$2,695.74 in Debt Destroyed! Monthly Financial Review – August, 2017
Welcome to the seventh installment of our Monthly Financial Review. We’re very sorry for the delay in getting this report out; life has been a bit crazy lately. Now that the tax extension deadline is over, I’m looking forward to getting caught up on everything blog-related! If this is your first time stopping by, I check in to update our financial position at the end of each month. The goal is to show our progress in real-time as we pay down our debt and live on a budget. This report will serve as a great record to look back on as we perfect our budget and learn what works. We had another solid month of progress in August, and we were finally able to catch up on some much needed shopping, vehicle maintenance, and celebrate the milestone of paying off $34,450.69 in only 7.5 months!
So, where were we? If you take a look at our position as of 7/31/17, you’ll see that we had a total of $75,859.37 in debt. We’d been making steady progress on our debt since Alyssa started her new job in March, including a crazy month in June where we paid off over $11,000 in debt. With only $2,282.64 remaining between credit card and car debt, we were definitely looking forward to seeing those zero-balance statements. Over the past few months, we have been working hard to increase our income from side-hustles and cutting unnecessary spending wherever possible. We pay off as much as we can afford with each paycheck, before we have a chance to spend any of it.
How we reduced our debt by $2,695.74 in August!
As we started August, we were both hungry and excited to finish off our first major debt goal and give ourselves a little breathing room. As a result, we made our final credit card and car payments about halfway through the month. With the accomplishment of that milestone, we planned to use some of our remaining disposable income for some much needed shopping and celebrate our success a bit. I was able to upgrade my phone, and Alyssa did a bit of a wardrobe refresh among other things. Most importantly, we were able to sit down together and evaluate our plans for the future including the budget, potential home-ownership, and realizing how much potential we truly have to succeed. Even with the planned spending spree, we still managed to increase our net worth by over $5,300 in August apparently due to some appreciation in our vehicles and gains in our retirement accounts.
By the end of August, our spending spree and budget break had run its course and we were both ready to get back on the plan. Our budget going forward allows us to loosen the reins a bit to make sure it is sustainable for the long term. We have allowed ourselves $200 each in monthly discretionary allowance for personal spending. We will also be increasing our student loan payments by $200 above the minimum payments in order to accelerate progress towards our remaining debt. The main goal for the intermediate future is to increase our cash savings by over $3,000 per month to allow us to invest in real estate within the next year.
The end result of all this effort is that we were able to eliminate $2,695.74 in debt during August! This brings our debt total down to $73,163.63 as of 8/31/17. Our net worth increased by over $5,300 in July, which shows just how effectively we are using our income. Setting goals and having frequent check-ins has been the key to our continued progress.
2017 Goal Update
We began this journey in January, 2017 with over $107,000 in debt. The progress has been awesome and only fuels our fire to ultimately become debt free. Alyssa’s side-hustle of walking dogs and pet-sitting provides some extra cash to the budget. We’re both thrilled at the idea of purchasing a house that fits into our plan by the end of 2018 and having our own space for the first time in our lives.
As we shared in Our Road Map post, the next step is to build up savings to prepare for buying our first house (ideally a multi-unit rental property) in 2018. We plan to accumulate at least $10,000 by the end of 2017. It will definitely be a challenge to stay disciplined seeing that cash building up in the bank. We are very excited to approach our first real estate investment and get one step closer to the ultimate goal of early retirement.
As I shared previously, our base budget gives us close to $4,000 extra every month to put towards our goals. We will continue to CRUSH IT in the coming months and share our progress along the way!
What’s the biggest goal you’re hoping to achieve in the next year?