My husband and I are well on our way to financial independence. In the last year, we’ve paid off 3 credit cards, a bank loan, and a car loan. We’ve been very lucky that my husband maintained his regular income even during the COVID lockdown and with a bit of discipline (and some unexpected windfalls) we made real progress on our goals.
One of the first things I did was to set up a budget planner for myself. In it, I track all of our expenses and income. It’s really helpful just to see where all your money goes during the month. Before the pandemic hit, we ate out quite a bit – so cutting down that expense (especially since lots of places weren’t open) was helpful. We also made a concerted effort to cut down on our Amazon spending. It’s so easy to just go to Amazon, pick out what we want, and then two days later it’s on our doorstep.
However, we were buying things we didn’t really need, so we cut that spending down. I also tackled our smallest debt first, which at the time was the balance of a car loan. It felt amazing to walk into the bank and plonk down the cash to pay it off! After that, we had some store credit cards we’d used to purchase some appliances, so I focused on those next. We continued to pay on our other bills as well, of course. Once the store credit cards were paid off, we focused on the bank loan.
At the beginning of this year, we were down to just one credit card, a car loan, and our mortgage. We refinanced our mortgage two years ago in preparation for my youngest entering college. We were able to get some equity out of our house and into our bank account as well as lowering our mortgage payment due to the super low interest rates at the time.
Our remaining credit card has been a source of frustration for me, because we have had it paid off before, but whenever we travel to Canada to visit my husband’s family, the balance creeps right back up. This year, since we haven’t been able to travel, we’ve had more time to get it paid off, as well as getting some help in the form of our tax refund and our stimulus money.
But – a win is a win, and I’ll take it! The last credit card is paid off – though I do have some small monthly subs that will get charged and then paid off immediately. Because of course, if you don’t use your credit cards, your credit score goes down. How and why everything is tied to your credit score is a source of constant frustration and irritation to me, but that’s a whole ‘nother post! 😛
So, we have one car loan and our mortgage left. And we will be using a chunk of our stimulus money to pay down the balance on the car loan significantly. All this means that we can (finally!) start putting money that was used to pay debts to work for us – in savings, in investments, in retirement accounts. We’ve been able to purchase additional large ticket items – like a new smartphone and a new dishwasher – in cash, rather than putting them on a credit card. Yes, it means a little delayed gratification sometimes while we wait to have the cash in hand, but the feeling of paying for each item in full at purchase has been more than worth the wait.
I’m still using my budget planner every month (with my cute stickers that I made!) to track all our purchases. Our Amazon spending has crept back up, so we need to be more careful with that, but otherwise we’ve pretty much stuck to the plan and are saving and investing as much as we can each month. Now we’re able to talk about what we want our lives to look like when we do finally move. We’d both like to work less and have more time to spend with each other and our family. More time to do those things that we want – like traveling, or just spending leisure time at home and with each other. My husband works long hours and it sometimes feels like we barely see each other – like we spend all of our time working to afford this house that we’re barely in except to sleep.
Looking back on all we’ve accomplished in the last year or so feels really good. We’ve got decent savings in the event of an emergency, we’re saving up to pay tuition, we pay our regular bills, and we still have money to set aside for investments for the future. I can’t wait to see what else we can achieve this year!