Category Archives: debt

Two in the Bush

Next month is my condo closing (knock wood), which means that about a week from now I’ll be making my last mortgage payment on the place. Oh, and my last assessment, last tax escrow payment, last PMI payment… all told, that’s $2700/month that I’m paying now but won’t be paying come October. And as annoying as it’s been to be making these payments on a vacant condo, I’m fortunate to have a job that pays well enough for me to make that payment along with all my other bills and expenses.

So the thought of this money coming in is really seeming like quite a windfall, and I’ve been brainstorming fun ways to spend it. It really hits me that it’s a lot of money when I look at what else I could do with this money every month:

  • The nail salon near my home charges $35 for a pedicure. With a 20% tip, that’s $42. With $2700 every month I could get two pedicures a day, every day. A pedicure is the ultimate indulgence for me, so this actually sounds tempting!
  • A flight to Europe even in peak tourist season is under $1000. Add 6 nights in a hotel at $200/night and give me a $500 food/museum budget for the week and that’s a one-week vacation to Europe every month.  Of course, I wouldn’t have a job after a couple of months of doing this, and there goes the $2700.
  • Ever read a shelter magazine, like Martha Stewart Living or Architectural Digest and marvel at the flower arrangements in the rooms that look to comprise about 1000 roses and hydrangeas? I’ll bet $650 would buy a pretty nice flower arrangement every week.
  • How could I forget the “latte factor”? If a soy latte is around $4, let’s be generous and leave a tip for an even $5, I could have 17 lattes a day! (Better make some of those decaf.)

Well, you get the idea. But believe it or not, the point of this post isn’t to brag about how I’m going to be living large in a couple of months. Because, actually, I’m not going to be doing any of that stuff. The point of this post is that fantasizing about spending money is very different from actually having the money in hand and deciding where it will go.

My financial goals are longer-term. What I really would like to do is get my student loan debt paid off, so that I no longer feel locked into my well-paying, but unfulfilling, job. As much as I like the idea of endless flower arrangements, the appeal would wear off every time my student loan statement came in the mail.  So almost all of this “extra” money will go towards aggressively paying down my debt.

But it doesn’t have to be all-or-nothing. What if I set aside a few hundred dollars of the $2700 for smaller versions of the indulgences listed above? If I put $2000 to my student loan debt, I would still have money left over for one pedicure a week, a modest bouquet of fresh flowers every week, a latte a day, and, say, $350 to go in a savings account towards a vacation at the end of the year. And all that would still feel really luxurious, without all the guilt.

There’d still be some guilt, though; $700 is still a decent chunk of change. But it would allow me to pay down my debt quickly (if not as quickly as possible) while still retaining some of that “windfall” feeling. This is all still talk, at this point. We’ll see what I do when I have the bird in the hand.


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Filed under conscientious consumption, debt, HROI

Live a Little While Getting Out of Debt

Many people believe–and from what I understand, at least one finance guru recommends–that when digging yourself out of debt, you should eliminate all non-essential spending and put as much money as possible towards paying off your debt. I disagree.

To me, this plan is just like a strict diet where you can’t have so much as an ounce of chocolate until you’ve reached your goal weight. It might work for the most disciplined people, but for others it will be a miserable process and, at the end, it may result in a binge that negates a lot of hard work. Whenever you’re being careful about finances, living frugally, or paying down a significant indebtedness, it’s easy to start down the path of miserdom. A little bit of breathing room in your budget will go a long way towards staying happy and healthy even while you’re paying down your debt.

I have a huge amount of student loan debt and recently started paying it down (at least the higher-interest debt) aggressively. In order to have more money to throw at the loans, I’ve become very frugal in some areas–I’ll dutifully go out of my way to save a few bucks on groceries, and I haven’t turned on my air conditioner even though it’s been really hot and humid lately. But I won’t think twice about putting my sack lunch in the office fridge if my colleagues decide to go out. One way to look at it is that the economies I’m making elsewhere allow me to put more money on things that are really important to me; that’s kind of the theme of this blog, after all. But the bottom line is that I am willing to carry my debt load for a few extra months if it means staying sane during the whole process.

To keep your discretionary spending from getting out of control, it’s probably best to budget a modest amount and stick to it by withdrawing that amount, in cash, upfront. Obviously, if you’re trying to pay off your credit card debt, you should probably not be charging discretionary purchases.

If you do need to–or feel you need to–cut out all non-essentials while you’re paying down your debt, I would encourage you to make a double or triple effort to find activities that are free. Take advantage of the free day at the museum or the free seats at your local theater, meet friends for a picnic, join a book club, volunteer–there are so many ways to stay active without spending a dime that you never have to feel like you’re missing out. And you will probably find that even after your debt is paid off and you have more spending money, you’re still taking advantage of these budget opportunities. 

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