Debt Free in 2013

Last weekend, Mike and I went out to dinner to celebrate a momentous occasion. Tucking into a plate of tater tots at Cambridge Common, we smiled goofily at each other, utterly giddy at what we'd just accomplished. You see, we had just reached a major life milestone shared by many people of our generation.

What could it be you ask? Did one of us get a big promotion? Did we buy a home? Did we hit the lotto?!? No, friends. It was better.

We paid off all of our student loan debt.

I know, I know. Not really that sexy. But work with me here. Mike and I will never have to write another check send another electronic payment to chip away at the debt we acquired getting the degrees that are now 10+ years old. We no longer have to pay thousands of dollars of interest to a bank. WE. ARE. FREE.

How did we get here? It started, as most things in our life do, with me getting a little obsessed. You see, after an expensive 2012 (our wedding, other peoples' weddings, vacations, kitchen island, not sticking to christmas gift limits, etc.) I started to take stock of our financial health. With no big expenditures on the horizon, what was the best thing to do with the little bit of extra money we had in our accounts at each month's end? Sock it away in an emergency fund? Save or invest it so we could buy a place? Contribute more towards our 401ks? Open up Roth IRAs? Start a college fund for our future children? Go on another vacation? Buy even more Apple products? Up Oscar's treat budget? The options were overwhelming.

My first thought was to see a financial panther planner. And we still may at some point. But I felt like I needed to get a hold on our basic financial strategy before I went to see someone who will likely just want me to invest my money. So I did a lot of Googling. And looked at savings interest rates. And retirement calculators. And home prices in our area (which was painful to say the least). And college costs in 2033 (perhaps even more painful). But none of that gave me any direction of what to do when. Then I went to brunch with a friend who mentioned she was attending a financial planning class based on Dave Ramsey's philosophy about paying off debt. And I was intrigued. So, I ran home from brunch, downloaded his book on my Kindle, and read it straight through.

You see, while I don't think Dave and I would get along personally (socially I suspect he leans further to the right than I'm generally comfortable with), we do have a shared hatred of debt. And paying interest. So his philosophy really appealed to me. You can read about his 7 Baby Steps here.

He outlines a clear plan to what he calls "Financial Freedom." Doesn't that have a nice ring to it? His path to this financial freedom can be a bit extreme, so I can't say we are following his plan to the letter. BUT, we did take one big step which put us in position to make the big student loan payoff. We sold Mike's car. And we took that money, and some savings, and we made the last payments on our loans. We decided to prioritize paying off debt over everything else. And I gotta say, it feels good.

Next step for us is paying off my car, which we are hoping to do in the next 6 months. Turns out you have a lot more money when you aren't making two student loan payments each month! Then, once we are completely debt free (in 2013!) we'll start our emergency fund and then start saving for our own little house or condo (Well, maybe. But that is a debate for another blog post. Is buying a house worth it anymore?)

It feels really good to be digging our way out of debt. And it feels even better to have a clear plan. So while 2013 won't be as exciting as our 2012, I think it will set us up for a better future. So here's hoping the sacrifice is worth it. I think it will be.

The Fiscal Diet

As I've mentioned in past posts, I’ve started training for a half marathon. And as with all my harebrained schemes, I first like to invest in various accessories to properly equip myself. “Retail before action” is my motto.

So I recently decided that I REALLY needed more capri pants for running. There was no way I could commence running in this heat (oh, the incessant heat!) without purchasing some new running capris. These capris were an essential element of my running wardrobe, and I was in desperate need of them.  Things appeared grim until I could acquire new capri pants.

I explained this pressing need to Mike. He appeared confused. “But sweetie, don’t you already have enough pants?” he asked, helpfully. Certainly not! He was surely mistaken. And how dare he question my need for new workout gear.

Then, during an expedition to my closet, I uncovered a treasure trove of workout pants. It turns out that I already owned eight pairs of capri running pants. Eight! Not including long running pants or running shorts, of course. Those I also had in spades.

This discovery was a bit sobering. And it was at this time that I began to wonder if I had a problem.

Maybe I should have recognized there was an issue when I was greeted by a new shipment from Amazon/Zappos/Gap/RueLaLa/Banana Republic/Endless every week. Or maybe I should have realized things were getting out of hand when I could no longer stuff any more clothes into the spare bedroom I’d turned into my closet. Or when I would discover various items of clothing lodged deep within my dresser drawers, with the tags still attached.  Or even the umpteenth time I bought an article of clothing, only to bring it home and realize I already owned the same exact item.

My name is Bridget and I’m a shopaholic.

So I’ve put myself on a fiscal diet. Specifically, I’ve decided not to buy any “things” for next few months. I’m on month two of said diet, and I’ve discovered something a bit unexpected. Now that I’ve decided I’m not going to buy anything, I feel, well, relieved. I don’t have to read the five million emails I get daily about new discounts and sales. I don’t have to spend hours trolling the internet for deals on things I don’t need. I don’t have to buy another ugly tank top that I’d never wear just because it is 70% off.

And as for all that money I’m saving by not buying things I don’t need? Well, don’t worry. I’ve already spent that on a honeymoon to Mexico. Because if there is one thing I CAN justify spending money on, it is white sand beaches and cocktails with my husband. And ten years from now when we look back at this time in our lives, I guarantee Mike and I will have better memories of our travels than we do of my capri pants. At least I will. Mike really likes capris.

Saver vs. Spender. Round 1.

For my maiden blog post, I’d like to take this opportunity to talk a bit about A Joint Account and why I find it such a fitting name for a blog about marriage. And it isn’t just because I love puns.

Of all the ways our lives have changed since March 31, 2012, the opening of our joint checking and savings accounts (hereafter to be referred to as “The Joint Account”) has made the most immediate and impactful difference. It is a daily reminder that our lives are blended, shared, and inextricably intertwined. And while there is great comfort in that, it also poses some challenges.  

But let me back up a bit.

I have been earning my own money since I was 11 years old and making a small fortune in West Newbury’s booming babysitting industry. I don’t know if I’ve ever had so much disposable income! Life was good. And even though I’ve since grown up and now clock in at a regular 9-5 gig, the one constant in my life has always been the control I’ve had over how I chose to spend my meager income. And how I’ve chose to spend it is sometimes unorthodox. For example, over the past two years I’ve spent an obscene amount of my money on trips to India, Australia, and Fiji, and developed a pretty serious laser hair removal habit. But who cares? It was my money and I could spend it as I saw fit.  

You see, I like to go out to nice restaurants and order an appetizer AND dessert. I’m addicted to online shopping (remember the 15 wedding dress?). I have an Amazon Prime membership and I’m not afraid to use it (seriously, it is amazing. Check it out). I prefer to buy lunch at my work cafeteria instead of brown bagging it. I am powerless to a good sale. I am physically incapable of going into a grocery store and spending less than $50. And then there is the aforementioned weakness for travel and hair removal. While I don’t have any debt besides my car and a small student loan, I’m also not winning any saving awards. I am a spender.

Mike, on the other hand, has been nominated for a lifetime achievement award in saving. He buys the same ¾ lb of deli meat and ½ lb of cheese each week for lunch and is never tempted by the cafes of Harvard Square. Mike has been known to transfer $0.12 to his checking account to ensure he has a nice, round, even number in there. Mike takes out $20.00 at the beginning of the week and by Friday still has $19.99 (I’m not sure where that damn penny goes). Mike was wearing the same suit his mother bought him for his National Honor Society induction to job interviews until I expressed my horror and subsequently guilted him into upgrading (and it was a brown suit. Brown!). Mike has fiscal willpower the likes of which have not been seen since the Great Depression. Mike is a saver.

So, as you can imagine, the decision to combine our finances was not one either of us came to lightly. In fact, as is my tendency, I did a fair bit of research on the topic of marital finance. I found an article about newlyweds managing their finances quite helpful. I wanted Mike and me to be partners. Especially since we plan on having kids at some point, it just didn’t make sense to me to have separate accounts. It seemed like too much work. It seemed like we wouldn’t be “all in”.

On the other hand, I didn’t feel ready to have to justify my boot-collecting habit to Mike. As a compromise, we decided that we would keep our individual accounts, but open The Joint Account into which we would both transfer money at each paycheck and from which we would pay all of our shared expenses.

The Joint Account has been a real eye-opener for both of us. It is a constant reminder of the need for us to compromise. To respect each other’s differences. To talk directly and honestly about money and about our wants and needs. This is difficult, especially for someone who has spent the last twenty years making these decisions alone.  But it is has also been a profoundly useful way for us to practice the art of being married.