Tag Archives: debt

Celebrating One Year Debt-Free

A year ago this month, I paid off the last of my student loan.

Since then, my net worth has more than doubled, now at 85% of my income. More than the positive influence on my net worth, being debt free has provided a degree of flexibility and freedom that I didn’t have before.

For example, I flew back to North Carolina earlier this month. This is a trip that I’ve wanted to do for over a year, but I couldn’t justify slowing down my debt payoff to save for it. Now debt free, I can enjoy such trips without guilt.

Another benefit I see to being debt free is that interest is now my friend. As I was filing my taxes for 2015, I realized that this was the last year I plan on reporting paying more interest than I have received. (Well, at least until I get a mortgage. But I revel in being fully debt free for now.)

While I still practice a tight budget, I much prefer to see the balance of my saving accounts going up to the balance on my student loans going down. I can easily imagine each of those dollars playing their part in buying my dream urban homestead.

I’m anxious to take the next step in my financial plan: buying my house, but I know that I will best be served by preparing first. If I do, I should be able to be permanently debt free in less than a decade after I make that large purchase.

Visiting the beach debt-free doesn't keep it from being a rainy day.
Visiting the beach debt-free doesn’t keep it from being a rainy day.

First Year of Striving Stewardess: Ronnica’s Favorite Posts

single candle cakeAs of November 1st, this blog is a year old.

Over that year, Amanda and I have worked to find our voices in this platform and the right rhythm for posting. I’ve enjoyed having this outlet to discuss the things that I’ve learned and publicly challenge myself.

In the past year, there were a few posts that were closer to my heart than others. To reflect on this time, I want to share these post with you.

My favorite post this past year was “How I Paid Off $10,678.28 in 10 Months.” In spite it’s slightly click-baity title, it represents my biggest accomplishment over the last year. Now that I’ve been debt-free for six months, it’s easy to forget the weight that debt carries. Now that I’m on the other side, I’m determined never to get back there again.

Another post I wrote on the subject is the post I enjoyed the most writing: “Sacrifice What?” I always love “what if?” type stories and I loved getting to write my own story about what would have happened if I had continued along the same financial course I was on previously. The story was a good reminder to myself that the sacrifice is worth it.

The final post that I’ll discuss today is a more recent post, “Why it Matters.” I wrote this post for myself as much as for anyone else: I need to be reminded why I make the choices I make. Remembering the “why” keeps me motivated to make the decisions I want to long-term.

Thursday Amanda will share her favorite posts. Thanks for sharing this past year with us!

Photo by Sophie

Frugal Victories

6988272680_97102f42c6_zI’ve been spending quite a bit of time on here lately commenting on reducing our grocery bill, perhaps at the detriment of discussing financial victories we have experienced.

You know me (and Ronnica too)–improving our stewardship of money is a constant quest! I wanted to take a post and share what I’ve been proud of recently, as far as our finances are concerned.

We have been a one-car family for over three years. Darn right I’m proud of this.  We have been a one-car household (remember:  four people and two big dogs comprise our family) for over half of our marriage now.  People said it couldn’t be done, but thanks to careful planning, priorities aligning, and a walkable neighborhood, this has been a noteworthy accomplishment.

I don’t know how long we will be able to swing this, but we have no plans of adding a car any time soon, so as long as we can make one car work for us, we will.  It’s saved us a large amount of money!

We have been without student loan debt for over two years.  I wish we could say “completely debt-free” but the mortgage alone precludes this.  We’ll get there–in the meantime, let me say that not paying a student loan bill has been pretty awesome (as Ronnica can attest to!).

We continue to be on-track for savings–including retirement and college.  Without delving into specific numbers, I will say that I am pleased with our progress in saving for our emergency fund (we’ve needed it more than once!), retirement, and college for the kiddies.  There are times where I wish we had more funds to play with right now, but knowing we won’t have to worry about the future as much (because, as a worrywart, I worry no matter what) is a relief.

What victories have you celebrated lately?

Photo by Phillip Taylor at ptmoney.com

Updates on the Striving Stewardess

A few months have gone by since our last updates, so here’s updates on things we’ve talked about previously:

Ronnica’s Updates

How I Paid Off $10,678.28 in 8 Months

It’s been over 4 months since I got out of debt. The cool thing about not having a mortgage is that I’m completely debt free.

Since then, I’ve been focusing hard on building emergency savings and adding to my retirement account. To balance my two goals, I’ve decided to put 20% of my savings towards retirement (my 401k contributions are handled separately).

How it Works: Living without Air Conditioning

This is the first summer that I’ve gone completely without air conditioning. I’ve become unapologetic about it: if someone is at my house I’ll give them full control over the fans, but do not turn on the air. While it doesn’t get as hot here in Colorado as in anywhere I have lived, it has regularly gotten into the lower to mid-90s.

Yes, I’ve sweat a lot, but I don’t think that’s a bad thing (regular showers are a must).

Parsley has my best performer this year (good for my ranch dressing!).
Parsley has my best performer this year (good for my ranch dressing!).

Ronnica’s Garden Plan

Sadly, this has been my least productive garden, apart from the year I stopped watering due to anemia-caused exhaustion.

The primary cause was the cold and rainy weather we had for most of May. I also tried a few new-to-me varieties that I’m not sure did as well as I would have liked.

The great thing about gardening, though, is that every year is a learning opportunity. I’m going to take what I’ve learned to make better choices next year.

And there’s always my winter garden (details to come).

Amanda’s Updates

Giving Our Time

Just a couple of months after writing this post, an opportunity to give my time presented itself:  serving on the pastoral call committee of our church.

Although we have only met a few times so far, and there is a good chunk of time I have to commit (a few hours a month for meetings and ultimately interviewing potential candidates to serve as our pastor), it is a volunteer position that is well-aligned to my gifts, one that is fairly flexible with our family schedule, and most importantly, is vital to the future of our congregation.  It’s a great opportunity!

Grocery Shopping

It has been six months since I first posted about my grocery shopping method (one word:  methodical).

Since that time, a lot has changed–for starters, the national egg shortage has resulted in eggs no longer being the least expensive item in my cart.  I have also lightened up quite a bit in my grocery shopping prep, because where I get most of our food now (Aldi) doesn’t accept coupons, so that actually saves me time…but also because I’ve become a bit lazy.

Our grocery bill has also crept upwards, due in part to a sales tax increase and cost of food steadily increasing, but also due to the aforementioned lackadaisical attitude.  Since grocery shopping is one of the easiest ways to help or hinder a family budget, I have been working on reducing our grocery bill.  Stay tuned later this month for how that went.

Fall Purge

A quick look at the calendar tells me that, yes, fall is indeed upon us!  Since Riley has started working from home several days a week, this has forced us to adopt a whole new way of looking at cleaning and organization; with no home office, we have had to turn “the dungeon” into a multipurpose area.

That has meant–you guessed it–a whole lot of purging.

It’s a work in progress.  But it definitely doesn’t look like this anymore…

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…and for that I am very grateful.

Calculating My Net Worth

I’m a trained credit counselor, so the concept of “net worth” is not new to me.

For your review net worth is simply:

all assets – all debts = net worth

In my credit counseling days, I was too scared to calculate my net worth. I really didn’t want to know what it would say. I think I knew that it would be negative.

Sidenote: Let me pause right here. I know that “net worth” makes sense as a financial term, but it kinda bugs me. I don’t believe that true worth has anything to do with the number of zeroes in your bank account or how much you own.

I decided to calculate my actual net worth (financially speaking, of course) a few months ago. Thanks to the ease of mobile banking, I was able to go back and calculate my net worth at a few points over the past year as well.

While I’m not comfortable speaking about my net worth in raw dollar numbers, I will share my results as a percent of my current (annual) base salary.

 

Net Worth

 

My net worth just before I moved from North Carolina in April 2014 was almost 54% of my current salary. I’m sure that was the highest it had ever been at that time. Of course, it was greatly hindered by my $12,000 in student loans I still had at that time.

For most of the next 6 months, I was living on my savings, thus the huge trough in the graph.  But since then, I’ve been able to get my net worth above where it was before I moved. I’m happy that it took just over a year after my move to get it back to that point. And since then, it keeps growing. As of my last calculation a few weeks ago, by net worth is at 63% of my annual salary.

While net worth isn’t everything, it is a measure of financial health that I will keep track of. I don’t have a goal net worth size: I don’t intend to be rich. I only want enough to support myself, own a urban homestead one day and to give generously as I go.

How it Works: Selling Stuff

I once had an English teacher who said one of the worst words a writer could use was the word “stuff.”  (The other one, in case you were wondering, was “things.”)

That said, “stuff” is going to be discussed at length in this post, because one of the easiest ways to live out minimalist values and make a little extra money (to build up an emergency fund or pay off that pesky debt) is to sell “stuff.”

Of course, one could always sell body “things”, such as plasma, but since I have no experience in that arena, let’s talk instead about something I have actual experience with:  clearing out clutter and getting cash for it.

Three of the more lucrative household items I have found to clear the most room AND give the most money are clothing, books and paper products, and “dust collectors”–also known as knick knacks, tchotchkes, and trinkets.

 20150301_2222531.  Clothing.  One of the biggest things to remember about selling clothing is that if you wouldn’t buy it, then neither will a secondhand clothing store.  Typically stores that buy clothing want on-trend, good quality clothing; depending on where you are selling, brand names will matter.  My experience has been they will pay based on what is in their current stock; if they have a glut of shirts, for example, then they won’t pay top dollar for yours, if they take them at all.  Selling a few clothes at Plato’s Closet yielded us around $50, but again, this can vary.  Some stores will also offer you store credit in lieu of cash.

2.  Books and Paper Products.  My first experience selling books was in college, where I hoped I would get a little money back for textbooks that may (or may not) have seen a great deal of use during the semester.  I have continued to sell books and other items periodically, especially if I happen to have duplicates of a book, puzzle, or calendar.  Selling books is similar to selling clothing, as far as requirements are concerned.  Quality books, puzzles, and the like can be sold online or in a traditional used book store, with cash back varying widely.  I confess I never make huge amounts of money doing this, but it’s nice to clear off my bookshelves and get a bit of money for a special treat!

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An example of the tschotskes that made the cut.

3.  Knick-knacks.  In my mind this is the trickiest of the three:  how do you know what is best to donate to a thrift store and what is worth the time to try and sell?  I’ve found that if an item is rare or a collectible, it is obviously worth the time to try to sell (usually an online venue is best), but so too is the item that would appeal to a certain population.  I used to collect dog figurines before I realized what a chore dusting them really was.  I sold them online to people (typically fans of the dog breed depicted in the statue) who would enjoy and appreciate them more than I was.  Depending on the item, this can yield a good chunk of change.

What “stuff” have you sold?  What was your experience like?

Saving for College

7067727893_b68dce54fc_mLast month, Ronnica talked about how she paid off the last of her student loan debt–five figures in a a mere eight months.  *thunderous applause*

It got me to thinking about the many ways one can fund their (or their children’s) education and which way is the “best”.  Here are a few I’ve come up with:

1.  Student pays it all.

2.  Parents pay it all.

3.  Some sort of combination between parents and student.

4.  Loans

5.  College savings plan (Coverdell, 529, etc.)

Of course, there is the combination of the above, and the “other”, which, in addition to scholarships, is how I funded a good portion of my education (my mother died when I was young, and her life insurance was her final gift to my brother and I).  And there are those who opt to join the work force or military (which pays for education) in lieu of going straight to college.

Realizing that my young kiddos will be leaving the nest sooner than I care to admit, this idea of “how to pay for college” is something I’ve been struggling with lately; I can see merit to many of the options available.  Having a student fund all or part of their education commands the student take ownership of their degree.  It may also inspire them to make different choices (like in-state versus out-of-state).

But you don’t have to look far to see stories regarding the mountains of debt the average student accrues today.  At the same time, the economy seems slow to recover from the Great Recession, so many parents can’t fund a savings account (529, Coverdell, or otherwise) for their children’s education even if they wanted to.

So what’s a parent and good steward do?

Good question. It’s something I’m still trying to figure out for myself.  I certainly don’t know what’s best for every family.  Circumstances (and priorities) are different within each.

For our family, we nickel-and-dimed a start to a Coverdell Education Savings Account (aka Education IRA) for the kids.  I say “nickel-and-dimed” because that’s literally what we did (incidentally, this is a tactic that Ronnica hits on in her debt-free post):  We funneled extra change into the kids’ piggy banks until there was a decent enough amount to start funds for them, and we add to them automatically each month.  Unless something changes in our circumstances, however, our kiddos will likely have some sort of combination of the payment options above.

What have you done in your family?

Photo by TaxCredits.net

Sacrifice What?

scale balanceWhen I shared my news last month of finally slaying my debt dragon, one of the frequent comments I got was that I had sacrificed a lot to do so.

I understand what they were saying, but at no point did paying off my debt feel like a sacrifice. After all, it’s not really sacrifice to give up something lesser for something more important.

So what did I “sacrifice” these last 8 months to pay off my $10,678.28 in debt? The following is a estimation based on my previous spending habits. Let’s call this alternate story “Nicki’s story.”

While I paid $10,865.27 in payments, Nicki made $2,575.12 in payments. While this represents more than her minimum payments, today she still owes $8,252.59 after interest.

At this rate, Nicki will be debt-free in August 2017.

Nicki did not opt to work as much overtime or odd jobs, so she had 72 more hours of free time. As this time was spread out over several months, she used almost all of it to watch mindless TV and surf social media. This free time cost her $1,258 that she could not put towards her student loans.

Not only that, but Nicki splurged on more entertainment options (Netflix/Hulu, a few movies and events) to fill those hours, spending $228 more than Ronnica on entertainment.

Nicki prefers to eat out regularly (6 times/week), as preparing and cooking meals takes more time and energy than she wants to give them. For this convenience, she has paid an additional $1,456 than Ronnica did.

Nicki, thankful to have a job again, spent $1,808.15 more on stuff than Ronnica did. Among this cache of goods are a new laptop, extra gardening and hiking goodies plus some new clothes to refresh her wardrobe. This amount also includes money not redirected from over-budgeting items, as that money would have been spent on little things instead. In fact, Nicki regularly overspent her grocery budget by a few dollars.

Nicki is a generous person and gave $540 more in gifts and financial donations than Ronnica did.

I’m happy that Nicki’s story is not mine. I find more pleasure and joy in being debt-free than I would have in fast food, entertainment and stuff.

As for the giving, I do give less monetarily than I used to and spend less on gifts. But I’m working on using my creativity and talents to make my giving go farther. I’m trying not to buy into the idea that love is expressed by spending. And I’m going to work on upping my financial giving again, too.

As you can see, living a more minimalist lifestyle isn’t about sacrifice. As Amanda shared last week, we really aren’t “doing without“, but choosing what we value more. For me, that was being debt-free instead of spending more on my temporal pleasures.

Photo by Hans Splinter

Use It Up, Amanda’s Take

Yesterday, Ronnica gave her interpretation of the first part of the old adage, “Use it up, wear it out, make it do, or do without.”

As I’ve gotten deeper into the minimalist philosophy, I’ve found the first tenet of this rhyme to be the easiest to implement:  Use it up.  Isn’t that at the heart of most minimalist, simple living or environmentalist views?

To that end, of course I try to ensure our family uses up all food and toiletries; to borrow another old-timey mantra, “Waste not, want not.”  But, there are a couple more ways we “use it up”–they may be a more non-traditional interpretation, but they are arguably just as valid and important as using up more material things.

6710868859_ef0cc13ace_m1.  Gift cards.  I don’t know about you, but I love getting gift cards as gifts.  The freedom they give me is the best!  But to really get the most from your gift, you have to use up the entire balance.  Using a gift card as a supplement to shopping you would ordinarily do (like groceries or clothing) if at all possible.  This will yield some great savings in your budget if you play your (gift) cards right!

2.  Vacation time.  Do you have it?  Use it, even if you don’t go anywhere particularly special.  Especially if it doesn’t roll over at the end of the year.  Americans are arguably more stressed than residents of many other developed countries.  You can’t serve others well and perform optimally at anything if you are functioning at a less than optimum level.  Take a break!

3.  Your income.  Definitely more of a reach, but truly–it is important to give every last cent of your income a “home” in your budget.  If it is unaccounted for, that cent as no practical purpose and is more likely to be spent frivolously.
Every cent counts, especially if you are working on paying off debt.  Use up all your income!

What have we overlooked in the “use it up” category?  We’d love to hear from you!

Photo by 401kcalculator.org

Use It Up, Ronnica’s Take

We’ve all heard of the phrase, “Use it up, wear it out, make it do, or do without.” While I only started to think about this quote more seriously when I was doing my “Buy Little” month, Amanda has been applying it for longer.

Because this is a useful rule of thumb when you’re fighting clutter and over-consumption, we’ve decided to devote a couple of weeks to it. Each of us will share some brief thoughts about each part of the saying. 

We’d love to hear how you’ve put this saying to use in your own lives as well!

“Use it up” can be hard. I’ll be honest: I’m picky. If I have something that I don’t like, my tendency is to throw it out, not finish it up.

But just because it’s hard doesn’t mean I shouldn’t do it. In fact, just the knowledge that it’s hard encourages me that I need to do it. How else will I grow?

So what areas have I been working to apply the “Use it up”?

1. Food

This is an obvious one. I’ve been working on reducing my food waste as I’ve discussed already.  A big part of this, for me, is being okay with eating something that I have, even if it’s not what I’m craving.

In particular, I like to make up my work-week “lunches” (at 8 PM, it’s probably best called supper) of leftovers I can heat up at work. This can make for some unusual meals: one recently was hashbrown casserole and turkey pepperoni, (perhaps not healthy but remembering that I was “using it up” gave me an excuse to eat something delicious, guilt-free!).

2. Personal hygiene

I’m still working on simplifying my beauty routines, but even while doing so, I’m using up what I currently have before switching. This means that I’m using my not-so-favorite lotion, but it helps cut down on waste.

3. Debt

Okay, this is a bit of a stretch. But seriously, I’m trying to finish off my debt so it counts, right?

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Tomorrow, Amanda will be sharing a few thoughts about “Use it up.” What do you do to use up what you have?