Doing Stuff About Debt

So, it’s not like I’ve been totally blithe about debt and savings and other personal finance issues all these years. It’s just that…it didn’t seem to matter that much right now. There were more important things, like keeping the rent paid month to month, and I was still young, anyway, right? Plenty of time to do things like save.

But now that I’ve had this abrupt switch flip, not only am I mourning my lack of retirement savings, I’m also suddenly totally allergic to the debt. Realistically, I know that I’ve made big progress, and that it’s pretty cool that I could get out of debt entirely a year out of graduate school. Less realistically, it’s driving me CRAZY that I have to put basically all my remaining cash, after the bills are paid, towards the debt if I want to do that. I mourn the much nicer savings account I could’ve had after this year of full-time employment if I’d only lived just a little bit more within my means while in Very Expensive Grad School City….

That said, I’ve been pleased with some of the debt-reduction strategies I’ve used this year. First of all, I had enough sense to pay down my high-interest credit cards using my first couple paychecks. I’d built some up because of a series of emergency expenses incurred over the previous year (and of course I didn’t have an emergency fund, so.) Then, I paid off the used car I bought from friend who was moving out of the country. And then, around September, I was finally ready to start thinking about the loan…and since my grace period didn’t end until December, I was able to pay $4000 of it before it started accumulating interest. (The 6.8% for graduate loans is extremely annoying, by the way, and a big reason why I’m focused on paying them off before investing more in a retirement account.)

Second, I took a smaller apartment for $750 instead of a larger one for $950. This is kind of a medium win, since I looked at several apartments that were even cheaper, but none of them had laundry in the building and I kind of caved; after a decade of dragging everything to the laundromat, I was done. I feel, in retrospect, like maybe I should’ve been tougher on the apartment front. But at least I didn’t take the even more expensive and nicer option!

Third, while I haven’t been keeping really close track of expenses (I’m sort of afraid to think about how much I spend on food a month; it’s not that I go out so much, although I do probably spend too much on coffee and grabbing a sandwich, etc; but I like really nice ingredients and fresh produce and so on, and that definitely adds up) I have been using mint.com and checking it religiously, and I feel like overall that’s been really good about keeping me on track: focused on the debt but also on keeping expenses to a relatively low level instead of running off for vacations all over the place. Those scary red bars are scary!

I’ve had setbacks — a big tax bill that needed to be paid in February meant that I only put the minimum towards the loans in that month, and December holiday expenses also meant a lower loan payment — but I’ve basically been steadily chipping away, anywhere from $1000 to (this month) $2600 every month. I still hate how slowly the balance seems to drop, even when you throw over 2/3 of your take-home pay at it!

The Biological Savings Clock

One reason to start this blog is to keep me going as I finish hacking away at the student loan debt (how I acquired it and what I’ve been doing about it will be the subject of a future post.) But another one is to have a space to think through issues relating to making a more conscious turn towards the future: that is to say, emergency funds, savings funds, retirement funds. These things kind of freak me out.

Until a couple of weeks ago, I’d lived my whole adult life without getting into catastrophic debt, but also without any kind of financial margin or plan that looked beyond the next paycheck. From 22 to 34, I lived in the aforementioned giant expensive city; first I was a freelancer, then I was a grad student. Even the year that I made a grand total of $12,000, I did all right. I lived in cheap neighborhoods, with roommates, took public transportation, rarely ate out. But one thing I never did was establish any kind of permanent savings account. I didn’t work for anyone that had a 401(k); I never set up an IRA; I always had a regular savings account, but routinely drained it to pay for either normal living expenses (when I was between jobs) or travel.

You know how some women have the biological clock kick in around my age? They must have a baby right now or they’ll die? Yeah, I had one of those moments two weeks ago, except in my case it was about how I had to have an IRA, right this second.

Really, it felt like a switch flipped in my brain. One minute I kind of vaguely knew that at some point in the future, after I paid off the student loan and built up an emergency fund, I should start a retirement account. And the next minute I was frantically researching Roth vs. traditional, and how do you open the damn things anyway? Suddenly I just could not get enough, and I spent countless hours clicking around the various websites you get when you google “paying down student loans vs. retirement savings” and other search strings to that effect.

Reader, I drained my emergency savings funds again. But this time instead of going to Europe, or paying my rent after a down month, I put $2000 in a Vanguard target retirement fund. (Roth, in case you were wondering. It seems like a way better deal.)

It kind of makes me laugh, because hello, I’m 35, I have no job currently lined up for after July 2015, I don’t really know what I want to do with my career or what city I’m going to end up in…but hey, I guess I have a little something put by. A very little something. But maybe it’ll grow.

Introducing Me (And My Slowly Growing But Still Negative Net Worth)

Hello to anyone reading this; thanks for being here.

I’m a 35-year-old, permanently (at least as far as I know) single woman. I’m not complaining about that — singleness has its pros as well as cons! But….

As this article notes, single people face some particular issues when it comes to cash flow, housing costs, and retirement savings. (See also this post by Krystal Yee, which got me thinking about this topic a lot.) Those things are definitely on my mind right now. And what with singleness being one of the key factors in my financial life right now, I figured I’d make it the title of this blog, which I’m starting after a couple of weeks of fairly intensive reading around in the personal finance blogosphere. It seems like a really good way to keep myself motivated as I move forward; I like the thought of sharing my journey, which in some ways is well underway and in some ways is just beginning.

Here’s the big-picture snapshot of my financial situation, which shows you both “well underway” and also “just beginning”:

That’s my net worth, starting in June 2013, when I was (thanks, mint.com, for the precision) $21,249 in debt, of which nearly $19,000 was embedded in student loans that were about to begin coming due. I also had $5629 of “assets” (the little green bar) but since $3500 of that is the value of my car, we were really talking…not that much. But counting the car, that brought my net worth in at negative $15,619.

June 2013 was a big month for me; I graduated from a humanities PhD program, located in a Giant Expensive City, and moved to a much smaller, much cheaper city to take a fortunately very well-paid, by humanities PhD standards, but unfortunately only 1-year, job. The move was expensive, since it required buying a fair amount of furniture (long story), but nevertheless, as the summer and fall went on, I started throwing chunks of money at the student debt pretty regularly. So I’ve arrived at the end of March, 2014, with $7703 in debt and a net worth of negative $1034 (still including the car!) The student loan stands at $7558. In other words, I’ve paid over $11,000 on the student loan in nine months. By putting basically all my extra income towards it over the next few months, I hope to have it entirely paid off by August.

This is great, and I’m glad I’ve been able to tackle the loan to this extent, but it still leaves me with a lot of question marks about my financial future, which I’ll tackle in my next post.

[Edit, December 15, 2014: Shortly after beginning this blog, I removed the “value” of my car from my net worth numbers, on the grounds that there’s really no sense in which it’s liquid; this is why elsewhere on the site you’ll see my “starting” net worth, in June 2013, listed at -$19119, and all subsequent net worth updates don’t include the value of my car. I decided to leave this introductory post as is, though, because of the screenshot! The debt numbers in it are accurate, but the assets are too high.]