Pay Yourself First

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I’ve written before about my financial goals and my journey to be debt-free. It’s still slow going, but any progress is good, especially when it comes to debt.

Lately it has felt a bit like we were stuck – not making any big purchases to add to debt, but not making any huge payments to make a dent in the debt, either. As we headed into 2021, we sat down and had a discussion about what our financial goals were.

I don’t think either of us had ever actually sat down and had a discussion about what financial goals were important to us. It was extremely helpful – both for us to see what goals were most important to the other person, as well as to discuss whether we agreed with those goals and then how to reach them.

With two kids in college, tuition is a big goal. I want both my kids to graduate debt-free, as I did. My oldest should graduate in May, and I just made the last tuition payment for her. So yay! That goal is met for her, now I just have to concentrate on my youngest. I’m so glad that we only had one year of paying tuition for both of them – I have no idea how people do it.

Of course, we’re continuing with our previous goals – to pay off as much debt as possible. We’re down to one car payment, our mortgage, and one credit card. The mortgage will be gone when we move, so for now I’m ignoring it, though we do pay extra every month to get it paid off faster. The less we owe, the more we’ll have in equity when we do move.

The car payment also gets a bit extra added to it every month, but for now I am focusing on the credit card and trying to get it paid off. My husband was in agreement with all those goals, but also wanted to start saving for a vacation – something we haven’t had in a while (and we wouldn’t have been able to travel, even if we’d had the money, with the current state of affairs). As we talked, something I’d heard somewhere stuck with me – ‘Pay yourself first.’

I don’t remember where I heard it, but the gist was to make sure that you were paying yourself – by saving some money each paycheck, even if it was a small amount. After all, you work hard for your money, so you should get to enjoy it too, right?

So we decided that we would put a small amount aside each paycheck for a vacation fund. It’s not a ton of money, but if we put money in it consistently, it won’t take long to build up. I’ve been doing it since the first of the year, and honestly, it’s felt really good to see the balance growing.

I know that most financial advisors would tell us to use that money to pay off debt faster, and I get that. But psychologically, watching that small bit of money grow each month is more motivating to me than using it on our debt. It’s small enough that it wouldn’t make much of difference to the debt, and it’s worth more to me for the motivation factor in the vacation fund.

Who knows, we might decide at the end of the year to use the money for debt rather than a vacation, but until then, watching it grow is financially motivating. In the meantime, we’ll keep plugging along, working day jobs and trying to grow side hustles (like Etsy and YouTube). Maybe one day we’ll get lucky and one of those lottery tickets my husband buys every week will pay out. Okay, probably not, but we can dream, right? 😀

Financial Progress

One of my many goals this year is to pay down our debt as much as possible.  With two kids in college come this fall, we need every spare penny!  My husband is an essential worker, so even with all the current (and probably coming) craziness in the world right now, we’ve been able to depend on his income.

However, I am definitely planning ahead and trying to make sure if more strange things happen this year (murder hornets?!) that we are prepared financially – as much as we can be, anyway.

We refinanced our house earlier this year and were able to lower both our interest rate and our payment, which has helped a lot.  Our refinance also netted us some cash, so we were able to stick that into savings.

I think the last time I posted about our budget, we had the mortgage, a car loan, a bank loan, and 4 credit cards.  Yikes!  In March, we paid off one of the credit cards. 😀  We had some expenses that I thought were going to be on that card, but we ended up being able to pay those directly, so now that card is paid off.

In addition to that, we had been putting more money towards the bank loan, because it had one of the highest interest rates.  We used part of our tax refund and put it towards this loan.  Because of that, we were able to pay off that loan this month!

I am still tracking the rest of our debts on my snowball tracker, shown here:

IH Debt Snowball Tracker PNG

My next goal is to pay off two of the credit cards.  They are big box store cards that we used to get 12/18 months no interest and we are close to paying one of them off.  I’m hoping to have the money to do that this month as well.

If I can do that, it will leave us with just 1 credit card, the mortgage, and the car loan.  Which would be AMAZING!  Our house loan is only a 15-year loan and even though the payment was lowered with our refinance, I am still paying the old loan payment amount each month.  This will help us pay it off even faster.

Doing this would also let us put more money in savings every month.  We’ll see how we manage – my husband’s hours have been cut back and I won’t be getting a paycheck while I’m off for the summer.  So paying things off may be a bit trickier, but I’m still determined to get there.

What are your financial goals?