A Fistful of Dollars
It's another Sunday night and another eventful week is in the books.
Last weekend, we had visits from Stacy and Brendan, and Brian & Jen! There were winery trips and a visit to the spa for massages. Yesterday, C & I had dinner with Mary & Jay at their place in downtown DC. Such delicious beer and corned beef. Today was another day of Bradley Method classes for C & I, and Stacy & Brendan should be arriving once more in an hour or two. They went to Florida for a week's vacation, using our place as a good midway point.
There's a noteworthy event that took place a few weeks ago that I've been meaning to write about. As her Valentine's Day gift, I helped Courtney pay off the loan on her car. (She then used her February car payment to pay for the spa visit.)
This marks the completion of a goal we set for ourselves several months ago, when I first started crunching the numbers for our baby budget; since C will be leaving work and staying home with the baby--meaning we'll be living off of my paycheck alone--making our best effort to improve cash flow and money management has been a high priority item. To be fair, in the past year or two I've been increasingly focused on the topic of personal finances... but the stakes are real here, and the car payment represents an important victory on the road to supporting my growing family.
Now, don't get me wrong... I'm reasonably well-paid. I'm by no means the richest person in Northern Virginia, but compared to many (not all) of my peers, I'm making some serious coin. I was named "Most Likely to Succeed" in my senior year of high school, and while I know that money isn't everything, I consider it to be a significant metric in measuring my adherence to what I consider to be a mandate from my peers.
The important part of all this is that on my paycheck alone, we will be able to cover all our living expenses, bills, and debt payments, continue to save money and make some investments, and still have a little--not very much, but some--room to breathe and have fun a bit. It makes me happy to know I can do this, and it makes me a little nervous to think that the financial well-being of my family will rest squarely upon my shoulders. (I'm not too nervous, mind you... still confident, just... aware.)
The debt payment part is what really tends to capture my attention. This is money that I pay now, but that I will not pay forever. It is the weight of faceless corporate entities that weighs on my mind and shackles my dreams. It is money that needed to be borrowed, that was generally well-used, and must now be returned. Now that C's car is paid off, the loans are solely educational in origin. Courtney incurred a lot more in student loans than I did--have I mentioned that having work reimburse you for grad school is FUCKING AWESOME--but it is rapidly becoming apparent to both of us that there is indeed a light at the end of the tunnel, though it is still a bit far off.
To be successful in something, you first have to define your goal. To reach your goal, you need to have a plan. My goal is to eliminate our student loan debt. I have a particular loan payoff tactic that I've developed and put into practice twice now, first with my own car and then with Courtney's. We set aside money in our shared savings account toward different defined goals with different allotments. We call these "reserve items." There's a reserve item called "Emergency Funds" and one called "Baby Fund," both of which are pretty self-explanatory. We also develop reserve items in the amounts of our outstanding debts, and put a little bit more money toward them with every paycheck. This is on top of making our regular loan payments (in amounts that are often higher than the minimum required).
To an imaginative mind, it's like a flanking attack on debt. The above-minimum payments make the total loan amount diminish, which I will call "death from above," or DFA. Meanwhile, the savings toward eventual loan payoff are constantly building up higher and higher toward the point where they will ultimately be sufficient to pay off the debt in full... which I will call "death from below," or DFB.
Like any good flank attack, the two components work together to make the attack more effective. The DFA is always making the goal (debt payoff) more and more achievable via DFB, while the DFB allows for the psychological confidence needed to keep up the attack. DFB also allows financial flexibility, since you can choose which loan to target. Plus, you earn interest on the money instead of your creditors, since it is in your possession until you choose to deploy it. Granted, this can work out to a slight loss in terms of efficiency if your loan's interest rate is higher than that of your savings... but the flexibility can be worth it. To put it bluntly, shit happens, and it's handy to have a pile of money handy when it does. (I submit my own honeymoon as Exhibit A of evidence.)
The attack from the top will inevitably meet with the attack from the bottom, and the debt will not survive. With the money that would normally go toward paying that debt freed up, the next debt can be hit even harder until it too expires, and so forth... until you are debt free. Brutal, but effective.
I vowed to have that car loan paid off before the baby arrived, and we did. The next (hard) goal is to pay off one of my student loans completely before the end of the year. It definitely will not be easy, but even if I don't make it, I'll have made a lot of progress toward making ultimate victory arrive more quickly.
The big goal is to have zero student loan debt remaining between my wife and I before I turn thirty.
One of my friends told me a few months ago that I'm "pretty fucking great at being awesome." I didn't call this blog "Confessions of a Future World Dominator" for nothing.
It is on.
Last weekend, we had visits from Stacy and Brendan, and Brian & Jen! There were winery trips and a visit to the spa for massages. Yesterday, C & I had dinner with Mary & Jay at their place in downtown DC. Such delicious beer and corned beef. Today was another day of Bradley Method classes for C & I, and Stacy & Brendan should be arriving once more in an hour or two. They went to Florida for a week's vacation, using our place as a good midway point.
There's a noteworthy event that took place a few weeks ago that I've been meaning to write about. As her Valentine's Day gift, I helped Courtney pay off the loan on her car. (She then used her February car payment to pay for the spa visit.)
This marks the completion of a goal we set for ourselves several months ago, when I first started crunching the numbers for our baby budget; since C will be leaving work and staying home with the baby--meaning we'll be living off of my paycheck alone--making our best effort to improve cash flow and money management has been a high priority item. To be fair, in the past year or two I've been increasingly focused on the topic of personal finances... but the stakes are real here, and the car payment represents an important victory on the road to supporting my growing family.
Now, don't get me wrong... I'm reasonably well-paid. I'm by no means the richest person in Northern Virginia, but compared to many (not all) of my peers, I'm making some serious coin. I was named "Most Likely to Succeed" in my senior year of high school, and while I know that money isn't everything, I consider it to be a significant metric in measuring my adherence to what I consider to be a mandate from my peers.
The important part of all this is that on my paycheck alone, we will be able to cover all our living expenses, bills, and debt payments, continue to save money and make some investments, and still have a little--not very much, but some--room to breathe and have fun a bit. It makes me happy to know I can do this, and it makes me a little nervous to think that the financial well-being of my family will rest squarely upon my shoulders. (I'm not too nervous, mind you... still confident, just... aware.)
The debt payment part is what really tends to capture my attention. This is money that I pay now, but that I will not pay forever. It is the weight of faceless corporate entities that weighs on my mind and shackles my dreams. It is money that needed to be borrowed, that was generally well-used, and must now be returned. Now that C's car is paid off, the loans are solely educational in origin. Courtney incurred a lot more in student loans than I did--have I mentioned that having work reimburse you for grad school is FUCKING AWESOME--but it is rapidly becoming apparent to both of us that there is indeed a light at the end of the tunnel, though it is still a bit far off.
To be successful in something, you first have to define your goal. To reach your goal, you need to have a plan. My goal is to eliminate our student loan debt. I have a particular loan payoff tactic that I've developed and put into practice twice now, first with my own car and then with Courtney's. We set aside money in our shared savings account toward different defined goals with different allotments. We call these "reserve items." There's a reserve item called "Emergency Funds" and one called "Baby Fund," both of which are pretty self-explanatory. We also develop reserve items in the amounts of our outstanding debts, and put a little bit more money toward them with every paycheck. This is on top of making our regular loan payments (in amounts that are often higher than the minimum required).
To an imaginative mind, it's like a flanking attack on debt. The above-minimum payments make the total loan amount diminish, which I will call "death from above," or DFA. Meanwhile, the savings toward eventual loan payoff are constantly building up higher and higher toward the point where they will ultimately be sufficient to pay off the debt in full... which I will call "death from below," or DFB.
Like any good flank attack, the two components work together to make the attack more effective. The DFA is always making the goal (debt payoff) more and more achievable via DFB, while the DFB allows for the psychological confidence needed to keep up the attack. DFB also allows financial flexibility, since you can choose which loan to target. Plus, you earn interest on the money instead of your creditors, since it is in your possession until you choose to deploy it. Granted, this can work out to a slight loss in terms of efficiency if your loan's interest rate is higher than that of your savings... but the flexibility can be worth it. To put it bluntly, shit happens, and it's handy to have a pile of money handy when it does. (I submit my own honeymoon as Exhibit A of evidence.)
The attack from the top will inevitably meet with the attack from the bottom, and the debt will not survive. With the money that would normally go toward paying that debt freed up, the next debt can be hit even harder until it too expires, and so forth... until you are debt free. Brutal, but effective.
I vowed to have that car loan paid off before the baby arrived, and we did. The next (hard) goal is to pay off one of my student loans completely before the end of the year. It definitely will not be easy, but even if I don't make it, I'll have made a lot of progress toward making ultimate victory arrive more quickly.
The big goal is to have zero student loan debt remaining between my wife and I before I turn thirty.
One of my friends told me a few months ago that I'm "pretty fucking great at being awesome." I didn't call this blog "Confessions of a Future World Dominator" for nothing.
It is on.