August Update

Today’s the day – our first progress update post! August has been a pretty good month for us financially. We had some unexpected veterinary expenses arise for our beloved dog. Luckily I was very quick to lodge both of our income tax returns in early July, which saw some nice refunds come
through that bolstered our position for the month.

Here is a snapshot of our forecast position:

Projected Aug
Car Loan  $ 18,321.50
Consolidation Loan  $ 12,813.27
Personal Loan  $   5,207.93
Credit Card A  $   2,216.81
Credit Card B  $   6,366.20
Credit Card C  $   6,262.20
Total  $ 51,187.91

And our actual position at the end of August:

Actual  Aug
Car Loan  $ 17,866.22
Consolidation Loan  $ 12,946.43
Personal Loan  $   5,233.45
Credit Card A  $   1,778.81
Credit Card B  $   6,423.09
Credit Card C  $   6,262.00
Total  $ 50,510.00

I am proud to report we are ahead of target by $677.91 – even if that is a result of our refunds. When you have as much consumer debt as we do, you have to enjoy the small wins. In fact when I constructed our plan I deliberately left out small expected windfalls from the plan for two reasons. Firstly, there was a component of relative uncertainty regarding the amounts and timing. Secondly, I think one of the main drivers of success in a financial plan, and any plan really over the long term is your mental state. Setting goals that are difficult, but achievable, then meeting or exceeding them is very satisfying, and helps keep you motivated and committed to the plan. For those interested, have a look at goal theory.

For those with a keen eye, you may ask what has driven some of the variability between each forecast and the actual result – it comes down to the timing of payments, and some other niggling factors like payment handling fees.

Looking forward to September, we have a total liability target of $48,579.69. I am very confident we can beat given our great starting position. September will also be an expensive month for us with car registration and insurance coming up towards the end of the month amounting to around $1,200. Luckily, I will also be receiving a one off bonus payment of around $3,900 in September, which should net me about $2,100 after taxes. I will use this amount to close out Credit Card A, and we will move our focus to Credit Card C, which is the next logical choice for us considering its interest free period lapses before Credit Card B.

What are your goals and how do you keep on track?

Thanks for reading.

 

 

11 thoughts on “August Update

  1. Great work! Just got to keep chugging away at it and you’ll be debt free in no time.

    Personally I am also trying to pay down the debt on my mortgage – I also do a spreadsheet to track it and keeping ahead of my target number keeps me motivated to stay on my goal. As much as I would love to pay off everything, I agree mental state is important and you should remember to enjoy life every now and then rather than just think about debt all the time.

    Liked by 1 person

    • Thanks for the kind words, in the past we avoided discussing our debt because it seemed so overwhelming, and somewhat discouraging looking at the interest rates. Now we look to the future with great optimism.

      It is a great feeling being below those numbers!

      Like

  2. What’d be interesting is what percentage of your income you’re using to pay off your debts – this is quite similar to others who track their savings rate.

    Like

    • Thanks for the suggestion, I will add it into the next monthly update. At a high level I would say it is currently around 46% of our net monthly pay. There are other areas of our expenditure that I will be drastically cutting back when possible (such as our mobile phone plans – waiting for contracts to end is the worst) which will allow us to allocate more.

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  3. It’s hard to pay down debt and still feel like your moving forward. Last year was the first year of my life that I had a plan to get my family financially fit. I also had to buy another car for my wife and had two credit cards to pay off. In total it was $23000.

    I decided to attack the personal loan first as it was charging me the most interest. Paid it off in 9 months effectively saving me $7000 in interest had I continued paying the minimum. Next I attacked the two credit cards.

    The whole time we were also saving as much as we could. At the end of the year we had paid everything off and saved $10000. At first I was really disheartened cause of how hard I was working at saving but I had to remind myself that the savings and paid debts combined meant next year we could save about $33000 in a year. Not bad for a single income household.

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  4. Great work. I appreciate seeing other’s numbers on their journey to FIRE as it helps me to be accountable to myself.

    Onwards and upwards (or in your current case, downwards).

    TTM

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  5. Well done!

    It was a little more than 18 months ago now I was in a similar position, I was $46k in the hole. Now I have 2 months emergency fund and just opened a share trading account. It’s a great feeling to get a handle on these things and pay them down. It takes time but consistency is the key.

    You can’t change the past, but you choose the direction to head in the future.

    Are you also saving up an emergency fund or are all your efforts going towards debt?

    Like

    • Congratulations on getting yourself out of the hole!

      Did you do anything to celebrate the win? At this stage we are solely focused on eliminating the debt. Once we have paid it off in full we will switch our focus to saving 3 months of expenses before entering into our investment phase 🙂

      Like

      • Cheers, we had a low key celebration. Just went down to a local restaurant to have dinner and a few drinks.

        I found that having an emergency fund really helped break the mental cycle of debt. Once we made our strategic rules, we never used a line of credit to purchase anything. We had enough money in the emergency fund that when my wife and I came across a few hurdles the were mere blips, if that. For example we had a surprise of a $7,000 tax bill (yes had to pay ATO), had to purchase medical equipment $2,500, etc. Each time having the funds available to purchase without going further into debt was nice.

        All we did was slip 10% of our wages away into a HISA and not touch (except in emergencies)… that was until my spreadsheet showed we were net positive and I took pleasure in transferring most of the emergency fund and making the final payment 🙂

        I understand the money works harder for you if you use it to pay down debt, but it was more psychological for me. I am my hardest critic, and not having any self judgement about going “backwards” was a blessing. It really helped me change the culture and our spending habits.

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  6. Pingback: June Update | Follow us on the path to FIRE

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