Winning the Jackpot … And How I Didn't …

The proverbial light at the end of the tunnel: Paris, 2014. 

Another month … another dollar.

Last week I told you about all of the credit cards Justin and I have signed up for in the past few weeks/year. While we are still working to meet those bonuses and get that extra money (!), we find ourselves continuing to trudge along slowly as we work to pay off student loan debt. Some days it feels like an uphill battle. Two steps forward, one step back. Other days, it is much easier… We can get a few extra bucks for going to an Atlanta Braves baseball game?! Let's do it! (True story.) Eventually we'll have our debt paid off and life in order, but there is no telling how long it will take to do it. Below I'll talk about where we are at this point after 2 years of fighting the debt monster.

First, let's talk about what Justin and I are doing right.

- Our networth is growing. There is a $30,000 difference between this year and last.
- We keep improving our spending to saving ratio by saving/paying down debt up to $2,600 a month. Imagine how nice it will be for us when this number is truly surplus and not going toward student loans? :)
- Our debt is decreased by $17,000 from last year and $2,000 from last month.
- In contrast our assets have increased by $12,300 since last year and by $1,000 in the last month.

We are on track to have our credit cards paid off by January 2016 and our student loans paid off by November 2019.

Two caveats –

1. While we could pay off our credit cards a lot sooner, we are taking advantage of 0% interest on the remaining fees and paying them off over time but before the interest rates go up. We have decided saving money and paying off debt with higher interest rates is a better use of our money.
2. Justin applied to refinance his student loans over the weekend which would bring his interest rate down from 10% to approximately 3.5% saving us a few thousand a year.

Finally, not necessarily financial but sort of, kind of financial… Justin and I both, through applying for credit cards, lowering our interest rates, and improving our net worth have improved our credit scores in the last month by at least 30 points. This means it will be easier for us to be approved for loans and cards in the future. I definitely feel this is a positive for us since we are hoping to buy a house in the near future. (No idea when exactly. Just generic near future.)

Here's what we are doing wrong:

Staying on budget.

During March, we went over budget on nearly every category. We spent a ton on wedding and baby gifts, we traveled to a wedding, we spent too much on clothes, work accessories, and food, and even our fuel expenses were high! Granted, Justin and I still make more than enough to cover all of this extra spend, but when we do that, we have less to put toward paying down debt. I'm just grateful that going over budget doesn't necessarily equate to going into more debt for us. That would just add to our stress. :-/

On top of not staying on budget, Justin and I also spent more in March than we did in February. :(

A little more thought:

I feel like there is ALWAYS an excuse on why it's ok to spend more. There's a birthday, a holiday, a wedding, a baby shower… But the thing is, there is rarely an excuse to spend less. Is there a way to mentally feel the need to spend less without actually requiring that you do spend less? How do you prioritize spending less over other values? And is it even really necessary (aside from a means to pay down debt/increase savings faster)?

Assuming you are able to spend less and –say– take a spending fast, would you then feel deprived? And if that deprivation causes you to spend more the next time you are able, is it worth it in the end?

I know that everyone is different and everyone has different values, these are just the things Justin and I discuss when it comes to our finances. I value traveling and new clothes; he values good food. I know that I could not give up my desires for 5 years given our current living situation where we are depriving ourselves of so many other things we want … and I doubt Justin could either. It definitely makes me feel in awe of both those who are able to give up what they want in pursuit of being debt free and those who are forced to stick to a strict budget for lack of means. You are awesome.

Your Turn

How are you doing with regards to finances? Are you strategizing to make your money go further (like getting a lower interest rate on a loan or credit card for example)? Have you stuck to your monthly budget? Do you have any suggestions or recommendations for me?

** Participate in the A-Z blogging challenge with me! You know you want to! :)