(Originally posted on The $76K Project on 2/24/2019)
Now feels like a good time to write a back-to-the-basics post in the spirit of why this blog was created in the first place: to help us track our debt repayment. There have been so many other things to discuss lately - Lola Retreat, new job, goals both big and small - but while I was in LA for the retreat, I was reminded that the people who read this blog on a regular basis are primarily here to watch us get our financial act together. And that's why I keep chugging along with the $76K Project. I want to show people that it's possible to fix your finances even when you're late to the game.
At that time, we were in debt to the tune of more than $76,000, including:
When we first started this journey, it was all about paying off debt. We were absolutely obsessed with this goal, and that was a good thing: it helped us obliterate some very bad debt quickly and efficiently.
Let's be honest: a lower student loan balance isn't going to help you pay the bills in the event of a job loss or other expensive emergency. And the likelihood of getting through two, three, four or more years of debt repayment without being smacked in the head by a financial anvil is highly unlikely. You've got to protect yourself.
It's true that there are things we no longer do or purchase. We don't buy books unless we have a gift certificate; we use the library instead. We don't travel internationally (for now). We don't buy furniture or other home goods until it's absolutely necessary (our friends think we have a very minimalistic design aesthetic, but in reality, we just can't justify shelling out the cash to make our home look HGTV-ready). We don't purchase new clothes that often, either; luckily, we live in a town where jeans and sweatshirts are high fashion. In other words, we don't spend our money on things that we don't care about or that don't serve us.
But we do go out to eat once every two weeks or so because it's something we enjoy doing as a family. We do go on frequent road trips. We do pay quite a bit to live in a place we love. And yeah, I did pay $600 to attend a two-day financial retreat. That was definitely a splurge. Sure, we could cut down on all of this and put that money towards debt, but life would be less fun. We're willing invest (yes, I see it as an investment) in the things we care about and that enrich our lives.
Getting our finances in order has helped us figure out what we truly value.
Income: When I changed jobs last month, I took a $10K salary cut. That's equivalent to ~$800/month. After taxes and deductions for health insurance, my HSA, and our 401k contributions, we now bring in about $5200/month.
We might do that. We might not. It might take us a little longer, especially if we decide to focus on our 401Ks.
Since starting this blog, I've realized that personal finance is both simple and complicated. It's simple in that it comes down to saving more than you spend and investing in the things you value. It's complicated in that every financial decision comes with its own set of pros and cons, risks and rewards. It's not as straightforward as the financial talking heads on late-night cable TV make it sound.
I've also realized that you really can't apply the same financial strategy to every phase of life and to every situation. If I were 20 years old, with years of compounding potential ahead of me, then yes, I'd take a more "scorched earth" approach to debt repayment. I'd give all of my money to the student loan company and just get it done. But at 40+ years old, we're making up for some lost time, and that means paying off debt can't be the only priority or even the top priority - even though it feels really, really good.
I know some people will disagree. But that's okay! Personal finance is personal. That's why I don't give much advice on this blog: what's appropriate and best for our situation might not apply as well to yours.