Happy New Year everyone! I hope that all of you made some great memories during the holidays. 2016 was a rough one for a lot people. The hateful goodbye messages on social media were proof enough of that fact. We faced many challenges of our own, but survived and came out ahead. Now that there has been some time for relaxing and the countdown is over, we’re reflecting on our progress and how best to channel the lessons from another year into making the most out of the next one.
Credit Cards: Yes, debt is always first, because it plays a huge role in motivating our financial progress. At the start of 2015, we had $42,000 in credit card debt. That number was down to about $30,000 at the beginning of last year. In 2016, we took out a new consolidation loan with a much lower interest rate (7.99% versus 14%) which is helping us with paying down the debt. The current total is $22,600 on the loan and one credit card with a balance of $1,600. I really wish we had got the total under $20,000, but $24,400 is still progress.
Mortgages: It really is ridiculous how slowly you pay down principal on mortgages (with no extra payments). We paid off approximately $4,000 in principal between the rental property and our house.
Student Loans: The dollar amount of my student loan payments have slowly been increasing over the years. This makes it more difficult to pay down credit cards, but is making a big dent in the total balance. We paid off approximately $12,000 in principal on my student loans this year.
Did we pay off $40,000 in principal this year? My calculations from last year require us to pay off approximately that much each year to meet our goal of being debt free by 2022. Our 2016 total debt paid off is a little more than $20,000 – about the same amount as 2015. The big difference is that now, all of our debt has interest rates of less than 10%. For people who have struggled with debt, this is a huge help. Larger interest rates create a situation like where you’re trying to bail out a boat that’s taking on water far too quickly. You are doomed to sink, unless you can find a way to drastically alter your predicament. If you add interest into the amount we paid towards our debt, it is much more than $20,000. As we continue to chip away at the principle amounts, the same payments will make a bigger difference towards the totals. I remain hopeful that we will meet our goals, but it’s going to take a lot of work.
The 401k hasn’t been a huge priority, but I must admit that it’s nice to see the balance steadily increasing. I started making small contributions from my check in 2016. My employer already makes automatic contributions, with no match requirements (definitely a big perk to my job). Between these contributions, my own check deductions, and the power of interest . . . the current balance is a little more than $24,000 (up from $18,000 last year). I always feel conflicted about increasing the amount of my contributions. In the past, we’ve focused on paying down debt to decrease money lost to interest. I did receive a small raise and we won’t need to contribute as much towards the HSA in 2017. However, it would be really nice to finally kill the consumer debt and move on to student loans. We will probably just make a small increase in the amount of my deductions.
Speaking of the HSA, we made fairly large contributions during 2016. We should have enough put away to cover the high deductible on our health insurance for all of my maternity care and the birth of the twins.
We still have two paid-off, running vehicles that have a value of around $10,000. We are going to need a new vehicle to accommodate having five children. The research has begun and we’re planning on using most, if not all, of our tax return towards the purchase of a large, used van . . . or school bus 😉
One other thing that is fairly new for us . . . there is money in the checking account. In the past, we have always scraped by, planning ahead for how much money we would need to cover our bills. I remember one time that we rolled loose change to pay for bills, back when we were living in an apartment. One of the ways I’ve really felt like we’re making progress is the fact that we have enough cash to cover unexpected expenses.
How Did We Do It?
Freelance/Side Hustle Income: This could have been a lot more in 2016, but I did learn about the best ways to invest my time. Writing is a good use of my time. The pay is decent for the time required to complete assignments. My first payment went through in May and I earned $900 over the year.
I was hoping to make some money with my crochet hobby, but have yet to make much of a return on that investment of time. I may try to open up an Etsy shop, but will concentrate my efforts on better, more-dependable ways to make money for the time being.
I didn’t do much with rewards websites this year and I was disappointed totaling up the meager earnings in comparison to 2015. I used Swagbucks a lot in 2015 and earned over $600 in gift cards. My total for 2016 was only $150.
We made approximately $65 selling things on eBay.
Tutoring: There was a bit of a mix up last year that lowered my income from this side hustle. I usually tutor twice per year, winter and summer. However, last winter I was not added to the list of tutors, so I only participated in this side hustle for the summer session. I still made almost $3,000, but that was a lower amount than previous years. Fortunately, I have already started my winter tutoring for 2017.
Other: We cashed out our whole term life insurance policies. Don’t worry, we replaced them with much more affordable, ordinary plans through my employer. We were roped into buying whole term policies more than a decade ago, trusting that they would be a good investment. However, in doing quite a bit of research and running the numbers, we realized that it was in our best interest to go a different way. We ended up eliminating a monthly payment and gaining a few thousand dollars to pay off debt.
Blogging: I actually made a small profit on the blog this year, including a huge $2.85 from my Bookscouter affiliate link – ha! The total that actually made it to the bank, after fees, was less than $100. I should be receiving my first Adsense payout in the next couple of months (there is a $100 threshold), so that will be nice. It’s been creeping up, penny by penny, since November of 2014. This site is very much a labor of love right now. However, I will admit to hoping that five years down the road it can provide a small amount of income to help facilitate our new lifestyle.
Of course, I have to mention that there are so, so many more benefits to blogging. Which is definitely a good thing, because I’m not sure how I would justify the time spent on this site over the last year beyond the very small profit.
I’ve decided not to post specific numbers for our net worth, at least for now. I may switch to percentages for increases from year to year, or may go back to a number at some point. I will say that it is awesome to finally have a positive net worth, after working hard to increase assets and pay down debt. Last year, we were right around $0. It finally feels like we are in a position to start building wealth, as opposed to just paying back what we owe . . . we’re no longer struggling to run up a descending escalator.
Plans For 2017
I’m still working on some more specific goals for 2017 (coming soon). We will have significant expenses/lost income from the birth of twins in May, including the fact that we will have to get that new vehicle. Also, while I do have the luxury of some paid time off from work for maternity leave, there will be some unpaid time off as well.
My primary objective is to be more focused for this year, instead of jumping around from this endeavor to that one, and trying all sorts of new things. I often have trouble concentrating and end up wasting time on activities that feel like they serve a purpose, but are better characterized as just spinning my wheels. There is a fine line between productive multi-tasking and just killing time. We really need to keep increasing our income if we ever hope to achieve our goal for financial semi-independence by 2022 – only five more years!!! Fortunately, I have learned what works best and will apply that knowledge to maximize our gains during the next year.
As we have paid off debt, our credit scores have increased dramatically. Refinancing our mortgage on the rental property is one of our top priorities for 2017. We have talked about it for the past few years, but agree that the time is now right. We have a fairly high interest rate. The hope is that we can refinance with similar monthly payments, but over a shorter time frame with a much lower interest rate. I will definitely keep you updated on our experience, but we plan to get the ball rolling as early as this week.
I really dislike my work, but the income and benefits are crucial to our present existence and future plans. Apparently, I had some problems hiding these feelings over the past year. It was mentioned during my review that I’ve “slid sideways” instead of moving forward. I need to refocus some of my energy towards my primary employment. One of my strategies is to keep reminding myself that it is only a temporary situation.
2017 is going to be an awesome year for our family, I can feel it . . . and you should have high hopes as well. The original purpose of this blog was to create some accountability and document our progress. However, it has been so rewarding to learn that my posts are inspiring and helping others. I will continue to write and plan to share personal stories and helpful information with my wonderful readers this year. And, I will be setting aside the time to finally finish my eBook.
Our futures are only limited by the excuses that we make for ourselves.
I may be paraphrasing this from different quotes I’ve read over the past few years, but it’s an important concept to remember. We live in a world with so many opportunities to get ahead, especially once you escape from traditional definitions of “normal” and “success.” I’m not saying that you should feel guilty about a little frivolous spending or not hustling away every second of the day. The key is being aware of your choices and accepting the consequences. If you understand the effect that a little effort and/or sacrifice today can mean for your tomorrow, then you can create your own path to an amazing future.
From our family to yours, here’s to an extraordinary year! Let’s see how far we can wander off the path, creating our own beautiful kaleidoscope of a life.