Week 4 Wins: How I saved $177, found immediate motivation, & tackled our student loan debt.
When you go on a diet, those first few pounds are always the easiest. Deceptively, they fly right off. Once they are gone, the body seems to take on a great unwillingness to shed any more - even if you're doing the same darn things. I think this is true of a lot of kinds of change that we make. Much like a diet that's past the easy phase, my second pay period of mindful spending was a little rougher until I had some realizations that helped me stay motivated. Here's what our house is celebrating and what I learned in these last couple weeks:
Keeping my daily spending in check!
Despite my modest expectations and the pressure of matching my first pay period of spending, my daily habits were continuing to improve. While I still spent roughly $28 on paid parking in this pay period, I actually reduced my unnecessary spending by another 77%!
Reductions in Unnecessary Spending (AKA big fat debt payoffs!)
First Pay Period - $100.00
Second Pay Period - $177.09
Including the other ways I'd reduced my credit card debt in the first pay period, I had paid an extra $400.26 toward our debt in just 4 weeks!
This success was mostly due to radical changes of the tiniest kind: The everyday choices that I used to blow off as inconsequential really had been adding up, and I was conscientious of them now. I even felt the full impact of the coffee drinks that my husband occasionally offered to buy me, and often felt better declining them then indulging. We were beginning to make other small changes too: using cloth napkins instead of disposable ones at dinner and packing less expensive (but still delicious) leftovers for work lunches.
Losing (and then Rediscovering!) My Motivation.
Over the course of each pay period, I found myself watching the balance of my spending money account like a hawk. Every penny remaining at the end of two weeks, would be going to pay down our debt. It became a huge source of pride and my motivation to keep saving. In the middle of this particular pay period, that number was a lot less than I thought it should be. When I looked in to the problem, I found a surprising culprit.
The Digit App that had allowed me to save roughly $35 per month before I made big changes knew that there was a whole lotta extra money hanging out in my account, and it had sprung into action. In just three days, it rightly identified $43 dollars that were not going to be spent that pay period and moved them into my Digit savings account. This would have been awesome, except that it made a huge impact on the account balance I was using to motivate me. Digit is still holding onto some extra savings that I'll be using to buy Christmas presents this year, but I moved that $43 back immediately. I also paused my savings with Digit, ensuring that future pay periods will remain packed with motivation.
Wins that Weren't about Dollars.
My new habits were causing deeper changes. I was becoming more appreciative. I truly savored the non-necessary purchases that I allowed myself. And when I didn’t earn a treat coffee because I had indulged in paid parking during the week, that was okay too. It strengthened my resolve to do better next time.
Reducing Monthly Bills: STUDENT LOANS.
During this pay period, we focused on reducing our ongoing monthly bills by adjusting our burdensome student loan debt payments. My husband and I are both somewhat recent graduates who work in public service, and we are both likely to continue this work over the next ten years. A little research showed us that we could both be eligible for "Public Service Loan Forgiveness". Basically, this meant that we could use a payment plan based on our income, make a lower payment for ten years, and any remaining loan balance at the end of that ten years would be waived in return for our public service. It sounded easy on paper, but getting it set up required some serious dedication on our part.
We have three loan companies between the two of us. We had to submit paperwork individually to each company and then follow up on that paperwork with each of them. When there turned out to be some glitches with the status of my graduate school loans, we had to create and submit new paperwork to all three of our loan providers all over again. The good news: It was worth it. We now save more than $500 each month on what was previously a crippling payment. This one change will give us an extra $6,000 each year that we can use to pay down other debt. A tidy sum well worthy the mountain of time we spent on paperwork.
Two things I learned about student loan debt:
- Study your options carefully. If our loans weren't going to be forgiven at the end of ten years for working in public service, we would have weighed our options much differently. Plans that lower monthly payment amounts can mean a lot more money spent on interest over time. If we had zero other debt and weren't in public service, we would have made the biggest payments we could manage. The questions we would have asked ourselves had the same debt but didn't qualify for loan forgiveness would have been: Do we use lower student loan payments for a short time as a tool to let us pay off higher-interest credit card debt? What would that look like and how much could it save us?
- Be careful about consolidation. Loan consolidation seemed especially attractive at first. My loan servicing company was managing about ten different loans that I had used to fund my Masters degree. It all seemed complicated, and we had heard commercials about the benefits of consolidating. What we learned was that consolidating would have applied an average interest rate across all of our loans. It also could have made us ineligible for certain benefits. We chose not to consolidate because we wanted to keep the option to pay off our higher-interest student loans first if we ever leave public service. Instead of consolidating, our loan companies worked with us to coordinate the payment dates of all the various smaller loans that they managed on our behalf.
Expenses with Meaning.
It was right around this time in my journey that I became passionate about starting a blog. I spent $15.68 to buy a domain name and build my website, and that felt okay. Instead of going whole hog and signing up for a year of all the things and registering all the competing domain names (I was definitely tempted!), I asked myself what was truly necessary. I also sought out free solutions for email service, social media post scheduling, graphic design, and more. This kept my total start up costs down to less than $20. These expenses felt meaningful and important, and having a blog has inspired me to spend a lot more time writing (something I’m passionate about) and kept me accountable and dedicated to mindful living.
I'll be continuing to work on paying less for parking (there is some hope for me yet!). Now that we have reduced our monthly bills substantially by adjusting our student loan payments, we’ll be approaching our bank about refinancing our mortgage (a process likely to take us much longer than just one pay period). In the meantime, the search will be on for small ways to save, and those big monthly savings on our student loans will keep getting paid toward our other debt.
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