I’ve Paid Off Over $3K in Two Months

This is the fourth installment of Krys’ story: see Day 1, Day 24, and Day 31. Over the coming weeks, we’re following her progress on eight financial goals she’s set for herself. This post was originally written at the end of December in 2019: after Krys’ second month using YNAB. 

Celebrating two whole months on YNAB! Woohoo! 

It’s the end of the month. The end of the year. The end of the decade. Talk about a time for fresh starts! January is looking rosy, with the first half of the month glowing with green categories thanks to my December 27 paycheck! But before we look ahead, let's see how we did this month.

Last month, I talked about riding the YNAB obsession while it lasted. I'm glad to say it’s still going! I'm happy to be still writing about it too—I wasn't sure how long I would keep sharing, particularly once we fell back into old habits. I don't like admitting our failures— makes them feel more real.

Status on Financial Goals

1. Get off the credit card float. ✅
   Still paying this down, but we're funding each month's new expenses with cash!
2. Start contributing to sinking funds for known expenses. ✅
   Seeing what we spent this month on Christmas gifts, I'm significantly increasing the annual goal for gifts so we have enough for next year.
3. Start building the $1,000 emergency fund. ✅
   We have just under $200 in the emergency fund now. I am putting $50 per month into it, since fully funding sinking funds each month should cover what previously would have been considered an emergency. At this rate, it will take more than a year to rebuild the emergency fund, but I don't mind.
4. Pay off the first credit card (credit card float/car repairs).
   We started out with a $3,700 balance here on November 1 (the dreaded credit card float), and are down to less than $850 now! Happy to say that we paid this down despite adding to this card with the car repairs last month!
5. Pay off the second credit card (medical debt).
   We started with a $2,800 balance here on November 1, and are down to $2,700. We were much farther along, but that surprise medical bill earlier this month erased much of our progress on this one. So frustrating, but still an overall reduction in debt.

Update on Debt

• November 1               $19,169.50
• December 30             $15,795.84
• Difference                   -$3,373.66

This is amazing progress—it's more than 17% of our original debt, and (lest you forget!) we ADDED about $2,600 to our debt after November 1 with car repairs and additional medical bills! I'm *elated*.

How We Did It

I have to come clean about how we did it. The ability to show positive movement here is primarily due to gifted money, because we didn't meet our goals with curbing spending (not altogether surprising due to the holidays, but a disappointment all the same). We also were able to make a little extra headway due to some delayed reimbursements.

In the past, the gifted money from our family, the holiday bonus from work, and other found money (reimbursements for work mileage, jury duty daily fee and mileage, cash back rewards) would have all been instantly frittered away, leaving us in exactly the same position we were in without them. Instead, they are being consciously applied to our priorities, and are helping us change our long-term financial situation.

The fact that I'm treating these gifts as real money with a real purpose is encouraging. I know how lucky we are to have money given to us like that, and now I'm actually ACTING like I know it. That's a meaningful change.

Now that I've admitted all that, I'll also tell you that I'm not letting a little thing like *why* we are doing so well get in the way of celebrating our progress. We would never have had such momentum in the past, and this is a milestone worth celebrating!

January Debt Plan

In January, we have the minimum payments on all debts budgeted, as well as some headway on the home equity loan. So far, I've only been paying on the interest, which is not smart, as we have spent a small fortune paying nothing toward the principal. That changes next year! I'm also budgeting for rounded-up numbers on our mortgage and car payments, so we have a tiny bit extra going to principal on both of those loans, too.

January Budget Plan

Dining Out and Groceries are two categories that will be tough again in January. They're funded a little better than they were at the start of December, but they're still not what we usually spend, so we need to make adjustments to our habits here. We overspent in December, and had to WAM to make up the difference, so “found money” was our saving grace this month. We won't have that in January, so we are really going to feel that pinch.

Feeling the pinch is kind of the point of this whole exercise, though, right? 

I mean, I knew we were living beyond our means when I started, so I knew we needed to rein it in, and food is a trouble spot for us. Better planning will alleviate much of the pinch we could feel, though, so I need to get my butt back in gear on that. I don't want my family feeling burdened by debt (despite the reality that we are), and with a little more effort, I know we can make what we have feel more rewarding.

I KNOW What I Need to Do—I Just Need to Actually DO It

We've lived without a care in the world for long enough that it's hard to rebuild the discipline required to make this work. I know you know what I mean.

We are going to have to keep a really close eye on things, or we will fall back into our old habits. I fell down on meal planning over the past few weeks, so I'm a big part of the problem. My husband hasn't adopted the habit of checking the budget to see if we have money to cover spending, so that's been some of the issue, too. I think he is willing, I'm just gonna have to nag a bit, to get the ball rolling for him.

Age of Money: 12 Days

This Is Hard! But We’re Going to Keep Trying

Finally, going over budget needs to slow down. Changing our spending habits hasn't been easy. This sh*t is hard, y'all! But we are going to keep trying.

Krys is enjoying working from home during the lockdown, because she loves spending time with her husband, daughter, and three pets. She's been using YNAB since 2019 and has been documenting her journey in paying off almost $20,000 of debt. When she's not budgeting, she enjoys reading, watching Marvel movies, and learning new languages. She also possesses a fierce love of bacon and sarcasm.‍