My last post of 2020! I’m so relieved. 2020 has been…a lot.
As I compiled this year-end review, I had to take more than a moment to acknowledge how fortunate I have been as, unlike millions of American families, I remained employed throughout the year and did not struggle with housing, food, health care, or education insecurity.
So, given that I was fortunate to remain mostly healthy and employed throughout 2020, how much financial headway did I make, and did I accomplish any of the financial goals I created at the outset?
Student Loan Balances – January 1, 2020
Student Loan Balances – December 31, 2020
Net Student Loan Debt Reduction in 2020: $12,885.84
Not…amazing. Especially when you consider that I benefited significantly from the current interest forbearance on federal student loans, which means the bulk of my loans didn’t accrue interest for nine (9) months of 2020. Ugh.
It’s also…not terrible. That still means, on average, I had a net reduction of more than $1000.00 per month. ALSO, I did set and achieve a goal of establishing a $5,000.00 emergency fund which covers three (3) months of fixed expenses.
My net income (gross minus taxes, deductions, etc.) is approximately $37,000.00. Which means I put
almost more* than 50% of my after tax income ($17,885.84) towards debt and savings. However, this didn’t roll out over the year evenly, and some months were much better than others.
*I forgot this is just the net difference in student loan debt. I put significantly more of my after tax income towards debt, some of it just got ate up in interest.
Net Debt Reduction by Month
January – $424.54 – This smaller-than-it-should-be reduction resulted from unbudgeted spending in December 2019.
February – $605.68 – This reduction was still smaller than it should have been but also resulted from an accounting error when I switched from using the principle balance to the outstanding balance (principle balance plus accrued interest) which I wouldn’t figure out until the following month.
March – $1,465.59 – I was a happy idiot once I figured out the error. March was a strong month for debt reduction as my regular payment was also buttressed by state and federal income tax returns.
April – $3,300.51 – April resulted in the highest debt reduction month to date. In addition to maxing out the portion of my debt payment that comes from my monthly paycheck, April also included the first stimulus payment ($1,200.00) and a mileage reimbursement from work. I also began benefiting from the interest rate forbearance on federal student loans.
May – $1,599.34 – Feeling the pressure to payoff Private Student Loan 1 before the balance transfer ended, I continued to max out my the amount I could pull from my monthly paycheck each month.
June – $1,172.50
July – $1,296.20
August – $2,460.69 – I paid off Private Student Loan 1 (PSL1) and the balance transfer before it ended, resulting in the second highest debate reduction month to date.
September – $477.23 – Once I paid off PSL1, I switched gears and began to focus on beefing up my emergency fund to cover three (3) months of fixed expenses. This amount reflects the reduction made based on minimum debt payments.
October – $475.92
November – $484.13
December – ~$1,089.25 – December isn’t quite over but the month is close enough to its end that I can estimate with pretty good accuracy (maybe a penny or two off on the accrued interest estimate), where I will end up for the month. This month saw me finish funding my $5,000.00 emergency fund and return to aggressive debt repayment. I also quit my part time job, and pledged to aggressively pursue more lucrative consulting work in 2021.
In some ways, 2020 was an awesome year for debt reduction for me, even outside of actual dollars put towards it. Having to payoff PSL1 before the balance transfer ended, to avoid interest and embarrassment, forced me to really buckle down. I now know that putting at least $1,000.00 a month towards debt reduction isn’t that much of a stretch, if there are no significant unexpected expenses, and really just requires I adhere to my budget. This was kind of a game changer in terms of how I think about money.
Finally, how did I do with my planned 2020 financial goals?
1) Pay off Private Student Loan 1 – Pass! This loan was paid off as of August 3, 2020.
2) Pay off Private Student Loan
3 2 – Altered. The onset of the COVID-19 pandemic, and the subsequent diminished capacity to earn additional income over the summer, meant this goal became a stretch. Then I decided to increase my emergency fund to $5000.00. As shared above, I reached my emergency fund savings goal on December 1, 2020 but Private Student Loan 2 remains.
3) Start a small business AND generate an additional $500.00/month in income. – Fail…sorta. So I think my intention here in writing this was for this to be one goal. Ultimately, it turned into two smaller goals… I am not quite as far along in terms of my business plans as I would like, but this month, I received a check for consulting work I secured in August and completed in November. While I quit my part-time job earlier this month, prior to departing, an increase in responsibilities at University B and additional hustling meant I consistently netted, on average, an additional $500.00 each month.
2020 Blogging Goal: One (1) student loan balance post a month AND one update post a month. Fail. In February (I know!) and June, I only posted a student loan balance update on the first of the month. However, since the transition to better blog digs, I have been posting much more frequently; and, I imagine this will continue to be the case now that I have reached my emergency fund goal and transitioned back to aggressive debt repayment.
So that’s it. That was my 2020 from a debt repayment perspective. My first post of 2021 will go over my financial goals for the upcoming year.
Before signing off, I want to THANK everyone who read(s) my blog, and especially those who take time to occasionally comment (C, Ellen, Avery, Isabella, Mike, DDSW, Peter, and anonymous folks). While I generally don’t care what strangers think about my financial choices, what you all might think about my progress is definitely a behavior check. Knowing that I will have to report and account for my significant (or not so significant) debt payments and financial choices has been an accountability tool I didn’t know I needed. Thank you!
I hope the end of 2020, and the start of the new year, finds you and your loved ones safe, or getting there, and as well as can be at the moment.