Help! My Debt Snowball Is Melting!
The summer heat has taken a toll on my debt snowball. Two months ago, I paid off the last of my credit card debt, but I still have thousands of dollars in loans. I started the summer with over $10,000 in my savings account, no credit card debt, and a solid plan to pay off my remaining loans within the next few years.
Then life happened. I've been living out of suitcases for the past two months, traveling to New York, Buenos Aires, and Bangor. (I've blogged quite a bit about how travel is one of my budget weak spots.) So I spent some money. Not as much as I was afraid I might, but more than I probably should have.
Also, I have kids. Those of you with children may have noticed that they're expensive. There are a thousand articles out there on how to keep the cost of having children to a minimum. I've written some of those myself. But I'm here to tell you that whether you do your back-to-school shopping at Bloomingdale's or Goodwill, kids will add to your monthly expenses.
So here I am. Summer's ending. I'm writing from the lake house in northern Maine where I've been holed up for much of the past few months. In the peaceful quiet hour around sunset, I finally steeled myself and looked at my bank balance.
Resting on my laurels
It's not as bad as I'd feared. The numbers are still solidly in the black. My savings have a dent in them, but a smaller one than I expected. My checking account is in good shape. My bills are paid.
The shadow in this rosy picture: I haven't made any extra debt payments all summer. The hot weather arrived, my credit cards were paid off, and instead of rolling that debt snowball right into my car loan, I sat back on my laurels. No wonder I have more money than I expected: I've been letting all my debt snowball money (which adds up to almost $2000 a month) sluice around in my regular budget for two months!
I was going to try to slide this under the radar. I figured I'd turn a new leaf when the leaves changed colors, keep paying my debts off as quick as I can, and no one needed to be the wiser.
But then J.D. pointed out that my recent posts here haven't had a lot of “me” in them. That's not just because I'm focused on other things. It's because I don't want anyone looking too closely at me. I'm a little ashamed of where my finances are.
Not that there's anything wrong with taking a few months off from my debt snowball. I wanted to do something indulgent and special to celebrate being out of credit card debt. Taking a summer off would have been an expensive but reasonable choice.
The problem is that I didn't choose it. It just sort of happened. I let things slide. I put “set up increased loan payments” at the top of my financial to-do list in June. (A to-do list I literally left sitting on my desk when I packed my bags and left for the summer.) But I neglected to do set up those payments, or to do any other active management of my household finances for months. There was money in my checking account, and that was good enough for me.
Now there's a familiar sinking feeling in my stomach as I look at my bank balance and have no idea where my money has gone or what the numbers mean.
I'm not actually in any financial trouble. But my timeline for being out of debt has slipped, and it's slipped through some of the same cracks that led me into debt in the first place. I don't know where all that extra money went. Some of it went into preschool tuition and plane tickets and new shoes for the kids. Sure. But I was also careless budgeting for groceries and any number of small purchases. Those add up to a lot of dollars.
My shame isn't about my bottom line. It's about my bad habits. I'm making some of the same mistakes I made for years. The mistakes I'm prone to making with money when I don't pay attention. That's embarrassing, no matter what my bank balance is.
Of course, shame and fear about money was what led me into this debt trap. I didn't want to look. For years, I simply refused to know what my spending habits were, or even what my regular bills added up to. By the time I turned 30, that head-in-the-sand approach had saddled me more debt than the total income I'd earned in my life. I've spent the past two years digging myself out, and I'm starting to see a light at the end of that tunnel.
I've been living on a skinny budget for years. I've paid off a mountain of credit cards. But even though I had a lot of credit card debt, the credit cards were still the low-hanging fruit.
Now I have to pay off loans. They have lower interest rates and higher balances than my credit cards did. The bills just come quietly every month and I pay them. The balances only move down, but they move down slowly.
There's no exciting struggle. No relearning old habits to keep the plastic in my wallet and out of my hand when I'm standing in line at the checkout. No lifestyle changes that will suddenly free up hundreds of dollars to wipe out the debt.
I just need to roll that snowball over and keep paying it. I suspect that even being very aggressive about my debt payments, it will be two years before I hit another financial milestone worth throwing a party about. This approach is effective — but boring. That's what getting rich slowly is all about.
It's the beginning of September. The beginning of fall, and of a new school year. A great time for new beginnings. I'm back on the wagon with my budget, and making those extra loan payments this month.
I'm writing about all this publicly in the hopes that it's a teachable moment. The lesson I've learned so far: Sometimes we all slip. The key is to fall back on the skills and strengths you know you have, and start over from wherever you are.
What else can I learn here? You're a bunch of extremely smart readers. What do you do to stay motivated while paying down debt or saving towards a goal? What helps you keep your good financial habits going?