Looking at the numbers, it looks like we just barely missed the milestone of getting under $30,000 of debt remaining, but we actually hit an even bigger milestone this month, so we’ll save the under $30K for next month.
The big news is that we no longer owe any money to student loan service providers! Our beginning of the month payment took care of those. Hooray! We may have smiled at the image below multiple times this month.
The other $30 K
I haven’t talked about the other $30,000 loan, so I’ll do so now. About two and a half years ago, after hearing that we were tackling our student debt as fast as we could, a family member came forward telling us about $30,000 that she had set aside years ago. The money was just sitting in her savings account earning less than 1% interest. She wanted to loan us the money so we could pay off a chunk of our student loans and save interest on that portion of our debt.
Knowing that we would absolutely pay back the money (and with interest), we took the loan and paid $30,000 of student loans that were at 7.8% interest. Of course that amount was never counted as “paid” in my reports on the blog because it was still money that we owed, just a change in creditor. Instead of owing $30,000 to the student loan company, we owed $30,000 to a relative.
That family loan was the inspiration behind what I wrote about taking loans from family. The funny thing is, although I highly recommend putting a loan contract in writing, we didn’t. We weren’t worried about the contract because we knew that we would pay (and pay more than was required). She apparently wasn’t worried about a contract either. She always told us she wasn’t worried about it.
Every month when I calculate our remaining debt, I just add in the $30,000 without interest. Though she didn’t require us to pay any interest (she was making next to nothing from her savings account), we had planned to pay her interest all along, we just hadn’t decided how much or done any calculations. Since we hadn’t decided how much to pay in interest, I never added it into the total amount owed. Now that our only loan left is the personal loan to her, we calculated the interest and added it into our debt remaining total.
There was no scientific process determine what interest rate we would pay. In 2013, interest rates were dismally low for savers (and wonderfully low for borrowers). Last month, when we had to decide what the rate would be, we looked at the savings account rate (less than one percent) and knew we wanted to pay substantially more than that. We looked at the 10-year treasury note interest rate over the last four years, and saw it just barely reached 3% one day during that period. We knew our debt was as safe a bet as the conservative 10-year note, so decided 3% was as good a rate as any. Our thoughtful and generous relative earns more than three times what she would have earned leaving the $30,000 in her savings account, and we pay less than half what we would have paid without her re-financing that $30,000 for us. We all win.
So we kind of got below $30,000 according to our old calculations, but then we tacked another $2,225 of accrued interest onto the total we owe. We are still super excited to be down to our final loan!
In March we paid off $9,862 in debt! This is what was left from our February income after paying expenses and setting aside some tax money. Thanks to February’s unusually large income and keeping our expenses low, this is our biggest monthly payoff ever!
Our total net income for March was $9,847. Since we live on last month’s income, this is income that we haven’t touched yet. We will budget and spend it in April.
Attorney Income (Day Job)– $5,140 Mr. SixFiguresUnder has been working full-time as an attorney for the state of California for just over six months now. His actual take-home pay is $3,762, but I add back in the cost of the benefits (insurance, dental, vision, parking, union dues and retirement) that are automatically taken out of his check so that I can show them to you in our budget below.
Attorney Income (Private Practice)– $2,473 On top of working full-time for the state, my husband has his own private law practice. It makes for super long days for him, but the income is really helping us work toward our goal, plus he’s really good at what he does and he enjoys helping people individually, which is very different from what he does at the state.
My Income (Blog)– $2,234 The income that I report is the income that I received this month minus all of my blogging expenses. I keep track of both what I earn and what I receive. If you’re interested in the details of my blogging income as well as other blogging tips and resources, you can sign up for my Behind-the-Scenes Blogging emails to get the scoop.
If you’re interested in starting a money-making blog, check out my complete step-by-step instructions for setting up a self-hosted blog and you can get yours started today.
Each month we budget down to zero using last month’s income. Our spending in March came from the income we earned in February. In addition to the debt payment above, here’s how we spent money in February:
Other Giving– $40 Other charitable donations this month.
Mortgage/Rent– $0 Living in my in-laws’ unfinished basement is a huge blessing. I don’t expect everyone to do what we do, but for us, it’s worth sacrificing some comforts and privacy to pay off our debt faster. If you are considering living with family, here are some things to consider.
Internet– $0 Thanks to some legal work that my husband did for our service provider, we will have free internet for a while. It’s nice to have a skill to barter with, though we will still be paying income tax on the fair market value of this service come tax time next year.
Republic Wireless Cell Phones– $28 We switched our Republic Wireless phones to the new Republic Refund plans. With our refund for the data we didn’t use the month before, I ended up paying just under $12 and my husband paid just under $16 for our phones. That includes taxes too! You can read about getting refunded for cell data you don’t use here.
Health Insurance– $739 We have our insurance through my husband’s employer. This is the portion of the insurance premium that his employer does not cover. It includes dental and vision insurance premiums too. This should go down once he has worked at the state for a year.
Car Insurance– $151 We are insuring three older vehicles. We’re looking forward to making that just two. We haven’t heard back from our second application for the vehicle retirement program yet. I really hope we will be rid of the red van this month (though I’m sure you’re sick of hearing me say that)!
Food– $314 We went over a little this month, but we had company in town for a couple of weeks this month. My parents came with their RV. They usually ate with us down in the basement. They thoughtfully provided some groceries, including some meat (bought from the store, for those of you who read my last post).
Gas– $328 I get excited every time I see how our gas budget has gone down. A year or two ago, we budgeted $500 per month. Right now the gas near us is just over $2.50/gallon.
Parking– $155– Working downtown means paying for parking. It is set up to come straight out of my husband’s paycheck, which means it is paid for with pre-tax dollars, a small consolation I suppose.
Fun– $42 We got fast food once when we had to be in town all evening. I think it was when we took my husband into town to pick up his car from the shop. Normally I am the one who buys holiday treats, but this year I had my husband pick up Easter goodies on his way home from work since I was never in town without the kids. We also went to see Zootopia in the theater. Going to the theater is a very rare for us, but I had 4 free tickets that were about to expire so we only had to pay for one. Finally, my husband took our oldest girl to her school’s Daddy-Daughter dance, where she tired him out on the dance floor. $42 is more than our usual fun budget, but that was a lot of fun.
Clothing– $0 We didn’t spend anything on clothes this month!
Household– $15 The only household expenses were some toiletries.
Car Repair– $980 My newsletter subscribers (you can subscribe here if you don’t already) will remember that earlier in the month, my husband’s car died on the freeway just as he was leaving work in rush hour traffic. He was towed to a nearby shop (thankfully our USAA auto insurance has free towing) and I drove into Sacramento to pick him up. It turns out it was the timing belt. So for around $600 the timing belt and water pump were replaced. I had put $1,000 in the car repair category at the beginning of the month, for which I was grateful. I was hoping that the remaining $400 would go toward debt, but later in the month, the starter went out on the van. Lovely. I’m glad we had put money in the car repair category, but I sure hope this doesn’t happen again next month. We know we’ll need to replace my husband’s car sometime soon, but we’re hoping it will at least outlast our debt.
Medical– $15 Our little one had a check-up to make sure her ear infection was gone. All is well.
Retirement– $484 With my husband’s state job we are forced to save for retirement. While we have some retirement savings from our before law school, it’s nice to finally be contributing again. This amount is taken out automatically.
College Savings– $100 We contribute $25 per month per child to 529 accounts. More on our decision to start saving for college in this post.
Self Employment Taxes– $3,000 Knowing that we have a tax bill coming up and that we’ll be paying estimated quarterlies for our self-employment income, we wanted to start setting aside money for that. Since February’s income was high, taking this money out wasn’t very noticeable. This should cover most of what we’ll be paying for our 2015 taxes. In April we will budget for (and pay) estimated quarterlies for the first quarter of 2016 based on the safe harbor, which actually shouldn’t be too bad.
There you have it. Our personal finances made public. It was an exciting month for us! It still sounds crazy to owe $30,000 and feel like we’re on the homestretch. It feels so close!
If you’re new here, don’t get discouraged. Our start was slow, but steady. Some months our payments weren’t very big at all, but little by little we picked up momentum and now I feel like we’re sprinting! They key is to stick with it. Don’t give up! You’ll get there too!
How About You?
- How did your budget turn out in March?
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