Done. The Last 5 Years. ($0.00)

Episode 6 scene 15

(from empowereddollar.com)

 

Today is a big day…I just clicked ‘submit’ on the Navient site one last time…my school loans are paid off and we are debt free!!!

It was late 2011 when I had a nervous breakdown in the living room of my apartment in Minneapolis. I was looking at my finances, which included a long list of student loan accounts, a car payment, and a couple credit cards. I started crying. I was overwhelmed by how much interest was piling up. Some of the loans from undergrad didn’t allow me to defer while I was in grad school. Of the minimum payment I made each month ($257.49), $233.28 of it was interest. Money in the toilet. I was doing that monthly since 2008 when I finished undergrad and had made no progress paying down the loans I already had taken out.

I had just started a doctoral program, and the only relief I felt was knowing the loans would continue to be in deferment while I was in school. The reality is that I didn’t own up to the truth…I fucked up. I continued to let the loans and interest pile up for an advanced degree I really didn’t need to further my career. I blamed everyone else but myself. I was in denial. Aside from my school loans, I was stressed being in grad school full-time, working full-time, and trying to work in a research lab at the same time. I was in the panic zone. Major fail.

Age 16 for me was the most stressful time of my life but 25 takes a close second. I was afraid to talk about my money troubles to anyone. I saw many of my friends getting married, buying homes and doing adult things, but once I opened my eyes I realized how many people around me were in the same boat. Some friends moving back in with their parents to save money, some ignoring their debts in hopes they’d make more money and be responsible later on, and others were assuming that school loan repayment is just another line item in their budget for the next 30 years. I wanted to be different.

I daydreamed about being debt-free going into my 30’s, but that seemed so farfetched based on my salary at the time and everything going on in my life. I’m 30 now and just paid the remaining balance on my school loans. The only difference between a dream and a goal is a plan. The plan has worked. We did it. I want to say thank you to all of you for reading and holding me accountable by checking in. My biggest thank you goes to Deanna for supporting me and helping me attain this goal, so that we can live the life we want to live. I’ve learned a lot over the past 5 years about money, setting goals, communicating, and my own motivation.

I’ll continue to write about money because this journey isn’t over, but this is a time to celebrate an epic milestone.

WHYB? ($12,997.14!)

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(from memegenerator.net)

Where have you been?
5 months have passed since my last post. A lot of things have transpired. My wife and I both left our jobs in Minnesota to move out west to new jobs in Los Angeles. Woah. Within the context of this blog, we left our rent free house to live in a 1 bedroom apartment in one of the most expensive parts of the country. At first blush this sounds like a pretty dumb financial move which in some ways it was. The real story is we had a really cool opportunity present itself to us, and we went for it. I’m on my ninth week at a new company and it has been really rewarding so far.

How the heck did you pay off that much with all this going on?
I put my pride aside. Let me explain. My wife had some savings that she wanted to give towards paying down my school debt. Initially, I felt like a leech. This is debt that I personally took for my education and here my wife is taking her hard earned savings to pay my debt. Ugh. She reminded me that we are married and my debt is officially our debt. This was a powerful reminder that when I said ‘I do’, this thing called life became a team sport. She made a solid point, but I still needed to get over myself. I still feel some guilt about it but there’s a longer term goal that we’re focused on…together.

Makes sense, but how are you still paying down so much AND living in such an expensive part of the world?
We both got great job opportunities and my company has a bunch of perks, which include free parking, coffee, and meals. That alone saves me hundreds of dollars I was spending every month back in Minneapolis. In our first two months in LA we haven’t really done much exploring because we’re still adjusting to our new jobs. As a result we’re not spending much money at the moment.

When you’re a couple a DINKs (dual income, no kids), it allows a lot of flexibility on where you can go. We’re just beginning to enjoy the harvest that is a result of college, advanced degrees, and working our butts off the past 10 years. I am proud of my wife and myself for reaching this point of our careers where it feels like all that school was well worth it for the careers we’re in. We are so close to being debt free. It is the final 10% of the original amount or for those of you who like a good running metaphor, the final 2.62 of this marathon.

We’re making it happen. You can too. For realz.

Shaving Money ($42,888.33)

As I look for more ways to save money in my routines, I had an unexpected insight on saving money with something that costs more than you realize…shaving. About a month ago, I had the pleasure of seeing Tristan Walker speak at an event. He’s the creator of the Bevel shaving system and an amazing entrepreneur in Silicon Valley. He talked about a problem he experienced with modern shaving products, which was razor bumps. Nasty little ingrown hairs caused by shaving.

He said in the 70’s and 80’s, Gillette and other companies started introducing multiple blade razors claiming they provided a closer shave with less irritation. This just wasn’t and still isn’t true (maybe a closer shave but at the cost of your skin health). Pure marketing BS. Gillette has had to settle false claims in the past. In fact, research is showing that depending on your facial hair type, multiple blade systems are more damaging to your skin and create more ingrown hairs. Specifically, men of color tend to have more curly facial hair and are more prone to these razor bumps. Again, depends on your facial hair type.

I had an aha moment because over the years I have had annoying razor bumps but never thought about my shaving routines. Gillette brilliantly sent me a Mach3 razor when I turned 18 and I mindlessly never looked back. After some research, I found that people are going back to the double edge safety razors because they cause less irritation and they’re a hell of a lot cheaper. A couple weeks later here I am with no more razor bumps.

cartridge_v_double

from hairfreelife.com

Disclaimer: Do what works for you. If you have never used a double edge safety razor, be sure to do some research on how to shave with this type of razor because it requires different techniques.

Gillette Fusion and Mach3 blades cost approximately $2-4 per replacement cartridge, but many of us just pick up a multi-cartridge pack for $20-35. The replacement blades for my current razor…100 blades for $10-14!! Each blade gives you 4-5 shaves. The blades are a lot cheaper and better for the environment because they reduce waste (no plastic). Once you’ve stockpiled enough blades, you can dispose of them properly depending on your city’s metal recycling program. Save money. Reduce waste.

On a separate note, my wife and I took a chunk of savings and threw it at the school debt. $42k left to pay off. It’s happening!

What other creative ways have you found to save money?

Feel the Pain ($57,693.77)

I haven’t posted in a while. Guilty as charged. I got the taxes done and after all the stuff related to running my photography business alongside the fact that this was the first year that I filed as married, we got a sizeable tax return. Guess where that’s going? Straight to Navient and that good ol’ student debt. Damn I have made some good progress. Yes I am bragging. I have earned it. A couple years ago I was almost $130k in debt (school loans and credit cards). As I look back at my student debt journey, I have been trying to think why I have been so motivated and what keeps me going. One would think it is the satisfaction of seeing that debt number go down every month when I make a payment whether it is small or large…but that just isn’t the case.

It is the pain that has motivated me.

carrot_stick2

(from teen10mag.com)

That is sort of sick. What’s the story? At a basic level, we can think of motivation as the stick or the carrot. The carrot is the dream of being debt-free which is a long term goal, but even the short term goal of seeing the principal balance go down isn’t that satisfying. It’s like trying to lose weight and you’re only seeing a pound of progress per month. It is progress but it isn’t enough to celebrate like crazy. Short term progress over time will yield big results, but for me and my debt, it is the daily pain that has pushed me.

Introducing…the daily interest calculation or DIC for short. And this metric really is a dick. How do you calculate this? This is copied verbatim from the Navient site:

The amount of interest that accrues on your loan is determined by a simple daily interest calculation:

 Your current principal balance

× The number of days since your last payment

× Interest rate factor = interest rate ÷ 365.25 (number of days in a year)

= Your daily interest rate

If you have multiple student loans, you likely have multiple interest rates, so you will need to do this calculation for each loan, and add them up to see all the daily interest.

Once interest is capitalized, it becomes part of the principal balance and interest begins to accrue on the new principal amount.

At the end of each year you should receive a tax document from Navient and each of your loan servicers detailing the exact amount of interest that you paid.

The good news is that the IRS treats capitalized interest as interest for tax purposes and is deductible as payments of the principal balance are made on the loan. However, no deduction for capitalized interest is allowed in a year in which no loan payments were made.

Let’s use my current situation. Current principal balance is $57,693.77. Last payment was 1 day ago. Interest rate is 6.125%. Using the formula above that would be:

$57,693.77 x 1 day x (.06125 interest rate ÷ 365.25) = ~$9.67.

In other words, I am paying $9.67 every single freakin’ day on INTEREST. Every 30 days, $290 is going to nothing but interest. Ouch. Pain. Motivation. That’s a solid meal in downtown Minneapolis every day. That’s a car payment every month. That’s money towards an investment that could earn me some money. That’s a kid’s tuition savings. That’s seeing a movie every day. That’s a couple drinks at happy hour. Whether it is a frivolous purchase or a responsible long term investment, that is cash money going out your pocket and into The Man’s. The opportunity cost of that money is pain that we don’t always think about.

Some people have low interest rates, which is why they don’t feel compelled to pay of their debt in an aggressive manner. I would argue that the interest you’re accruing is actively working against any positive interest you’re gaining. All depends on your unique scenario, I know.

There you have it. Some more insight into what is driving me to pay this beast down. What motivates you?

Celebrating Major Momentum ($65,587.95)

When you’re paying off debt like a madman, the week-to-week motivation is draining. When you have a longer term goal it feels so far away…because it is. You see friends buying houses, cars, vacations, and there are definite moments of jealousy. I remind myself that I made the decision to go to college and grad school, and I know these decisions are a long term investment…yet I still feel bad like I’m behind or something. First world problems, right? Yep, they sure are. This is why it is important to quit the pity party for one and look backwards to move forwards. I spent a moment to look back at the past 12 months, and it is absolutely bonkers how much progress I have made. Re-motivated. IT IS PAYING OFF!

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(image from theverge.com)

In 2015, I have paid a total of $31,392.61 towards my student loan debt. Boom. About 16% of this ($5,121.88) was interest, but that is expected because the amount 12 months ago was just under $100k with 6.125% interest. Am I bragging? Yes. I earned this and it feels great. In May, I paid off my second-to-last student loan so now I only have one payment which is the big consolidated loan that had a principal amount around $80,000.

The average class of ’15 college grad (who took out student loans) has about $35,000 of school debt. So if I were average, I would have just about paid my debt off, but I’m above average…which isn’t so awesome in this case. I made some poor financial choices and I am learning from them big time. When looking back to the time around 2011/12, my financial life really felt like it was out of control…15 payments every month including rent, cable/internet, cell phone, car/renter’s insurance, electric, 6 student loan payments, 2 credit cards, Netflix, and a gym membership. Nearly $6k in credit card debt on top of all my student loan debt.

Fast forward to the end of 2015 and here I am with just over $65k left to pay off. I’ve paid off just a little more than half since I finished grad school. I am really proud of the financial work I have done this year. Not to mention we had a wedding and honeymoon in there that we cash flowed. For those of you that want to pay off some debt…you can absolutely do it. I kicked some major debt butt this past year, and my wife and I are scheming up ways to try and pay off even more in 2016.

It feels good to reflect on 2015 for a lot of reasons, but I’m taking a moment to celebrate my financial progress. Cheers to you for all you’ve learned in 2015 and here’s to a great start to chapter 2016!

P.S. The wonderful people at NerdWallet included some advice I gave for recent grads in a recent blog. Check it out and be sure to follow their blogs!

(Un)Conscious Holiday Spending ($71,257.45)

This blog post is probably a few days too late. The holidays are officially upon us, and with this time comes an attitude of gratitude and multitude of guilty spending. Raise your hand if you actually sat down with your partner and created a budget for your holiday spending. Yeah, me neither. Although I chose to be in the office on Friday I still took a break from work and did some holiday shopping with my wife. We treated ourselves to a few things. I feel a little guilty…just a little.

holiday spending

Don’t let Grumpy Cat win…

Life update: I just realized I haven’t posted since September 7th. Deanna and I got married on September 27th and then went on our honeymoon in Maui for 10 days in October. We then had a family reception in Madison a couple weekends ago. We still aren’t sure if we’ll do a gathering with friends in the twin cities. At this point it doesn’t seem like it is worth it to do a reception in the cities. We’ve already spent plenty of money and with the holidays here, everyone is getting busy. Please don’t be offended, and please know that we are incredibly grateful for everyone’s support.

Holidays bring an array of emotions. For me, it is fun to see my extended family and hear what they’ve been up to but it’s also tough because it is the first Christmas without my grandma who truly was the matriarch of my mom’s side of the family. I always find myself reflecting a lot more than usual during this time of year. I often think about my friends I grew up with, and I am reaching that age where many of those friends have families of their own and we’ve lost touch. I know it’s part of life. I feel a sense of accomplishment for all I’ve done this year, and I also feel a sense of anxiety not having clarity on what I want next year to look like for me and my family. I feel happiness, sadness, excitement, and anxiety for those around me as well as holidays can bring joy and a terrible amount of pain.

With great emotions come impulse decisions. When it comes to buying behavior, we suddenly see deals on things we don’t really need and with a click, tap, or swipe we’ve made a purchase without thinking about it. Dumbest thing I bought online on Friday was a NFL football. Yes, an official NFL football. Mine is flat with a hole in it, so at $52 it felt like a good price to replace it…my dang feelings won.

Just take a piece of paper and write down who you want to buy gifts for and a price limit. That’s all you need to do, or at the very least make a mental budget. If you haven’t made a budget for holiday shopping, then stop to think, “do I actually need this thing?” If you do have good reason to buy, then think about how you can get the best deal on it, and do not fall for the retail game. I needed a new winter coat. I’ve had the same one since high school. Yes. I’m serious. I saw one at Macy’s where regular price was $400. Lies. With the ‘50% sale’, it was going to be $200! More lies. I pulled out my Amazon app, scanned the jacket’s tag, and it popped up for $159. If you need to buy it, at least do some research and get the best deal that you can. My new jacket is incredibly warm and I no longer look like I’m ready for a middle school ski trip…oh Columbia jackets.

When it comes to holiday spending, check yourself before your wreck yourself. I don’t want to see you or myself spending hard-earned money on things we don’t really need. You also don’t need to buy things to show someone you love them. You can make them something instead. It’s more special that way. My mother-in-law makes super kick ass handmade cards and they mean a lot to me! I found a couple cool sites here and here for those of you who want to be craftier and save some cash in the process.

Happy holidays and don’t go broke or depressed in the process. You can do it. Be mindful of your spending, not mindless. Comment below with your holiday spending tips!

P.S. I dialed back the aggressive pay down on the student loans for a few months, so we could do our wedding and honeymoon debt free. Success! I’ll have to write about this later…

Planning Life, Not a Wedding

wedding meme

This post has two purposes. One, to inform friends and family what we’re doing and why we’re doing our wedding this way. Two, I thought I would share some reflections we’ve had through the planning process from a financial and general life lens.

A few months ago, my fiancée expressed her frustration doing some google searches. I remember her saying something like, “there’s so much online about planning a wedding and not much on planning a life together.” Big a-ha moment for me. We recently wrapped up pre-marital counseling and it was a great experience on planning for our life, but what about the wedding?

Disclaimer: Don’t read this as me judging you for how you did or are doing your big day. Given our preferences, this is how we’re rolling.

I’ve hit the brakes a little bit on the aggressive student loan repayment plan because we’ve got a wedding to plan! On one end of the spectrum would be a traditional wedding complete with a ceremony and reception for 200 to 300 people (spending tens of thousands of dollars that we’d rather use for other things), and on the other end would be going down to the courthouse and getting married by a judge with our dog as witness. We’ve decided to go an alternative route somewhere in the middle and we’re getting married in…less than three weeks!

Between student loans, wedding planning-related stress, and just wanting to keep things simple we are having a tiny ceremony with just our parents in Duluth on September 27. Then, Deanna and I will have our honeymoon in Maui next month. When looking at the cost of catering, venue rentals, flowers, attire for wedding party, cost of logistics of our families and friends, and much more, we just decided we want to do this in our own way. My family just can’t contribute what they would like financially, so we really don’t want to create a financial pinch for anyone. For those who know my story, you get it.

I’ve learned a lot about weddings from attending friends’ weddings and taking photos at other weddings. I usually hear some form of this phrase, “…well this day is more for the parents than anything.” While that is definitely true, I think we just wanted to challenge the idea of ‘how’ we go about making our parents happy. We spoke with our families and they’re happy about the idea and we get to make it a full weekend of activities with just our parents. It will be some quality time we haven’t had in a long time. For example, me having dinner with my parents hasn’t happened in a smaller setting since I was 13 years old before they got divorced. It’s going to be weird in a happy way.

A friend of mine who is a couple decades older than myself once told me not to spend so much money and stress on inviting people to your wedding you will probably lose touch with in the next 5 years. While this is sad to hear, it’s probably true. Life happens. A big party is memorable, but weeding out who you invite and who you don’t can come with some tough conversations that just aren’t worth it in my mind. I don’t want random co-worker friends of my parents whom I have never met showing up for our big day. It is your day, so you choose the guidelines for who makes it and who doesn’t. In our case, we are just keeping it to our parents, which is absolutely not a reflection on my feelings for the people who aren’t there.

And…the honeymoon?

We originally wanted to get married in Hawaii, but we’re going to have our honeymoon there instead. We’ll spend 10 days in Maui, so we are very excited about that trip in October. We’re planning to rent through Airbnb which appears to be a lot cheaper than the “nice” resorts in the area (Let me know if you have any suggestions for Maui).

This is all fine and good, but what about a reception? What about your friends and families?

We’re kicking around a couple different ideas. One is having a wedding reception happy hour here in the twin cities where we keep it low key and invite anyone and everyone to stop by for a beer and say congrats. For my family back in WI, we’re thinking we might do a separate small family party there. Not sure yet, still figuring it out.

There you have it. Our wedding, honeymoon, and tentative pseudo-reception plans. I am extremely pumped to marry my best friend and partner-in-crime on September 27. Wish me luck!