Staying Focused to Pay Off Debt

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Doing Bills to Pay Off Debt
Dude – Hit me up with another cup. We may be here for a while …

 

Current Progress to Pay Off Debt

I’ve started and stopped writing this post so many times, it’s unreal. Every time I wanted to post an update, I’d reconsider, thinking enough progress hadn’t been made.

The entire premise of this blog is based on my journey to pay off debt. The ways I’ve been trying to make money on the side, and pursuing side hustles, in order to do that.

But somewhere along the line, your priority list gets a little jumbled. And you forget what it was you were originally setting out to do. Which isn’t to say the debt journey documentation has ended, by any means. In fact, if anything — its existence has extended even further.

Not because we’ve added anything significant to our existing debt. But because we’ve been doing a cr*ppy job (in my opinion) of paying it down successfully.

When you’re trying to stay focused to pay off debt, you sometimes find yourself in a swirl of competing priorities.

It can become overwhelming, as you’re trying to “do all the things” —

All the Things

  • Reduce spending
  • Increase income
  • Create a budget
  • Prioritize expenses
  • Save for retirement
  • Build an emergency fund

So how do you stay focused? And which things do you focus on first?

This is where I get stuck.

Because everything is pretty much cut and dry when you read it on paper. And also, if you’re lucky enough to have a large chunk of money (like a tax refund or a bonus check), then it’s pretty easy to decide the “right” thing to do with it.

But what’s harder is when you’re back to living your “day-to-day”. You receive a paycheck every two weeks or so, have monthly bills to pay, and there’s no longer a cushion. The long drudge of paying off thousands of dollars, some time way into the future.

You know the end date is out there, but it seems sooo farrr awayyy….

So let’s see how we’ve fared over these past few months. My last post about our debt was roughly four months ago. Have we made any progress? I’m sure we have — but when it comes to remaining motivated, it’s been a bit of a struggle.

But before you can improve, you need to fully understand where you’re coming from.

So let’s get started — 

Kicking It Off

Making Plans to Pay Off Debt

One of the easiest ways to pay off debt is with “found” money. So how do you find this ever-elusive money?

Well, the first way could be with a windfall, or any type of lump sum that happens to fall into your lap. And while it isn’t exactly commonplace, it can happen. In our case specifically, I’m talking about two things: 1) our tax refunds, and 2) our company bonuses.

While these are not scenarios you can totally rely or count on, it’s important to take advantage of them if they ever do occur.

Because if you just leave money sitting in your bank account, that mountain of cash will slowly deplete, little by little, to practically nothing. (yep, I totally know this!)

This past spring, we discovered some money would be coming our way. So we made a plan for exactly how our additional income would be spent.

First, we set aside money for our annual vacation. We take one vacation per year, and it’s always to the same place — we head to the beach.

Nothing elaborate, no big spending, no huge transportation expenses. We rent a pet-friendly house for one week, and drive there, with entire family and dogs in tow.

We paid off the rental (after having made an initial down payment), and then set aside money to cover our predicted expenses for that week. This will include: vehicle fuel, grocery shopping, alcohol, restaurants, and any activities we may be interested in doing. So now that vacation is totally taken care of, we can just look forward to our future trip.

That’s step number one, now onto the next —

Expect the Expected

One of my favorite shows to enjoy in the summertime is CBS’s Big Brother. And the famous catchphrase for that show is “Expected the unexpected”. Well, for purposes of reducing your expenses, I propose instead that you “Expect the expected“. Which is as basic as it sounds.

There are expenses that occur every month and/or every year. If you expect them to happen, then you can’t be surprised when you’re all of a sudden slapped with a bill.

For example:
Our car taxes are due every August 1st. The bill comes out  in July. This is something we need to plan for, since the bill is quite large. With four vehicles in the household, our car taxes weigh in at roughly $1,500 per year.

If we don’t plan for this expense and just feign astonishment when the bill materializes come July, then we’re in big trouble. At that point, we’d either need to use our emergency fund (if there is one), or resort to using credit. And yes, our town does accept credit cards for paying car taxes — ask me how I know that.

Other bills we try to proactively plan for are: ordering firewood and home heating oil for the winter, car insurance and annual vet expenses.

Speaking of Elephants

Okay, so now that we’ve addressed planning for annual expenses and vacation, I’ll need to say something about the elephant in the room.

Some might ask why we’re taking a vacation when we’re trying to pay off debt. Shouldn’t the debt be first and foremost on the list of “things to be paid”?

While I appreciate the concern, I would just like to subtly point out that these are our finances, and this is how we choose to manage them. Again, it’s just one vacation per year, and it’s to the beach. It’s not like we’re going to Europe, or the Caribbean, or Disneyland.

But speaking of debt, that will be the next item to be tackled on this list. Now that we have the large expenses out of the way, we’re safe to start chipping away at the debt. Which is the part where things can start to get sticky. Because at this point, you’re feeling pretty confident about the money sitting in your account. And maybe you’re not quite ready to part with all of it.

Lump Sum Payments

With our remaining funds, we really needed to agree on a plan for its use. Thankfully, the amounts received were pretty much equal. My partner and I received roughly the same tax refund, and also very similar bonuses. (We’re unmarried, so technically don’t need to share our money, but we do).

We decided to pay off several credit cards, plus one personal loan. This will allow us to apply those payment amounts to our remaining cards — the ones with much higher balances.

And I know the above may not be terribly helpful to some people, and I get it. My partner and I are very grateful to have the jobs we have, and to receive any form of bonus. There are people out there scraping by who won’t even have this option. And that makes me realize even further that we need to take advantage of the privileges we currently have, to get rid of the debt.

So now we are managing to a much smaller number, having cut our credit card debt essentially in half. However, we now have to stay the course, and keep up with our accelerated payments. That money needs to be redirected to the remaining bills, instead of being spent. Because falling back into contentment is just too easy at this point.

Pay Off Debt - For Good!
Hit the Road, Debt

Reduce Spending

After kicking off the debt payoff strategy, we then started to look at ways to reduce spending. I already had built out a spreadsheet of annual expenses, to create a loose budget. But in addition to that, we needed to look at ways we could — ya know, actually spend less. 

Reviewing all of the debits and charges on our bank accounts as well as credit cards gave us a pretty good idea of how we had been spending our money. I made a list of things we could potentially do without, and we had a quick discussion on them.

Here’s what was on the list that we decided to cut from our budget:

  • Ordering from restaurants/takeout ~$200/mth
  • Excessive dog treats ~$25/mth
  • Expensive dog dental chews (purchased through vet) $77/mth
  • Hairdresser appointments ~$40 every 6 weeks
  • End-of-week happy hours ~$35/week
  • Amazon spending on non-essentials ~$100/mth

We also debated cancelling pet insurance, which would save $150 per month, but we haven’t yet pulled the plug on that one. And in case you haven’t yet figured this out, owning pets is crazy-expensive — especially English Bulldogs!

From the above numbers, you’d think that would give us a good head start to apply to our remaining debt. That’s over $500 right there — except some of those items had been put on credit cards, so wouldn’t be putting any extra cash back in our pockets. They just wouldn’t be contributing to the overall number.

Increase Income

In addition to reducing expenses, I also looked at ways to potentially boost my income. Suggestion number one, of course, would be to leverage opportunities in my current employment.

And while that’s a prospect I won’t immediately count out, it’s also one I have actively averted over the past few years. I’ve had opportunities to advance my career, and have even been encouraged to do so. The problem with that is, “with greater responsibility comes greater stress” (or something like that…).

And more stress is something I don’t really want to sign up for.

Also, I’m 100% certain our salaries are enough to live comfortably on. The debt is what requires fine-tuning. If I take on a position solely to make more money, there’s no way to backpedal from that decision.

So with that in mind, the next best thing would be side hustles. Here are the things I did over the past few months to boost my income, and how they turned out:

  • Merch t-shirt designs – $155.23
  • GoDaddy domain parking – $4.86 (ha!)
  • Amazon affiliates – $193.29
  • Surveys/focus groups – $188
  • Ebates – $234.21
  • C-space – $140 (Amazon gift cards)
  • Fetch Rewards – $225 (Amazon gift cards)

So from the above figures, I think it’s pretty obvious that I’m not exactly killin’ it when it comes to side hustles.

Does that make me seem like a fraud? I hope not. Because I’ve always been totally transparent about this being a work in progress, and I have not quite mastered anything here…

I may not be the side hustle expert, but I am an honest person, who is trying to get things figured out. And hopefully, at some point, something will stick. At the very least, I can share my experiences with others.

Create a Budget

We touched upon this one briefly, further up in the post. And while I do have our expenses documented, as well as a loose budget in place, it’s not quite at the level I’d like.

To me, the difference between documented expenses and a defined budget is minor. And if you plan it all correctly, every expense will wind up in a unique bucket. That’s pretty easy to do when it comes to actual bills, like mortgage/rent, utilities and car payments.

But when you assign a dollar amount to something that fluctuates, that’s where you can run into trouble.

As an example, we are really good at planning for monthly bills and budgeting for vehicle fuel and groceries. However, we are utterly hopeless when it comes to discretionary spending.

Like, delayed gratification has never been something we’ve dealt with historically.

If we wanted something, we just bought it. It didn’t matter if we had the cash, or put it on a credit card or payment plan.

It’s been a tough haul to reconfigure that mindset. And while we are no longer frivolous with our credit card use, the same can’t be said for our cash spending. Unfortunately, any money sitting in the checking account inevitably gets spent. Which is why I try to pay the bills as soon as our paychecks hit our account, to get extra payments out there as quickly as I can.

Prioritize Expenses

This one kind of goes hand in hand with the above category of creating a budget. The bills, of course, will always come first. And then you need to create a balance between what you need to live on, plus any extra “play money”.

While I’ve been trying to manage to a zero-based budget, sometimes random expenses just happen to pop up. Things like a coworker’s birthday, or car trouble, or a golf excursion.

So an important piece of the overall budget might be to add in extra cushioning, just in case. This could be for recreation, home or car maintenance, and even job-related expenses. This is something we definitely need to work on.

Save for Retirement

I’ve been waffling back and forth on this one, and can’t quite land in a place where I’m comfortable. Leading up to this journey, I had a frenzied focus on saving for retirement. While I did start the overall process at a pretty early age, I’ve never been satisfied with the progress.

For many years, I would contribute to my 401k, inching my contribution percentage up further and further. And then finally it hit me — if we keep carrying around all of this credit card debt, we’ll never be able to actually retire at all.

And that’s when I started focusing more on paying off the debt, rather than contributing to my 401k. At one point, I stopped contributing altogether. But then felt a sense of regret for the employer matches I’d been missing.

So now, I’m back to making contributions in order to receive the 1:1 match provided by my company (up to 6%).

Piggy Bank - strapped for cash - pay off debt
Poor Little Piggy – All he wants to do is grow

 

Build an Emergency Fund

They say you should have an emergency fund to cover 3-6 months’ worth of expenses, in case you become unexpectedly unemployed. And some say you should have even more than that. I’ve always had a hard time figuring out what that means exactly. Is it to cover all of your mandatory expenses, like to live on? Or should it cover every single thing that you’re paying for right now?

Because I’d like to think if you lost your job out of the blue, you’d instinctively cut down on expenses regardless. Like, there’d be no more frivolous spending, or going out to eat, or random Amazon shopping. But I guess the point is you should have something saved in case of an emergency.

In our case, we kind of have a small-ish emergency fund, however it’s currently combined with everything else in our savings. So there’s a small cushion available, just in case. But it’s nowhere near what the experts recommend. I guess it’s better than nothing?

Summary

When it comes to making changes to pay off debt, it can feel like an uphill battle. At times you’re on top of the world, because you’ve paid off a big chunk of what you owe. Then at other times, you feel like it will never end. Like you’ll have to pay off debt forever, and will never reap the benefits of finally being debt-free.

It’s a constant struggle. But the important thing is not to lose hope.

Because as long as you keep pushing, eventually you will get there. Keep making strides in the right direction, even if they’re smaller than you’d hoped. And keep thinking of the end game — finally being out of debt — to keep motivated. At least that is what I’m telling myself — that it’ll all be worth it in the long run!

Because life isn’t supposed to be about things, it should be about people, and experiences, and growth.

Staying Focused to Pay Off Debt

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4 comments

  1. Good post, Robin. Becoming “debt free” is an extremely challenging goal. It seems that each time progress is made, something comes up to set you back a step or two. Other than “hitting” the lottery or some other big win, it is a long road to hoe. Some people have had their lives ruined by “winning” the lottery. As many people have said, “so long as you have your health and are relatively happy – you have already won”. Keep up the good fight, you are already ahead just by trying.

    1. Well said, DD! Because money definitely won’t bring happiness (although I’m sure we’d all be a lot happier if we didn’t have to stress about money so much!) And I agree the overall goal is to live a simple life — staying healthy, with the people we love, enjoying the little things in life! 🙂

  2. I can relate to this struggle. For 15-years we were in and out of credit card debt constantly. It seemed each phase where we got passionate about paying off debt would take 2-3 years to get debt free.

    You are smart in not cutting out your yearly vacation. There is a point where cutting too much can sacrifice the present for the future, which is not worth it IMO.

    We just got credit card debt free recently, and I still get anxious when we spend money. It’s crazy to think how being in constant debt has really messed up my outlook on money. It’s like each financial phase comes with unique problems, but I will say that paying off debt has been the hardest phase for us. But once you do reach that point, it’s going to feel sooooo good! I think it is worth pointing out that as you progress on paying off the debt, this starts to feel better and better.

    Bravo for contributing to your 401k to get that match! You will be thanking yourself when you do get debt free. Most of my working years we did not do that, for the sake of trying to pay off as much debt as possible, and it was free money we basically threw away.

    For me, the most valuable part of being in the “debt payoff” phase was it gave us time to figure out why we kept on going back into debt (which was mostly my fault, I will add). But honestly, this phase was brutal for us. We are stronger now because of it, but all the things you posted here were constant battles. Great article!

    1. Thank you Chris! I appreciate the support, especially when it comes to going on vacation! Having something to look forward to is so helpful when trying to stay motivated. But it’s definitely been a struggle, since I’d love to pay the debt off aggressively, but am meeting some resistance. Hopefully we’ll arrive at a happy medium!

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