Bookending ‘The Year of No’

Today is President’s Day in the United States, and a Federal holiday. It also happens to be the day my family sets aside each year to get our taxes done.

In 2017, the President signed into law the Tax Cuts and Jobs Act. The law’s purpose was to lower the amount of taxes paid by most Americans (hopefully stimulating the economy, creating jobs, etc.). There is plenty of debate elsewhere on whether this legislation is a good or bad thing, I only mention it here because I knew it could have some effect as we worked to pay off our student loans in 2018.

I was eager to get my taxes done today, because I honestly wasn’t sure how it was going to play out. As I read stories like “More Taxpayers Will Owe The IRS In April Because Of Underwithholding, Report Says,” I started to get a little nervous.

Would our work to pay off our student loans feel like a pyrrhic victory? Fortunately, the answer ended up being, “No.”

Our taxes are filed, and not only did we end up paying less taxes throughout 2018, but we are also receiving a refund. This refund will go toward our next goal of going to Disney World in September. I am quite happy with all the hard work from 2018 turned out. It was all worth it.

The filing of our taxes is the final bookend from The Year of No. Although the year ended with some personal setbacks stemming from the unexpected death of my mother, I am happy to report that the efforts of 2018 weren’t further penalized by having to pay additional taxes.

We are still not 100 percent completely debt free because of events toward the end of last year, but we are done with the debt I hated most: student loans. For that, I am very grateful.

An interesting tidbit I gleaned from my discussion with my tax preparer this morning, in addition to other education I learned last year, is that the Tax Cuts and Jobs Acts might actually reward taxpayers more than they realize.

You can potentially lower your tax bill by putting your money in pre-tax savings, such as a 401k, an HSA (if available to you), and college savings plans (if you have dependents who will go to college). This could lower your tax bill by moving you toward (or even into) a lower tax bracket, which would also lower the amount of taxes you end up paying.

Is the new tax law best for the country? That is another debate entirely. But, paying less taxes can be much better for your pocketbook, especially if you’re trying to get out of debt.

I wanted to stress how important I think it is to hire an expert. Our taxes are probably not complex enough to necessitate having to use a professional tax service. However, there are enough changes in our tax law from year to year — let alone when major legislation is passed — that I find great value in having someone who knows much more than me guide me through the finer points. My go-to is Hume’s Tax Service from when we used to live in Lawrence, Kansas, and I don’t plan on stopping using their services just because we moved 50 minutes away.

While I was there, I also took the time to ask how recent tax changes would affect our future plans, such as buying a house, and received some important information that will help us as we move toward that goal.

But first, we’re going to Disney World.

This chapter of my life was called “Getting out from the burden of student loans.” It is finally complete.

Knowing when to pause

As this year began, I was filled with an amazing amount of hope for how it would end. Little did I know how different it would end.

Financially, we are at a standstill because life has been put on pause. On Oct 13, 2018, my mother died unexpectedly. I had a good relationship with her. Perhaps not surprisingly, her death has hit me hard.

There have been many financial lessons learned in the past month. As such, I’ve been thinking about writing on the following topics from a financial perspective:

  • Writing a will
  • How much one should spend on burying the dead
  • Life insurance
  • How to let your loved ones know where all the very important papers and logins are
  • Being prepared for a death

But now is not the time to write about such things. My heart is not into writing much. It’s hard enough getting through the day, let alone thinking of writing. Dave Ramsey likes to stress the personal in the phrase “personal finance,” and now is one of those times where I certainly see why he does that.

Left unchecked, I could very easily self-medicate through spending and consumption. Would a new Apple Watch or iPhone bring back a little fun? Would going out and purchasing a “project house” help occupy my mind in my non-work hours? Would replacing my decrepit car ease my pain a little during my daily drives?

The answer to any of those questions may very well be “yes.” However, the risk is very high that the answer could be “no,” or “only temporarily,” and so the only real answer in times of uncertainty and turmoil is “wait.”

The funny thing is, at this moment, I really don’t care about being debt free. It’s very, very low on my list of things I find important for the time being.

Right now, I’m in a period of reflection. There are some key points surrounding my mother’s death that are challenging my thoughts on my own views of personal finance, but I need to allow some time for my views to mature. I will definitely write about them, but now is not the time to do so.

For now, I will round out the year. I will work, I will spend time with my family, I will grieve, and keep repeating all those things. For now, I wait.

A step backwards

Just when I thought I was out … they pull me back in. — Michael Corleone, as played by Al Pacino in The Godfather: Part III

When I started writing this charting of our journey to debt freedom, I decided to be highly transparent through the process. I wanted my writing to be helpful to others who might be on the same journey, even if our circumstances are unique to us. I had hoped that giving a glimpse into our family’s journey, it might helpful to many more.

Sadly, we are no longer debt free. I am sorry. But if you will allow for my side of the story, please keep reading.

In July, I wrote about our decrepit van and the struggle we were having keeping it afloat. It was limping along until August, but then ran into yet another issue that I couldn’t troubleshoot on my own. It wasn’t for a lack of trying. I went to a local salvage yard and bought a part for next to nothing in a last-ditch effort hoping it would fix it, but the effort was in vain.

The van, which we called Rosie, had reached end of life. She wasn’t safe to drive anymore. The blinkers and the horn didn’t work, so getting around in the city without the necessary safety accoutrements didn’t seem to be the right choice since Rosie served as our main daily kid-hauler.

It seemed like we were destined to sink more money into it, but then the unexpected happened. We received a windfall in the form of a financial blessing. The amount was more than enough to cover the cost of a replacement van. We’ve been planning, researching, and saving to replace the van in December, but we weren’t fully funded toward that goal yet. And then this out-of-the-blue windfall happened, and we examined our options.

We could:

  1. Throw more money at the van and hope that the fixes would get us by until later when we could have the full amount to pay for a newer vehicle with cash;
  2. Purchase a somewhat newer, and somewhat similar mileage van that would be completely paid for with the money we received and what we had saved up so far, or;
  3. Purchase a newer, lower-mileage vehicle with everything we wanted but would require a small loan to get us all the way there, coupled with what we had in savings and our newly acquired funds.

My wife and I discussed it, and felt like putting more money into a vehicle that was destined for the scrapyard was a foolish decision. We could have went with the second option, but we believed that would be a temporary stopgap. So, we chose option three.

For most people, option three would be a terrible choice. However, we were in a unique situation where we had most, but not all, of the funds to purchase. The market for used vehicles is always hit or miss, but we knew exactly what we wanted and there happened to be the exact type of van to meet all of our needs and wants available elsewhere in the metro area.

After two test drives, lots of discussion, and some paperwork, the deal was done.

Believe me, it pains me to write this. And yes, all of this was a choice. Whenever someone says, “I had to buy a (insert whatever purchase here),” that statement should almost always be read, “I chose to buy a new (thing).” We chose to go back into debt for this purchase. No matter how small the amount is, it was a choice we made.

This weekend has really made me think hard about the baby steps. If you’re following the plan and you have things like working cars or a home that needs little maintenance, then things are going to work out great. But what happens when you get out of debt and things you’ve held together on a string start falling apart? It takes time to save up enough money for an emergency fund, and then start replacing things. If all goes well, then you’re golden. But if not?

Also, I’ve thought a lot about dogma. Those following the Baby Steps tend to be fairly cultish in adherence to the principles (raises hand). The principles are sound, and wise, but are they 100 percent applicable to all people? When do you step away from a dogmatic approach and ask, “What’s the best to do for us, in our situation, right now?” I’m not saying I have the answers to these questions. I am merely asking them.

This weekend’s van purchase was hopefully one we’ll utilize for another decade. We purchased Rosie in 2009, and it make it until last this year. That’s quite a run for a van that was made in 2000. The new van is a 2012 Toyota Sienna minivan with 107,000 miles on it. It runs and rides like a dream. The blinkers work, the horn works, and it has excellent tires. Even though our last van was a Sienna, they have made great changes in the last 19 years, and our new van has an incredible amount more space for our family of five.

I regret that we were not in a better position to make this an outright purchase, but we didn’t have enough saved yet to make that happen. Perhaps we shouldn’t have put $900 into the old van in July. Maybe my wife and I shouldn’t have taken a vacation to celebrate our 15-year anniversary that same month. It’s possible we could have been more intense in our savings since we paid off our initial debt in June. But that’s not what happened, and now we have to deal with the choices of our actions, past and present.

Most importantly, we had to tell our children of the decision, why we did it, and what this means going forward. It looks like The Year of No is still on. In a few months, we’ll be back to where we were in June; we just had to take a little detour to get there.

Dear reader, I’m sorry if I let you down. Please know I didn’t make this decision flippantly, and weighed heavily all the options we had before us. In the end, we did what we felt was best for us at this time. But I hope you can appreciate my effort to be transparent, even if that means admitting to backpedalling a little for a short time. I value integrity to a great degree, and felt I had to be forthcoming about our decision this Labor Day weekend.

My hope is that in a few months, this won’t feel like such a sting. And in a year, my hope is this won’t even be a blip on the greater story of an American family trying to navigate this country’s financial waters.

Time will reveal if my suspicions are true.

We’re debt free

Free at last, free at last. Thank God almighty we are free at last. – Martin Luther King, Jr.

On Friday, June 15, 2018, my family officially became debt free.

We have no credit card debt.

We have no student loan debt.

We have no car debt.

We have no debt on appliances, electronics, or any other item.

And even though it’s not debt, we don’t even have any outstanding medical bills.

We’re currently renting, so we don’t even have a mortgage.

After almost 15 years of marriage, my wife, Amy, and I have finally returned to zero.

It’s been an amazing day. It started off with a nice morning walk, just me and my headphones. By the time I returned, the kids were already getting ready for the day. I grabbed Amy and said, “I need you to do something.” I logged in to the student loan providers website, set everything up, and said, “I want you to make the last payment.”

Amy pays the final debt
Amy makes the last payment on the remaining debt — the student loans.

She pressed the submit button, and closed the window. I am man enough to admit, I cried. Then, she cried. We hugged each other. She said, “You did it, babe.” I corrected her, “No, we did it.”

The wait began.

I had my favorite drink — Sugar Free Rockstar (which I like to call “cold coffee”) — and had the kids work on a sign that read “We’re Debt Free.” They colored in the letters with enthusiasm. They have been part of this process, and my family tree has been changed. They will grow up being taught to stay away from consumer debt, how to build savings, and learn how to give.

Amy had an activity planned with our kids, but my son was sick today so he stayed home with me while she took our two daughters to have some fun. The Boy and I hung out at the house. I chose to the take the day off today, because I wanted to be off for this special occasion. I cleaned and did a little house organization. I ordered my youngest daughter’s birthday gifts with the money we had budgeted. There’s no more credit card purchases here; everything is paid in full. I did anything to keep me busy while we waited for the official word from the student loan provider that the money had been processed.

My plan for today included meeting a dear friend of mine, David, to have a celebratory lunch. Since my son was sick, he agreed to bring lunch with him to my house and we enjoyed our meal at our kid-abused, paid for kitchen table. I had Chinese food, and savored every bite.

Food tastes better when you aren’t making payments on it.

My son wanted to play outside before going to the doctor, so we did. I relished my time with him. We went to the doctor; he’s fine and just needs to work a little virus out. He’s not contagious, so we are a “go” for celebrating more later tonight.

And then, more waiting. As has been the custom for this process this year, I knew the student loan provider wouldn’t have anything definitive until after 6 p.m. I checked anyway. “Processing,” it read. The wheels were in motion. I admit, I was nervous. “What if it doesn’t go through today? What if there’s some problem?” The borrower is truly slave to the lender.

We cut so much out of our budget this year. I took on a second job, utilizing the skills from my main job to aggressively accelerate our debt payoff. Amy helped run defense with the children, and kept the household functioning at somewhat normal levels. She was excellent with the budget when grocery shopping, finding things for the kids to do on the cheap, finding clothing, and so much more. For several months, I was doing 50+ hour weeks. It was so hard when we were going through it, but today it feels like a distant memory.

More waiting. And then, at 6 p.m., I checked again. The moment had finally arrived. The balance was shown as $0.00.

Our progress has been measured visually with a debt chain that has hung in our front room since January, the start of The Year of No. Each link represented $1,000 of debt, and we started the year with around $20,000 left to go.

I cut the next to last link in the chain, then had Amy cut the final one. It read, “Debt Free.”

Amy cuts last debt chain link
Amy cuts the last link in the debt chain.

Today was all about Amy. The last of the debt was hers, and today we fulfilled a goal I had made when we became engaged. I wanted us to be totally free, and now we have broken the chains of debt. When we started The Year of No, my deep-in-my-heart goal was to be out of debt by our anniversary. We beat that goal by one month. Our anniversary is July 26.

We have celebrated little milestones along this journey with something cheap and fun, and today was no different. We packed up the kids in our 18-year-old, paid-for, hanging-on-by-a-thread minivan and headed to a local frozen yogurt shop for a calorie-laden “dinner.” There no place for healthy food choices today; we celebrated our freedom with decadence, paid for with a debit card.

Debt free froyo
Celebrating being debt free with a family outing for froyo.

Froyo tastes better when it’s not attached to an annual percentage rate.

Today is day zero. Tomorrow is the first day of our debt-free life. I am beyond grateful to the many people who have helped on this journey, and have provided encouragement. I have even loved the haters, because nothing drives me more than “You can’t do that.”

We have followed Dave Ramsey’s plan as outlined in his book, “The Total Money Makeover.” I am here to say that we are proof: it’s a simple plan that works. I love it when a plan comes together. You can either wallow in your misery, or get angry and take action. I pray you chose the latter.

Our official debt payoff since starting the plan in full is $34,076 of debt paid off in 21 months.

Someone recently told me, “I wish I could be like you.”

You can.

‘The Year Of No’ monthly report: May

Even though I felt like this month has felt a little slow, we are now a step away from the end.

For the month of May, we paid off $1,979.39. We have $1,676.75 left.

Through some creative budgeting (it’s fine, really – nothing crazy), it appears the final debt payment will be June 15, 2018. God willing, we are two weeks away from being debt free.

I make that prediction with a strong degree of caution. Things could happen in two weeks. Emergencies could come up, or some tragedy could befall us that would mean it gets postponed.

In addition, we’ll have a child’s birthday party to pay for out of the next pay period. That alone will require a little creative party planning to pull off.

Alas, here we are. Many mistakes have been made along the way, but now we have wisdom. We have tried to wander out of debt, but now we are running. We used to be losers. But now, we are winning.

This will be one of the longest stretches of time in my adult life.

Bring it on.

From a waterfall to a trickle

Things were going so well.

I suppose it’s not fair to say that things aren’t going well, but the momentum has certainly slowed down quite a bit. The extra income has halted, and now we are stuck with simply being patient. That is certainly not one of my better qualities.

Geez. Some people are never satisfied.

As it stands now, we should be finished paying off our debt sometime in June. I have a date in mind, but I’m hesitant to pronounce it publicly. I don’t like to count my chickens before they hatch. I have learned that lesson. So many times I’ve purchased something on credit thinking, “Well, we can afford the payments” or “We’ll have this paid off early” only to have something happen that prevents that from coming true.

That is not a good mindset to have, and it’s one that isn’t part of my thinking anymore. We’ll just be patient, and if it pays off by the date I plan, then great. If not, then we’ll keep plugging away.

There were a couple of expenses that have come up so far this month I forgot to plan for. In our state, older vehicles (definitely ours) need inspected either annually or semi-annually depending on what year they are (odd or even). And of course there’s the annual renewal of license plate tags that I totally forgot about. Granted, these weren’t huge expenses to take care of, but it slowed our momentum down a little bit this month.

That’s all to say that we haven’t cut any more links off the debt chain since April 30. Given the rate we have been paying things off, that feels like an eternity. That’s not to say we haven’t paid on the debt, it just wasn’t enough to warrant cutting off another link. However, the next paycheck is at the end of the month and the progress will continue.

So, we wait. With waiting comes more restraint. It’s so tempting to let off the gas now that it feels like we’re close to the finish line. But now is not the time for celebration. Now is the time to keep going as we have since the beginning of this year: head down, nose to the grindstone, determined and focused.

As others have learned, never celebrate too soon:

The Beginning of the End

It’s a Big Day™.

For the first time in my post-college adult life, since marriage, since kids, since what feels like forever, we are down to four figures of debt remaining. Eighteen years of stupid later, the end is in sight.

I received another paycheck from my side gig today, then turned around and put almost all of it on the debt. This marks an important milestone for us. Since starting The Cause in ernest on Sept. 11, 2016, we are now down to 25 percent of our debt to go.

Throughout this journey, we have marked our milestones with celebrations. At 75 percent, we did something, although I really can’t remember what exactly. It was probably food. When we hit 50 percent, we combined a celebration with a birthday gift to my youngest daughter, going out to eat (the milestone gift) and playing video games (the birthday gift).

I’ve been telling the kids that when we hit 25 percent, we would do “froyo for dinner.” Yes, we are quite the health-conscious parents. When you celebrate a milestone in The Year of No, you gotta make it count. The links snipped from the Debt Chain, we did froyo for dinner. I’m glad I skipped lunch today.

Family celebrating with froyo
We celebrated hitting a milestone of having 25 percent of our debt left with a little froyo for dinner.

We’re down to $8,433.66 left to go. I have thought all day about what it means to be here now. For years this has felt like an impossible task. Then we got serious, and less than two years later, here we are headed toward the end.

The ending is there; We can see it. It’s closer than ever before. We are coming around the final lap and we can see the ribbon waving in the wind at the finish line.

‘The Year Of No’ monthly report: March

While much of the United States is caught up with college basketball fever this month, we’ve had our own version of March Madness.

This month has been a very busy one. I have worked a lot, and Amy has been busy tending to the kids more than usual. However, we did take time for a little fun on March 17.

Yes, that was St. Patrick’s Day, but it was also her birthday. We budgeted for some gifts for her, and we went out to eat on the cheap thanks to some free gift cards to a local restaurants received from from friends.

March 2018

In March, we paid down $3,392.59, bringing down our remaining loan balance to $10,467.32. I am very excited that we are almost down to having a four-digit figure on our loan. How exciting! I’m a little peeved it didn’t happen this month. We are so close, but we will simply stay the course and keep plugging away.

Perhaps more importantly, when we reach anywhere in the $8,000 range, that’s when things start getting interesting. That figure is what I call “The Beginning of the End,” which will bring us to just 25 percent left.

I’m thankful that we don’t have anymore birthdays or big events for awhile. I hope that April stays an anticipated snoozer as far as expenses go. Thanks to a wonderful Christmas gift of season passes to our local amusement park, we have cheap entertainment for the family when it opens April 21. All we have to pay for out of pocket is the parking fee, bottled water we always bring with us, and snacks we leave in our vehicle.

Stay the course, keep focused, keep grinding. The light at the end of the tunnel is right around the corner.

‘The Year Of No’ monthly report: February

The theme for February was full steam ahead.

It’s tax season, and even though we no longer own a house that we can deduct interest from, having three kids and student loan debt interest is still a tax saver. I have tried cutting the money I get back from the government each year by raising my deductions, but we still get money back. I suppose the money we give to the local grocery stores make up for the amount we receive.

February 2018

We are staying the course. We have held the line on expenses, and I started a side gig doing some freelance website work. I haven’t gotten paid but a tiny amount from that this year, and nothing in February. But March will be a different story.

The weather was nice enough for me to grab a walk with a beloved co-worker, and during our walk he made me realize something: we are only six months away from being out of debt. I moved up my projected worst case scenario from Oct. 1 to Sept. 1, and in my head I was thinking it was nine months away. My friend corrected me (since it’s almost March) and said, “Hey, that’s just six months away.”

That gave me chills.

The final rundown for February 2018 looks like this: we paid down $4,913.03, starting March with $13,812.35 left to go.

March likely won’t be as fruitful, but seeing the Progress Chart dip down has really got me me thinking about how close we are to having four figures of debt instead of five.

Shock and awe, shock and awe.