Winter Blues

It’s been awhile since I've posted anything. Anyone who knows an accountant is familiar with this time of year being crazy busy, and to be honest, the last thing I really want to do after looking at numbers all day, is come home and look at more numbers. I must confess that sitting down and writing these posts out after a long day at work feels more like a college paper than anything. However, after a few many strong nudges from my lovely wife, here I am. Her encouragement for me to keep up with these posts speaks to the kind of woman I married. It’s a known fact that money issues, or differences in managing styles of money, lead to more divorces than any other reason. The inverse of that truth is then inherently also true; being on the same page, having open communication, and constantly supporting and encouraging each other when it comes to our financial lives should then produce healthy and growing marriages. I think this was a small example of this. The purpose of this blog was never directly linked to our ability or our wanting to pay off debt, but it was linked to our dedication to being a team. Being accountable to each other is the only way we will ever follow through with fully paying this off. And so, even though I may not want to always take the time to document this journey, keeping with what we agreed to do as a couple is far more important than any debt we will pay off.

Here is a brief summary of what we have done so far since first deciding to pay off our debt back in May of 2013. We didn't start making extra payments until after our wedding in October 2013, however, minimum payments still decreased the overall balance during that time so I decided to include that time as well. The rest of this post may get a little more technical, complete with tables and numbers, so I hope I don’t bore you too much, but I think it’s important to go over how we are making the extra payments that we are.

As a disclaimer, and as mentioned in a previous post, we were gifted some money back in November and without hesitation we threw it at the loans, so the overall amount paid includes this amount. However, it’s so encouraging to see the progress we've made in such a short time. It should also be mentioned that by no means has this journey been easy. Nothing good is ever easy. Otherwise there would be a lot more millionaires out there.    

I've always been one to create budgets, but making ones that I would stick to was a different matter. My theory was that I just liked creating spreadsheets more than budgets themselves. Jeez, nerd much? There is only one major difference between the budgets of the past and the budget that we do now and that is that each month we create an entirely new budget. Why? Well, obviously there are many fixed costs every month that don’t change, however, it’s the variable ones that will make or break a budget. Since every month is different, it made sense to create a new budget reflecting those differences. The last week of each month we have decided to sit down and have a “budget meeting”. This isn't as intimidating as it sounds. Simply put, we just talk about what types of things could come up in the next 30 or so days. Examples: birthday dinners, road trips to visit friends, vet visit for the pup, coffee with friends, haircuts, etc. After making a list of these things, we then adjust our budget accordingly.

The one thing to note is that we never go below a set amount of extra payments. For example, below is a table of the minimum payment amounts at the beginning of December. We felt comfortable to be able to pay an extra $1,100 payment each month. When added to the minimum payment amount, we get the total amount going to loans of $2,516.79. As we continue to pay off loans our minimum payment amounts will obviously go down, however, the overall amount going to loans should never go below the $2,516.79. This is outlined by us paying off one of the Fed Loans below, dropping our minimum payment by $21.63. This is then simply added to our extra payment amount keeping our overall payment amount unchanged. Some months we may decide that we are able to pay more than the $1,121.63 in extra payments due to the fact that we don’t anticipate having to spend money on birthday dinners or vet visit or what have you.

Whew, you made it. I know that kind of gets monotonous, but I wanted to briefly share how we approach our monthly budget and extra payment amounts. If anyone wants me to go into more detail exactly how we have our budget set up let us know! Shaina has a hard time keeping up with me when I start to ramble about the numbers, so I have to try and deliver them in short concise bits, so that I don’t lose her to Pintrest halfway through the conversation. But I'd be glad to dive in deeper. 

Before I wrap up, I am excited to say that at the end of March, pending a work bonus and our tax return, we will be able to pay off another loan, which is currently sitting at a balance of $4,661.09! I also hope to try and keep up with this better than I have been and post more about our change in routines when it comes to saving and spending money.   

-Nate