Category: Debt

We Paid Off Our Student Loans – Now What?

We’re spending Memorial Day weekend on Cape Cod. I’m sure we’ll be spending time at the National Seashore, one of my favorite places, especially Marconi Beach. (Maybe if you hurry up, you can find us!) I’ll be using some photos from our earlier trips here.

And as part of our trip, we’ll be celebrating a big milestone…

We are now student loan free!

Maebys Marconi Sprint (4)

That’s one happy puppy

Yes, twelve years after graduating college, and hot on the heels of paying off our car loan, we just extinguished another type of debt from our balance sheet. Now the only debt we have is mortgage-related. How did we do it?

Well, over the long-term, we haven’t done much except meet our normal monthly payments. Occasionally I would make an extra payment or two, but if you look at our debt chart, you can see the student loan debt is a simple, straight line until the end. Mainly, between the two of us, we have just been paying the $211 per month dutifully for twelve years.

Marconi Beach Day1 (4)

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What Do You Do With Excess Cash?

For me, frugality is a never-ending game of optimization. I’m always looking for ways to either cut costs or get more out of my money. This leads us to do weird things like cancelling the newspaper, cancelling the cable, buying wood stove pellets instead of rabbit litter, and either riding a bike or taking a bus to work. (ed: Self hyper-linking skills are on fleek) The way I’ve forced myself into this position over the years is by promising to always increase our monthly savings as measured in Quicken.

Forced Savings

From the time Marge and I moved in together, our savings plan has basically been this: Force a certain amount of savings per month by using automated investing. Money disappears from our checking account before we even notice it was there, and it escapes to a investment vehicle where it goes to work for us. The investments happen on a weekly basis to maximize dollar-cost averaging.

We started this back in 2006. I arbitrarily picked $1,000 as a savings goal for the month. When it became clear that this was too easy a hurdle, I pushed it up to $1,500 a month. Once we hit that goal for three months in a row, we increased it $100. And we’ve followed that model ever since. The amount of monthly forced savings has increased $100 or more every three months.

Now we are at $4,000 a month. As you can tell, I’ve found this method to be really effective. Every few months, we have to optimize, because the money just isn’t there! The savings must be found.

To be honest, some of this is only short-term savings. Some of the savings are used as a DIY escrow account to pay for our property taxes and home insurance, or if we owe any income taxes at the end of the year. All other expenses flow through the monthly expenses and count against that $4,000 number.

And since months can be lopsided, I sometimes have to push expenses ahead a month or two in Quicken, or push income back, to make that average savings goal appear. Funny math, but you get the picture. Regardless, that monthly savings goal is being forced into savings using automatic investments either through our workplace retirement plans or Vanguard accounts every month. If there is a temporary cash shortfall, I keep $3,000 as a buffer in a savings account.

Then every once in a while, there’s a monkey wrench thrown into the works. We get three paychecks instead of two. A tax refund. Some unexpected income shows up and I’m at a loss of what to do with it. And we are having some of those days again. Oh, joyous days! Continue reading

Savings Bonds or Car Loan?

In our seemingly never-ending quest to rid ourselves of all debt forever, we made a move to pay off almost $2,000 of the loan on our Toyota Corolla. We sold a bunch of savings bonds! Was this a good idea or not?

It all depends on the interest rate we’d earn on the savings bonds versus the interest rate we’re paying on the loan. Let’s have a look.

To figure this out, we’ll need some facts. For one, the car loan is at 4%. Well, that was easy!

savingsbondsThe savings bonds, however, are much more complicated. To track the current value of all our separate paper bonds (stowed away in a fireproof box), I used the Treasure Department’s handy Savings Bond Wizard. To use it, you’re going to need to convince yourself that it’s 1998 again and download their software.  I’m not sure why they haven’t figured out a way to track your bonds with an online account, but needless to say, it’s the federal government, and they are incompetent when it comes to anything technology-related.  Except spying on citizens.

Man, if every federal agency had just had a few NSA snoops on staff, imagine how much better off they’d be.

After plugging in all of our savings bonds, graciously given to us by family members over the years, I came up with his listing:

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Debt Repayment Central

Just a quick update to let you know that Ridinkulous has a new page for tracking our debt payoff plan. I thought it would be a good repository of info, and a way to encourage us to free ourselves from the enslaving hand of debt.

Debt Progress

Here’s a sneak preview of some of the incredibly fun and eye-poppingly beautiful Excel 97 graphs waiting for you!


CarLoan-1502

StudentLoans-1502

mortgage-1502

 

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