Focus!

[EDDOCMOM]

Today I entered into the 5 digit world of student loans!  Having broken the 6 figure barrier the end seems so attainable - we average between $13,000 and $15,000 per month toward my loans.  At this rate I should be out of debt (still have a mortgage) by the end of summer.

But at the same time, it's so hard to be focused and disciplined, sticking to a budget.  We use budgeting apps but still seems like we go over every month.  I'm paid hourly so my paycheck is never quite the same, and I recently went to nights and weekends only for added $$$.  It's hard to not go out and get a $4 coffee when I'm making those kinds of monthly payments toward something invisible. But if we don't keep it under control the spending easily adds up.  I feel like I'm sacrificing on a lot of fronts right now and the end-goal still seems far away.

Any tips for these last few months of debt payoff?  Encouragement?  I'll be 4 years out of residency in July.  My after-debt goals are to move up in car (1999 Corolla) and go on a Disney Cruise with my family in 2018.  Also, boring 401K, 403b, 529, and other retirement needs to beef up.

 

[PhysicianOnFIRE]

Great job! You're putting massive amounts of money towards the loans.

A couple things you might want to consider are setting new goals. A six-figure net worth. Half Millon, Million, Financial Independence, etc... Also, realize it's not crucial to sweat the small stuff. When you have $15,000 leftover each month, $4 here and $40 there aren't going to break the budget. Maybe you need to allow yourselves a slightly higher spending allowance. If you feel like you're depriving yourself, maybe you are. You don't have to go overboard and become a spendthrift, but you need to be happy along the way.

Best,

-PoF

[hightower]

I agree with POF.  Its absolutely great you're paying off your debt quickly and you'll be very glad you did very soon.  However, its important to make sure you're also contributing to your retirement accounts (max your 401k and backdoor roth each year).  Also, you have to enjoy life a little.  Budget a monthly amount for "play" money.  You can use it for whatever you want (treat your family to a night out, save it for that cruise, etc, etc).  It could be just $500, but at least its something to give you some satisfaction each month.  You and your family deserve it!!

[The White Coat Investor]

EDDOCMOM wrote:

Today I entered into the 5 digit world of student loans!  Having broken the 6 figure barrier the end seems so attainable – we average between $13,000 and $15,000 per month toward my loans.  At this rate I should be out of debt (still have a mortgage) by the end of summer.

But at the same time, it’s so hard to be focused and disciplined, sticking to a budget.  We use budgeting apps but still seems like we go over every month.  I’m paid hourly so my paycheck is never quite the same, and I recently went to nights and weekends only for added $$$.  It’s hard to not go out and get a $4 coffee when I’m making those kinds of monthly payments toward something invisible. But if we don’t keep it under control the spending easily adds up.  I feel like I’m sacrificing on a lot of fronts right now and the end-goal still seems far away.

Any tips for these last few months of debt payoff?  Encouragement?  I’ll be 4 years out of residency in July.  My after-debt goals are to move up in car (1999 Corolla) and go on a Disney Cruise with my family in 2018.  Also, boring 401K, 403b, 529, and other retirement needs to beef up.

 

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I'll race you. I think I owe $95K on my mortgage and plan to pay it off by about then.

Remember it isn't the $4 coffee that gets you. It's the big rocks. You only have limited willpower, so don't blow it on $4 purchases.

[wideopenspaces]

Wise words from PoF, as usual! OP, you are doing amazing and I can't tell you how good you are going to feel later this year with those loans paid off! I'm still happy every day that mine are gone :-) I agree that you probably need to loosen up with your spending if you are feeling so deprived. Figure out what will make you happy for like $200 a month and go to town with it. That's like 50 lattes a month ;-) And that amount will not break the bank or change the time frame for paying off your loans. At some point you have to figure out how to spend in moderation on the things that give you pleasure, without going out of control to the point you aren't able to get to the goals you set for yourself. You don't want to engage in black or white, all or nothing type thinking or behavior as that will ultimately get in the way of your happiness and financial success. Good luck and update when you have paid them off!

[conniebird]

Wow, amazeballs. One thing I did to "visualize" my debt was make paper chains (in red) - with each chain link = $2000 (originally was going to do $1,000 but got tired of making chains). Each extra payment I get to cut off a few links. It's hanging in the office area and looks ridiculous and dragging onto the floor hanging from the ceiling.

[Hatton]

I am proud of you.  You will soon be focusing on accumulating millions of dollars.  Set some goals and congratulate yourself every time you hit one of them.  I still do that!

[DMFA]

EDDOCMOM wrote:

But at the same time, it’s so hard to be focused and disciplined, sticking to a budget.  We use budgeting apps but still seems like we go over every month.  I’m paid hourly so my paycheck is never quite the same, and I recently went to nights and weekends only for added $$$.  It’s hard to not go out and get a $4 coffee when I’m making those kinds of monthly payments toward something invisible. But if we don’t keep it under control the spending easily adds up.  I feel like I’m sacrificing on a lot of fronts right now and the end-goal still seems far away.

 

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I think you've earned a Sterbercks here or there.  If you're putting $13,000/month (more than I even make) into a student loan, I think you *might* still come close to your goal if you spend 0.031% of that payment on a skinny soy half-caf white chocolate mocha frap.

Although some might think you should leverage low-interest student loan debt (such as that which has been refi'd at a 5-year term with variable rate, which are in the low 2% range) against greater earnings in the market, it's never really wrong to pay down debt, and at the rate you're doing it you'll fill your coffers in a taxable, 529, HSA, etc very quickly.  I mean, that's maxing an HSA and IRA in less than a month, and another IRA in a week or so.  Brilliant.  You deserve applause...seriously.

conniebird wrote:

Wow, amazeballs. One thing I did to “visualize” my debt was make paper chains (in red) – with each chain link = $2000 (originally was going to do $1,000 but got tired of making chains). Each extra payment I get to cut off a few links. It’s hanging in the office area and looks ridiculous and dragging onto the floor hanging from the ceiling.

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I suggest we ban Bonnie for saying "amazeballs."

 

[Laeno]

Are you using the budgeting apps proactively or retroactively?  I used to be very good at tracking my spending, which wasn't very helpful.  Since I've tried budgeting a month ahead of time and really checking to see if I have the money first, I've been able to stick to that.  But I agree with the others... $4 starbucks aren't killing you (I do it, too... and it just fits into a little corner of my--probably too big--dining out budget).

 

Otherwise for motivation... do it for the rest of us!  I need a good example, as this month was the first month we were going to start heavily paying towards loans after graduating.  (Of course, my wife's car died the week before the payment... so it got repurposed unfortunately).

[Decapolis]

Fantastic job! This will all soon be a distant memory and you will be debt free. We are in a similar situation, 4 years out but paying off the mortgage instead and should be done this summer.

You need a splurge...nothing crazy but something...anything. For me buying a toy or taking the family on a trip every few months really helped keep me motivated. Is there something you've always dreamed of buying when you were done with training? For me it was a dream road bike. Yes it was expensive but it was pennies compared to the amount of money I was putting toward debt.

Anyone else in your life you can share your debt destruction with? I've got two friends who are also paying off debt and we will send texts when we hit big milestones...5 digit student loans! Plus they can save me from myself when I want to go buy a new car.

Finally, while I don't agree with everything he says  I've found listening to Dave Ramsey podcasts extremely helpful.  It's nearly impossible for me to buy something ridiculous when I listen to his show during my commute. Something about an hour of listening to people's poor financial decisions and then hearing debt free screams. ?

 

Keep us updated!

[Kamban]

EDDOCMOM wrote:

It’s hard to not go out and get a $4 coffee when I’m making those kinds of monthly payments toward something invisible. But if we don’t keep it under control the spending easily adds up. I feel like I’m sacrificing on a lot of fronts right now and the end-goal still seems far away. Any tips for these last few months of debt payoff? Encouragement? I’ll be 4 years out of residency in July. My after-debt goals are to move up in car (1999 Corolla) and go on a Disney Cruise with my family in 2018. Also, boring 401K, 403b, 529, and other retirement needs to beef up.

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Treat yourself to the occasional $4 coffee but be very careful about justifying it. You many now tell yourself it is a treat for putting $13K per month towards the student loan but after you have paid it off you may justify it as a reward for all those years of scrimping, saving and paying off loans.

Once you have paid off the loans, make sure that at least half or more of that $15K you are now contributing to the student loan goes towards a savings plan, whether they be a 401K, 403b, 529, taxable savings in Vanguard, saving for the new car ( do not take a car loan) or the Disney cruise. Do not get into credit card or auto loan debt. A few years of fiscal prudence that you are now showing, if carried on, will set you for life.

[EDDOCMOM]

We use Mint and Everydollar - and we try to do it proactively but often end up fudging because we're not very good at sticking to it.  We have never gone to "cash only" - we use debit cards but even then we add a few things to the cart here and there that we didn't see coming.  Both my husband and I tend to be impulse buyers (have been known to buy a new car or two in the past without much forethought) so we don't tend to chide each other too much.  We did manage to make a meal plan and shopping list for this month, along with budgeting for known birthdays etc.

Another issue I have is that both Mint and Everydollar take a few days to update - and more and more sites are not letting them pull information (our mortgage for instance no longer allows third party access to the account).  And we're not very good about doing it on paper or excel - maybe we should be?

Again - I truly struggle with budgeting for these small daily/weekly things (talking adding $200-$500 unplanned items per month) when my income seems so ridiculous.

[EDDOCMOM]

We also listen to Dave Ramsey - and get a lot of encouragement and motivation from it.  I think the hard part is listening to the differences in the $$$ amounts involved.  On the one hand I feel very blessed to have the income I do, but then it's easy to feel like the budgeting rules don't apply to me.  And I need to get my (accountant) husband on board with these extra motivational trips/splurges - he's already talking about paying off the mortgage and I'm thinking we need to turn it back a little and relax. (He currently stays at home with the kids, is getting his master's in accounting and spends my money on bills before I even get home

[RocDoc]

You're doing so well and you're getting close to the end! You should be very proud of yourself. I think Kamban's advice is excellent about putting at least half the money you're currently putting towards the loans into investments once the loans are paid off. Having a high savings rate at the beginning of your career will pay off incredibly. It's much easier to keep up a good savings rate if you don't get used to spending the extra money once the loans are done.

[DMFA]

EDDOCMOM wrote:

We also listen to Dave Ramsey – and get a lot of encouragement and motivation from it.  I think the hard part is listening to the differences in the $$$ amounts involved.  On the one hand I feel very blessed to have the income I do, but then it’s easy to feel like the budgeting rules don’t apply to me.  And I need to get my (accountant) husband on board with these extra motivational trips/splurges – he’s already talking about paying off the mortgage and I’m thinking we need to turn it back a little and relax. (He currently stays at home with the kids, is getting his master’s in accounting and spends my money on bills before I even get home

Click to expand...

Dave Ramsey is good for getting out of debt and applying more austere lifestyle principles, but his audience is geared more toward people who are either financially inept, or those who do have knowledge but are just extremely debt-averse.  You might find that, as you continue to grow in your aptitude about this sort of thing, that a lot of what he recommends is not the mathematically optimal thing, especially as it pertains to investing.  Low-interest non-compounding debt with possible tax advantages (like mortgages or, in some cases, low-interest student debts like from prior to 2006) leveraged against higher-earning, tax-advantaged, compounding investments makes the most mathematical sense, but there is a heavy behavioral aspect to money (way more than Starbucks PSLs).  The WCI blog has a few posts about it: https://www.whitecoatinvestor.com/tag/dave-ramsey/