full of good news, and it seems to be a yearly tradition! I will go over each update and its impact on my life, but the bottom line is:
My student loan balance now starts with an eight!
Jake paid off his credit card debt!
I got a raise!
Sometime last November or December, I told Jake I could feel it in my bones: 2014 was going to be our year — the year we would finally pick up steam, the year our hard work would finally start paying off in ways that we could see in our everyday lives. Still, I’m behind on some ofÂ my financial goals for 2014, so it’s a good thing that there is plenty of time left in the year. Nonetheless, we have made some serious strides.
1. My student loan balance starts with an eight.
Currently, my student loan balance stands at $89,740.48. Now, at first glance this is nothing to get too excited about. At the beginning of the year, my balance stood at $92,738.61, so really I have paid off only about $3,000. Since we are over halfway through the year and my goal was to pay off $10,000, it is clear that I am behind. This was due to a variety of factors.
I have been making extra payments every single month in addition to the minimum payment. However, I was not super aggressive about this becauseÂ the condo we’d been renting went through foreclosure. For almost the entire first half of the year we weren’t sure how long we were going to get to stay where we were. Jake and I were also both hoarding cash like fiends because we wanted to buy a house instead of rent. And we did!
Now that our living situation is settled and our bills are (somewhat) predictable again, I can start hitting my student loans hard. I’m not certain that I’ll catch up to my goal by the end of the year, but I’m sure going to try! In the meantime, I’m going to take some of my own advice onÂ motivation and money and celebrate what I have achieved so far! Breaking into “the eights” seems like a milestone to me.
2. Jake paid off his credit card debt!
This one is huge, you guys. According to theÂ original Mint reckoning from when I started writing at GRS, Jake’s credit card balance was about $30,000. He also had a car loan at that time of about $5,500. In January of this year, his credit card balance was $22,000. He paid the car loan off in March and made the last payment to his credit cards in mid-July. I think that’s amazing!
Now that he is out from under his consumer debt, he has several financial goals. First, he will be beefing up his emergency fund. He has about $2,600 right now, which we think is insufficient now that we’re homeowners. Second, he wants to pay for everything in cash forever except a home purchase — if we move again, we will probably still get a mortgage. Finally, he wants to start contributing to his employer’s retirement plan next year. He becomes eligible on his one-year anniversary of employment, which is why he’ll spend the second half of 2014 beefing up hisÂ savings (before his take-home pay decreases).
Honestly, I am sure there will be a splurge in there somewhere too. But since he’s said repeatedly that whatever he buys going forward will be paid for in cash, I’m not worried. I know he doesn’t want to EVER have a balance again. He was checking his Mint account every five minutes during the two or three days between authorizing that final payment and it finally posting to his account. I don’t think he’s been consumer debt-free since college, and we are in our mid-thirties now!
3. I got a raise!
Last year my raise was 5 percent. This year it was 2 percent. This only raises my take-home pay by about $25 per paycheck ($50 per month), but progress is progress. And hey, after not getting a raise my first five years in the position, I’ll take it!
Since vesting in my employer contributions last year, my 403(b) is trucking right along. I picked a target date fund that invests inÂ stock indexes, and the balance currently stands at almost $44,000. When I first started my job, I resented that participation in a retirement plan is mandatory where I work. Now I have to say that I’m grateful!
I also got a de facto raise because of how we handled our taxes. In 2013, Jake paid quarterly but I didn’t. I had never made enough money from my side gigs before to ever owe. Additionally, since my freelance work didn’t start taking off until mid-year, I had no reason to think I’d have to make quarterly payments at first. As a result, we owed for 2013 and it was almost exclusively because of me. Fortunately, I had been setting aside a third of my business income. It turned out to be enough to cover my entire 2013 tax burden as well as my first two quarterly payments for 2014.
At this point, I have enough in myÂ business savings account for the last two quarterly payments as well. This means I don’t have anything to worry about for the rest of the year. Any side income from here on out is pure gravy. Of course, being the worrywart that I am, I will probably continue to set some aside just in case. Hopefully, this precaution ends up being totally unnecessary and I can kick off 2015 with a massive student loan payment!
The milestones keep on coming!
I’m very excited to be able to reach some additional milestones in our financial journey. Living inside your own head sometimes makes it difficult to really see or appreciate how you change over time. I think part of it is that even big change happens so gradually that you don’t always notice. Another part of it may be that, in general, people are resistant to change. However, tracking everything this way makes it pretty clear that I am not the same woman who started chronicling this debt-payoff journey. Here’s to change and personal growth!
If you have successfully paid off a mountain of debt or accumulated the funds necessary for financial independence, when did you finally pick up steam? What factors led to your momentum?