reviewing our progress for 2011

It may be nearly June, but I have been intending to jot down our start-of-year paying-off-debt progress ever since the beginning of January. So here goes.

We didn’t make any specific financial goals for 2011. I had a feeling that we weren’t going to make much or any progress during the year. As it turns out, I was right.

Here is how 2011 looked for us. Keith was unemployed for the first five months, during which time we incurred more debt. He then worked long hours at an arduous job for most of the rest of the year, during which time we paid off some debt, including one of our three student loans (hurray!). We then had enough money saved up to pay the full birth costs of our third child by the end of December.

So. After being unemployed for nearly half the year and paying for the birth costs of another baby out-of-pocket, as well as having me be able to be home full-time with our little ones all year, we ended up starting 2012 with a grand total of $94.87 more debt to our name than when we began 2011.

Disappointing? Well… yes and no. Sometimes making less progress helps us recognize the times when we make more. It was not a banner year financially, and yet the difficulties that we ran into could have set us back much further than they did. We didn’t pinch pennies as carefully as we have during some years, yet we also didn’t make any memorably foolish financial decisions that cost us from going forward, and all in all I think we were fairly fiscally responsible.

The only area in which I wish we’d been able to do just a bit more was in contributing to Keith’s Roth IRA. Our yearly “bare minimum” goal is $1000… which I know is paltry compared to how much you really should put toward those things, but it’s significantly better than nothing… and we contributed $900. So it would have been nice to contribute just a bit more there, but that’s just the way it goes sometimes. Maybe this year we will be able to achieve a bit more in that category.

a happy milestone

I haven’t posted much this year because nothing much seems to be different. We are still doing things frugally. Keith was out of work for six months, so now we are trying to overcome a few thousand in credit card debt (for groceries and gas and other required expenses) acquired in the last month or two of that. We aren’t able to put extra money toward debts right now, as we need to build up our savings account and save for a few extra expenses coming up around the corner, as well as the possibility of seasonal unemployment again this coming winter.

It is disappointing to move slowly on our pursuit to pay off debt, but I have sensed since the beginning of this year that we wouldn’t be able to put extra toward debt in 2011, so I’m at peace with that. I do hope it changes a bit in 2012, but we’ll see.

We did hit one big milestone today, though. We paid off our first student loan! Hurray!

The milestone is a relief, but not as exciting as I’d thought it would be. That it took five years to pay it off, and that we have two more student loans to go, gives me cause for gloominess. We didn’t even get to put one big final payment toward it… it was just a slightly smaller payment than last month, paid automatically just like every month. No big rush of glory. And as much as I am glad to have it paid off, I thought when accruing it in college that it would be paid off in only a year or two after graduation.

On the other hand, we’ve been putting extra toward this loan whenever possible for the last year or two. This one had the highest interest rate of all our debts (a hefty 7.2%) as well as the highest required monthly payment. To have no more debts with interest rates higher than 3.99% is a very nice thing indeed! And if we continue to pay the same amount toward debts every month, the snowball effect will certainly help us pay off these pesky credit card debts and subsequent loans much more quickly.

So I suppose there really is cause for celebration, now that I think about it a little more. We haven’t reached the huge vacation or expensive piece of artwork stage of celebration yet, though we are thinking that giving a few bucks to a poor college student or something of that sort would be a nice little way to celebrate our freedom from this particular shackle. For now, I think I will make some brownies.

debt reduction planner

I’m reading a (terrific!) book called Miserly Moms. It makes reference to a debt planner located here…

http://cgi.money.cnn.com/tools/debtplanner/debtplanner.jsp

… and I must say, this is the best debt planner I’ve ever seen! It is a simple way to plug in all your debts and see what kind of variations you can make in order to pay it all down more quickly. This is the kind of calculator that we searched for but never found when we were walking people through the Money Merge Account program. Seriously, this is a great calculator! You’ve got to try it.

Note: It says that it’s for credit card debt, but it really doesn’t matter; you can include any time of debt. If you’re familiar with Dave Ramsey or Crown Financial, the Fixed Payment option works perfectly with what they call the snowball effect.

I am enamored with this thing. It is a number-cruncher’s dream come true!

meeting our goals

Last January, I shared with you our financial goals for 2010.

Today, I will share with you the outcome of those goals.

Goal #1: Acquire $2000 in an emergency fund.
Result: Success! We have that and a bit more in our emergency fund, as well as an extra month’s worth of funds in checking.

Goal #2: Contribute $1000 to our Roth IRA.
Result: Almost. We contributed $700. It would have been nice to contribute more, but something is better than nothing.

Goal #3: Pay off about $7300 in principal on our debts.
Result: Success! We paid off about $10,400 in principal on our debts, so we exceeded this goal by quite a lot.

I am both excited and disappointed, somehow. We set realistic goals, and even exceeded the amount that we paid toward principal on our debts. We had another baby, went on a big vacation, ate well, and still my husband was able to support all four of us on his one income as well as make additional payments toward our debt load… despite having no work for three months out of the year.

Yet we still have debt, and I suppose that is the thing that disappoints me.

I once heard that people overestimate what they can do in a year and underestimate what they can do in five years. At the rate we are going, we will be out of debt in a little over two years. That’s not too shabby. I want it to be today, of course, but this steady plodding thing is paying off. I hope that five years from now will see us out of debt and being halfway finished paying for a home of our own. It could happen, right?

this year’s goals

Thanks for the encouragement on the last blog post.

We don’t know what the next twelve months will hold. Adding another baby to our family will no doubt mean lots of fun new expenses which could make it difficult to meet this year’s goals. It’s even more difficult to meet goals if we don’t set them at all, though, so here are the major tenets of our personal financial goals for 2010:

1) Acquire $2000 in an emergency fund.

2) Contribute $1000 to our Roth IRA.

3) Pay off about $7300 in principal on our debts.

It is undetectable on the surface, but there is something different about this year’s goals as compared to the past four years. Perhaps I am learning the art of what Proverbs calls slow and steady plodding, or perhaps it is simply a matter of being content in our circumstances. Either way, my secret thought behind every previous financial goal has been this: “But really, I want to pay off EVERY CENT and I want to do it THIS YEAR.”

I feel now that such thinking has done more harm than good.

Not that it is wrong to desire to be out of debt, but setting unrealistic goals only sets me up for dissatisfaction, even as we make strides toward financial freedom. We have several major things taking place in the next six months which could either help us greatly or set us back greatly, and yet I am not worried about them. (Well, not most of them.) We will work hard toward these goals and trust the Lord to direct our steps in financial matters as in all others.

And if the end of 2010 doesn’t show the bottom-line number that we are hoping to see, we’ll still be okay.

last year’s goals

We’re now a full week into the new year, and I realize that I haven’t yet posted our year-end totals.

Part of the reason I’ve waited is that our finances are rather unstable now that Keith is out of work and not eligible for many weeks of unemployment. But if this blog is really to be one where I honestly chronicle our journey toward financial freedom, that will have to include the lean times too, right?

So here we go.

Our financial goals for 2009 were 1) to acquire $1000 in emergency savings, 2) to begin a Roth IRA, and 3) to pay off about $9250 in principal on our debts.

We achieved the first goal, but ended up dipping into it at the end of December. I believe we should be able to fill it back up this week, but that likely won’t last long, as our living expenses now exceed our income.

We achieved the second goal, hurray!

We didn’t achieve the third goal, instead paying off about $6515 in principal on our debts. I have to admit, that is pretty disappointing. But we know which choices we made that prevented us from reaching the number we had hoped to reach this year, and we don’t regret making them. And I will say that after a year like 2008 in which we saw our debt-load increase, it is satisfying to have come to the end of 2009 – a year in which three of us lived on one income in a down economy – and have at least made some headway on our long-term goal of paying off all debts.

one down

“Outstanding balance: $0.00.”

THAT feels GREAT.

We paid off the lesser of our two credit card balances the other day. Not the kind that we use for monthly expenses; this was a debt made up of 2007’s taxes. It’s been hanging around since last year, and we just made one final shove to get rid of it. Hurray! One debt down, only four more to go!

I’ve been realizing lately (with reluctance) that like everyone else, I too spend more money when putting monthly expenses on a credit card. It’s taken me a long time to admit it, though. Keith and I never used credit cards during college, and we’d never accrued any debt other than student loans, so when we began using credit cards for monthly expenses in the year following college graduation, it was purely for the purpose of building credit. Because we just knew that we would never be so foolish as to use credit cards unwisely. Fast forward a year, then throw in the worst six months of our lives, add in making next to nothing for the six months after that… and bing, we have credit card debt. I really do think it’s fortunate that we had credit to fall back on during that point in time, and we are fortunate to have our credit card interest rates to be under 5%, but still. Debt is debt.

So anyway, that has all been separate from the card we use for our monthly expenses, but I’ve decided I really need to just pay for things out of checking now. Even if we don’t get the 4% cash back. I’m excited to see what kind of difference it will make in my spending when I am forced to write everything down in the checkbook. Thus, the “monthly expense” card is now down to $0 as well, and I have begun in the last few days to use real money to pay for things.

I kind of like it.