Month: March 2016

A Year without Student Loans

Sunday marked the first anniversary of paying off my student loans. I’ve been thinking about this milestone since the new year. A year ago then, my debt repayment accelerated rapidly. It felt natural to reflect on what changed in the last year.

1. I’m in an unusual financial position. 

As a recent law grad, I’m expected to have student loans. I knew going into my payoff that I would be an anomaly, but it has been harder to face than I expected. I used to seek out the topic, but now the topic finds me.

At a gathering earlier this month, one of my fellow law grads brought up how he’s never had a lower net worth. He commented to our friend, a waitress, that she likely had a higher net worth that he and I do because of our student loan burdens. I didn’t correct him. His loans are his to bear. He’s a smart guy and I’m sure he’ll figure it out.

I don’t mind outsiders assuming I have an enormous debt burden because of my education. It helps my own frugality. However, it’s frustrating to have the presumption presented to my face. I can’t relate to the weight of their loans. It’s hard to talk about it with people that don’t want to do anything about it.  I haven’t found my place in where to talk about it with people who aren’t already planning to tackle their debt early.

2. Saving doesn’t feel as good as paying off debt. 

I hate to say this, but I enjoyed paying off my student loans.* When I graduated, $45,330 felt like an insurmountable sum. Every payment got me closer to something unbelievable. I didn’t think it was possible to do what I did, but I did it! Had I believed in myself earlier, I would have been done even sooner.

Paying off debt was an incredible confidence builder when it came to my money. I kept track of so many little details and nothing fell through the cracks. If I could manage that, I knew I could manage anything. I felt like a debt slaying warrior.

Saving doesn’t evoke the same feelings. The first few thousand were tough. I didn’t feel like I was getting anywhere with saving. It has been more fun as I stockpile more cash. The $20k and $25k milestones for the house fund had more weight than earlier accomplishments. Those felt like worthwhile savings amounts. I saved something! I’m excited to cross into $30k and $40k. Hopefully, I can get there before I buy a house. Starting over from zero is going to feel pretty cruddy.

*Hubs thinks I’m crazy for this. He hated paying off debt and loves saving. Each saving milestone brings him incredible joy. To be clear, I didn’t enjoy the debt; I enjoyed the journey.

3. Investing is where the fun is.

I was old for my grade and I stayed in school forever. I didn’t enter the working world until I was 27. Add to that, I had that pile of loans to address. I didn’t start actively investing until April 2015 at the prime old age of 28.5.

A lot of people may not sympathize with my tardiness to the investing game. So many start investing much later than I did. The problem for me was that I knew all along what I was missing. I knew about compound interest. I understood its power. Though, apparently I didn’t understand it enough to do anything about it.

Because of all this, I felt and still feel incredibly behind. Now with my student loans behind me and a small, low interest car loan (I can’t wait until this is done), I’ve been able to do something about my investing inadequacies.  I’ve maxed my IRA for the last 3 years. I’ve maxed my HSA for 2 years and I’ll max my 401k for the first time in 2016. Next year, Hubs and I will max out everything. That will be a glorious occasion.

I love investing because I can feel that I’m doing the right thing. I’m taking care of myself for today’s worries and tomorrow’s reality.

4. I’m in a better place now, on the road to a new end.

It’s easy, when paying off debt, to think of the payoff date as your end goal. It’s a great goal, but it should never be the end goal. For a while during my payoff, I was so focused on my payoff date, I believed my payoff date was the end goal. I’m here to tell you it’s not.

For the first 6-8 months after I was free, I struggled. I have no shame in admitting that I didn’t know where I wanted to go. I spent an incredible amount of time spinning my wheels, getting no where. Getting rid of my debt was a huge goal. When I accomplished it, I didn’t know what to do.  I played around with several ideas: minimalism, fitness, zero waste, early retirement. Less, more, less, more. None of these ideas filled the hole left behind by my drive to rid myself of student loans.

Today, I accept all of those pieces as a part of my next journey. I will never own 100 things, but I actively choose to own less. I will never be in amazing shape, but I choose to move more. I want to waste less and save more, a lot more.  I haven’t filled all the space yet, but I’m working on it.  The best news is that I’m more confident and at peace with myself than I’ve ever been.

 

I have no regrets about paying off my student loans. The process helped me learn a lot about myself and where I want to go. I’m excited about what the future holds.

February 2016 Net Worth

It’s March, but I am overdue for a February Net Worth update. It’s a good one. Before I get into the juicy stuff, let’s recap.

If there ever was a month of my life that epitomized Work Hard/Play Hard, it was February 2016. I had a major project at work peak. I was working nights and weekends to keep the entire team on schedule. I even worked a full day on Valentine’s Day, which to me was simply a Sunday in February, but that fact seems to pull on other’s sympathy strings. Can you believe it? I worked on a BS corporate holiday!

The play part of February was so much more fun. I had 3 major events in February, 2 of which were out of town. My favorite event was this: The Crashed Ice Finale in St Paul, MN!

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We stayed with friends when we were out of town and it was a delight. Hotels seem so impersonal to me now.

To top off all the fun of the month, Hubs and I were incredibly sick for 2 weeks of it. Our illness managed to fit themselves perfectly into such a crazy month to let us still do what we wanted to do and for me to get my work done. It was not fun to “sleep” (let’s be honest, there was no sleep) in a chair for a week, but I’m happy our immune systems got a work out.

I’m healthy now, let’s get to the numbers!

[Flashback!]

February 2015:  After only focusing on my student loan balance for a year, I started tracking my net worth! It was positive! My 401k balance broke through quadruple digits! I saved a comma! I was also bragging about my IRA gains. I have less IRA gains today than I did a year ago. Great.

February 2014: I was in my first month at my new job! I was still juggling all my unemployment volunteer obligations: writing wills & doing taxes. The Sochi Olympics were in full swing, so naturally, I was watching a lot of curling. HURRY!!!!! Haaaaaaard!

February 2016: A big month!

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Assets!

Retirement: $29,148 (+2,050)  Two great months, back to back! Last month was from my 401k match, this month got a boost from my annual bonus. I’ve made some serious retirement progress in the last 2 months. It’s hard to believe that all of these gains have come despite the recent market activity. 

Taxable: $8,269 No change.

Auto Value: $12,519 (-150)  The depreciating asset keeps depreciating. I got in a car accident in February, but I’m considering the accident a wash. There was no structural damage to the car and it was fully repaired with original parts. Minus the major inconvenience of getting my automobile fixed, the car is as good as new!

House Fund: $24,086 (+4,931) A huge month for the house fund!  HUGE! I crossed $20k with my first check of the month and made major progress with the second check.  Saving for a house has been incredibly boring for most of the last year, but a major saving month is a lot of fun!

I flew right through Thing 1 and nearly finished Thing 2! I am over the moon with my house fund saving this month. Can I get a bonus every month?

Round Two Progress: (What is Round Two? check here!)

  • Baby Saver: $2125 
  • Middle Saver: $7953 (Loan value: $5828) ✔
  • Thing 1: $16,453 (Loan value: $8500) 
  • Things 2: $24,953 (Loan value: $8500)  >in progress< … but almost done!
    • Dang! $24,086 down, only $867 to go!
  • Big Momma: $45,330 (Loan value: $20,377)

HSA: $5,728 (+254)  Another month without any bills. I had so many months with medical bills last year, paying bills feels like the norm around here. My body and bank account are pleased I haven’t been to the doctor in a while!

Car Fund: $451 (+50) I survived the market downturn without dipping into my cash reserves! That alone deserves a woo hoo! With saving so much of our income, I wonder if this account is a waste of time. If I need work done on my car, I can pay for it out of our cash flow. Then again, having this account means I have no excuse if a repair comes up or when it needs maintenance. Little funds like this are extra hassle during good times, but I’m sure it will be a soothing voice when I need it. 

It did feel nice during the process to repair my car. $451 isn’t a lot, but it was enough to keep me calm during a boom accident.

Liabilities!

Student Loan: $0! At the time of posting, I’ll have less than 2 weeks until my one year student loan free anniversary. 

Car Loan: $7,970 ($377)  Under $8k! If this were a student loan, it would be gone in a month or two. Unfortunately or fortunately, its a 1% car loan so it will be around for another 18 months. 

Overall:

  • Net worth: $72,231. Up $7,512 from last month. 

My largest increase yet! So much of it was from my bonus! I’m proud to report that my bonus only went 3 places: Taxes, 401k and the House Fund. Even better, I couldn’t have imagined spending it any differently. :D:D:D

Random Money Fact: I set one of my daily passwords to be my net worth goal. I wanted to get to my goal before the password expired. I am over the moon to report that I got the notification to change the password this week. My goal? $65k. I made it with room to spare!

 

How was your February? Do you bother with little sinking funds? How have you handled windfalls? Does it all make it into the bucket, or does a little (or a lot) leak out along the way?