2015 Financial Goals for Double Debt Single Woman + FS-DAIR

Posted on January 3, 2015 by Double Debt Single Woman

Happy New Year!

It is that time of year again. I unveil my 2015 financial goals. Before I do, I’ll look back at my recent yearly goals.

2014 Goals:

Pay off remaining $22,770 balance in credit card debt
Open and contribute to 401k up to point of employer match when eligible

2014 Outcome: [partial success]

Paid off $16,780 in credit card debt [remaining balance: -$5,990]
Paid $8,720 in student loan interest [0.o -Yeah, this is insane.]
Opened and contributed to retirement funds [+$6,578 (including employer match)]

In the footer and sidebar, I have added a tracker for my retirement and other savings to help me have a fuller picture of my finances.

2015 Goals:

Pay off remaining credit card debt of $5,990
Reach $20,000 in retirement savings
Reduce student loan debt to $108,000
Save $6,000 in savings (Yes, my lack of an emergency fund is scary.)
Pay cash for an international trip – $??

My student loan goal doesn’t look like much of a drop, but you have to remember that the first $750 that I pay each month is just going to interest, not principal. So it will take nearly $15k in payments to get from $113k to $108k.

Undoubtedly, I have some more thinking to do to figure out how to prioritize all of these goals. Save for retirement or pay down debt?

Will a noble samurai rescue me from my quandry? Enter FS-DAIR

Financial Samurai has posted a formula for determining how to prioritize debt repayment vs. retirement funding. His FS-DAIR (Financial Samurai Debt and Investment Ratio), looks like the tool I’ve been hoping to find for a while now. How does it work? This chart lays it all out in a clear format.


Source and Image Credit: FinancialSamurai.com

Basically, any debt that you have carrying 10% or higher in interest, should be paid off post-haste, at the expense of any investing (beyond the 401k employer match). Once your debts have interest rates at 9% and below, things get interesting. Read Sam’s FS-DAIR post for examples of how this works. For instance, Sam uses the following as an example for someone deciding how much to put toward student loans vs 401k.


Source: FinancialSamurai.com

My student loan debt is made up of many separate loans with different fixed interest rates. I will need to run the numbers to see how this would shape my plan of attack. I’ll do a follow-up post on this in the not too distant future. Thanks, Sam for lending me a sword to use in my battle!

Net Worth – Double Debt Single Woman – January 2015

As my debt drops in 2015, I’ll be tracking my Net Worth. My first goal will be to see it drop down into the 5-digit zone. Soon you will also be able to track it here @Rockstar Finance. I will be pretty low on the ranked list, but I will be gunning for higher and higher slots. Watch out Finance Phoenix and Feisty Finance!

“Debtor’s prison is real, and opportunity cost is a bitch.” (DDSW)

Goodbye 2014: The Year in Debt Review

Posted on December 30, 2014 by Double Debt Single Woman

As the clock ticks down on 2014, it is a natural time for reflection on the wins and losses and ups and downs of the year. It always seems as though the year flew by, and this was no exception.

I started off in 2014 with high hopes of finishing what I started in 2013 – finally killing this infernal credit card debt. In January 2014, I had $22,770 left in credit card debt (of my $30,340 total) and measured optimism. I knew that the single woman with double debt faces certain additional challenges to being able to turn around her finances. I also knew that in my case, the key to getting rid of this credit card debt within the year would hinge on lowering my living expenses.

I was not happy in my living arrangement for most of 2014. I really ~~wanted~~ still want to have my own place, but that is completely impossible in my high cost of living area. To live in a nice place, and in a nice area, many people spend on rent what I bring home in an entire month.

Ummm, no.

Sadly I can’t afford that. So, if I must live with roommates then, I knew I needed to make it as financially worthwhile as possible. I couldn’t wait to get out of the onerous lease that I was trapped in.

At work, my awesome direct manager left to work at another employer and…

Yes, she did. And I was afraid of reporting to the senior manager as she was quite intimidating to me. I was afraid that I might lose my job if I displeased her. I am happy to report that the senior manager and I have since worked together on a couple of projects and I no longer find her quite so intimidating at all. She has been quite kind to me, however I do know that I have room for improvement. In other words I’m not shaking every time I get called into an unplanned meeting, but I’m not still naive enough to think that I can get comfortable in my role. The job is challenging and is at the upper range of my skill set, so it will continue to be draining as I develop professionally. I also have a new direct manager who is also great. Things are not perfect, as it is sometimes very stressful at work, but I am grateful to have an income.

By April, I’d paid down half of my credit card debt to $15,000. It was a proud moment for me, as the first half of the journey is the hardest. The balances are at their highest and payments appear to have the smallest impact. By April, I was at the midway point. I was finally gaining momentum. I was starting to see a life beyond this credit card debt. I was starting to dream of doing something that I’ve wanted to do for over a decade — take an international trip — once the credit card debt was gone. While most of the leaders in the personal finance blogosphere warn against such choices, as it could lead to a life of reckless and out of control behavior…

…I got some good words of encouragement from you guys to help me keep things in perspective.

I’ve realized that travel is important to me, and that I don’t want to wait another 10 years before I can see the world. That is a prison sentence. I plan to take a trip in 2015 or 2016, depending on when I have the credit card debt gone for good and have cash saved up for the trip. So daydreaming of exotic locales also keeps me motivated these days.

In June, I found a new room to rent and was over the moon happy to spend $1,000 less on rent every month. Seriously the cost of living here is ridiculous. My new living arrangement with my three Craigslist roommates is far from perfect, but much better than what I had before. I’m having to put up with things that I ordinarily would not put up with, but that’s the price I have to pay for such reasonable rent. With that extra money going toward debt, I was able to pay down my credit card debt to $9000+ by August. Breaking that 4-digit mark was a great psychological boost. Now with 4-digits of debt, I could see the light at the end of the tunnel. It helped me to renew my resolve. I continued to make my payments. My debt dropped slowly to $6,000+.

In the last few months of 2014, I feel like I’ve been on a debt carousel. I’ve stalled at the $6,000+ mark. Unexpected but necessary medical expenses, along with a poorly controlled food budget have slowed my payoff.

Spending confession: Holiday Hangover

One step forward…two steps back. Is that how the saying goes?

After reaching an all-time low credit card balance of $5,567 at the beginning of December, I now have $7,190.47 in credit card debt. Ugh! I want to strangle myself sometimes. What the hell happened? What did I even spend it on?

I just looked at my statement and did some eyeball calculations. Numbers are approximate.

$285 Groceries & food
$100 Credit card interest (My 0% transfer rate has now ended.)
$300 Holiday Gifts
$333 Handmade Bed Quilt
$100 Books (work-related)
$500 Clothes (Half of which I will likely send back once they arrive.)

With my next paycheck I will pay some of this back down. All in all, however, it’s been a pretty good year financially — down from $22,770 to ~~$7,190~~ $5,990 in CC debt.

Addendum:

Woot! I got my last 2014 direct deposit paycheck this morning and promptly put the bulk of it toward the credit card debt.
With only hours remaining in 2014, my ending credit card balance will now be $5,990.00

With more careful planning, it should have been zero, but I’ll take what I can get. Now that interest has kicked in on my credit card again, this really needs to die, and soon.

Thanks guys for reading along and sending kind words my way throughout the few years that I’ve been posting here.

Goodbye 2014!

“Debtor’s prison is real, and opportunity cost is a bitch.” (DDSW)

The Moment When Debt Causes You to Lower Your Expectations in Life

Posted on December 4, 2014 by Double Debt Single Woman

I started this blog back in late 2012 after realizing that I wasn’t going to pay off my debt as easily as I’d assumed I would after I’d graduated from school. In the days following getting fired from my job back in 2013, my precarious financial situation became even more real to me. I spent a lot of time thinking about my past, present, and future whenever not applying for jobs. ‘Is there a way out of this?’, I’d ask. ‘Will I ever be able to live a “normal” life’ (i.e. my own house, car, nice things)? With a calculator and a notepad, I sat on the old squeaky twin bed that came with the room that I was renting at the time and started doing the math….

After a period of time running calculations, I accepted the unavoidable truth. I’d likely never be able to afford to pay off all of this debt, own a home and car, travel, afford nice clothes, and save enough for a comfortable retirement. I didn’t make enough money (still don’t), and there weren’t enough working years left. In 10 years, I’ll be in my 50’s and subject to ageism and involuntary retirement. I likely won’t have a spouse or anyone else to rely on in my old age. I’m always hopeful, of course, but also a realist. The odds are against me at this point in life. So that was it… And the illusion crumbled…

I sat there and let it sink in. The rest of my life won’t be like I’d always envisioned it being. The future self, the ‘successful me’, that I’d had in my head all these years would never exist. It was sad to think about. It’s still sad to think about. It was almost like a mourning. I felt like a failure. I still feel like a failure.

As I sat there, the cognitive dissonance started to subside as the rational part of my brain took over again. If there wasn’t going to be enough money to go around, then I had to prioritize and make choices. First, the debt has to be repaid. The consequences for not doing so would be too severe. Seventy-five percent of my 140k+ debt is student loan debt, so bankruptcy was not an option.

Next, I knew that retirement funds would be necessary to support me in my old age. With no retirement savings in my late 30s, I knew that I would have to sacrifice as much money as I could to put into a retirement account when (if) I got my next job. Lastly, I would have to live my life on very little money between then and retirement, only to continue living frugally in old age. That’s not even accounting for needing to take care of my parents in their final years. Frankly, I’m planning that my siblings will be willing to fund most of our parent’s care-taking as they are much more financially well-off than I am. (Hell, who isn’t?)

No house, no nice things, no travel. I’d need to continue living under other people’s roofs, in rented rooms, sleeping on other people’s old squeaky twin beds; at least for the foreseeable future. As someone who cherishes personal space and privacy, this was a bitter pill to swallow. (Side note: Although I’ve moved twice since that day in 2013, I’m currently writing this post on a squeaky twin bed in a rented room). As living with roommates is a constant source of low level stress for me, I realize I am sacrificing a bit of my health because of this.

Around that same time last year when I had my calculator reckoning, I discovered minimalism and simplicity. It was a buoy for me in that it helped me to cope with my situation. It helped me to see that I don’t need ‘nice things’ to be happy. I don’t need to own a home or car. I won’t lie and say that those things wouldn’t be nice to have. I’ve just come to accept that they may not be for me.

Today, I don’t know how my journey on this rock will end. (Would I even want to know?) However, I’m coping with ~~lowered~~ adjusted life expectations, the best way that I know how. I don’t look, dress, or live like other women my age, because of my financial situation. The sour truth is that sometimes I’m treated differently by others because of those differences. Being and looking poor has its disadvantages. I’m planning to re-start work on a couple of side projects that may become a source of side income. I need to find a way to make more money without sacrificing my health. I will do what I can to improve my situation, and to focus on the silver lining to my cloud.

How has debt affected you? What have you done about it?

“Debtor’s prison is real, and opportunity cost is a bitch.” (DDSW)