Friday, October 25, 2013

Month 12: The Big One Year Debt Repayment Update

Well, it has officially been ONE YEAR since we decided to hammer away at our $64,000 of debt. See the post on the beginning of our journey here.

Currently our finances spreadsheet says we're sitting at $51,550. This means in the last 12 months, we've paid off $12,450 or just under 20% of our debt. We're about 1/5th of the way to our goal! 

Our original goal was  to pay it all off in 4.5 years. At our current rate it looks like to will take us closer to 5 years but overall, I'm really happy with the progress we made this year. We started off really strong and then lost some steam along the way. Isn't this the case with most goals though? Yet, keeping nearly on track with our debt repayment plans, we've been living our most high frills lifestyle year yet. At first thought, I attributed it to the fact that with my latest raise, my before tax annual income went up nearly $10,000 since last September but when I reviewed the numbers from last year, currently we actually make $50 less/month than we did a year ago. Some of the highlights of this luxurious lifestyle shift were:

- Trading up our old clunker cars. This past year, both of our vehicles were in need of upgrading. We traded them up for sensible, reliable, new to us cars. With this upgrade, we downsized our fleet. I love love love my Prius and DH gave up his dream of having a truck and is really really happy driving his new car.

- Expanding our non-existent vacation budget by leaps and bounds and had zero regrets. We still don't take "vacation time" off work but we decided on a whim to purchase a trailer in cottage country and many memories were made spending weekends and long weekends up there all summer long.  We spent a couple long weekends up at my in-laws cottage too and got out in the boats. We're also taking a road trip over Christmas holidays to Disney World!

- Managing to do some relatively inexpensive home renovations to make our house more our own. Some of these went really well and others.. well... lets just say are in need of some help (more on this soon).

At times this year, DH and I weren't on the same page at all with regards to our finances. We had some stressful and difficult conversations. While DH was totally on board with our plan to pay down debt, it was mostly around the logistics of our finances where we had trouble. I have always taken on the lion's share of keeping track of the finances. When I was at home and we were living off (mostly) one income, this system worked really well for us. I had a lot of time to meticulously plan things out like groceries and I appreciated the autonomy of not having to ask for money to buy things we needed. Any excess money beyond bills I took out in cash so we knew exactly what was left for any spending. This year with me making a significant income contribution, we divided the bills between us based on what we thought made the most sense - for example, since I do all the grocery and other shopping, it would make the most sense for me to cover that bill, rather than having to shift money around. This meant that DH had to take a more active role in the finances (mainly his own portion) which he wasn't at all used to. It also meant that while most weeks, my expenses were fairly consistent (and my pay nearly always the same), based on bill cycles some of his weeks were really light and others really heavy which required rolling money forward from one week to the next rather than always operating on a week-to-week (0 sum) basis as we had in the past. Couple this with fluctuating paycheques since DH is in construction and things like weather affect his ability to work and long story short, this system did not work for us. We're now looking at going with a system more like the one Kelsey uses which we both feel more comfortable with.


Mo said...

do you not have a shared bank account? That would make things much easier for budgeting, instead of having "his" bills and money vs "her" bills and money.

Kristy said...

Yes, we do have a shared bank account. Most of our big bills come out of here - mortgage, property tax, etc. DH's paycheque goes into this account too. I also have a personal account that my government payments went into that I never changed or made joint since so little money went into it originally when I wasn't working and I was a student so it was free. My loan payments were already coming out of it and we just had other fixed expenses like the RESP come out of there since there was always the same minimal amount of money in there. This is how we operated for a number of years while I was at home and took on the role of family banker. Part of the reason why we switched to the his and hers bills and money system was so that we'd each have to take an active role in knowing what was coming out of the accounts and budgeting. I felt like I was the "money police" sometimes and I didn't like it. This system did help with that. In the new year we are planning on splitting all of the joint bills more evenly down the middle and contributing around the same amount from our paycheques to the joint account each pay. We'll then have our own spending money and personal expenses separate. Having these separate will allow us some autonomy in balancing values/spending since we don't have the same spending tendencies. For example.. if one of us wants a more expensive vehicle down the line, wants to buy coffee everyday instead of make it at home, or wants to go on a boys/ladies trip we can shift around numbers in the personal budget to make that happen without it effecting the family budget. I think it is all just a really big game of trial and error to find something that works. Money is so tricky.