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.
Ms. Afro Penny 
Hey, AfroPenny. Congrats on your debt numbers going in the right direction, even if they are moving as fast as you’d like. Don’t stress about any missed goals. We all get a pass this year. Just staying alive, employed, and relatively sane (or any combination of those) is enough this year. Hang in there!
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Thanks DDSW. It wasn’t a terrible year for me financially, and overall, I feel like you’re correct: things are going in the right direction. Let us hope 2021 is a better year for everyone, especially those who were much worse off this year.
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Yay for doing a year end review. I always love reading these end of the year recaps. And no need to thank us for reading! Thank YOU for providing us these updates. I always look forward to reading your posts 🙂
On a side note, I think you’re being too hard on your goals. Goal #3 should be a mild success! You did start a small business and even received a check for it already!
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“I always look forward to reading your posts…” Thanks Avery. This is gratifying to hear.
I said, “Fail…sorta.” Lol! Maybe I’ll amend the record to say “Pass…sorta.” 🙂
I look forward to reading your recap soon…*hint* *hint* 🙂
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I think you made good progress! Have you thought about an Instagram account for quick updates? I see a lot of debt slayers doing this!
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Thanks, Isabella 🙂
I hadn’t thought about an Instagram account. It is definitely something I should consider. I currently have a YouTube account that I use to interact with folks there. I have recently prodded into doing a voiceover video so that I can more fully participate in that debt repayment community. I just haven’t posted it yet because I am still a bit shy about privacy concerns. You suggestion seems like a much lower bar so I may try join Instagram for the new year.
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Congratulations on a great year of debt payoff and e-fund saving! It is beyond impressive that you put almost $18,000 towards these goals, especially on a net income of $37,000. The early years of debt payoff and savings can seem slow, but with the progress you are making, I have no doubt that in just a very few years we will be congratulating you on having zero debt, and then you’ll be at a crazy rate of savings and able to build your net worth very quickly. And, like Avery, and I’m sure your other readers too, I really look forward to your posts, so thank you for writing them.
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Thank you, Ellen 🙂
I know you aren’t blogging but I would be super curious as to how your year wrapped up…I know you had a couple of projects as well as financial goals in the works as well.
I will admit, since I have posted this and looked back over my financial spreadsheets, I feel like I have done a better job than is reflected in my tone here. I think in the new year, I will report the debt payments (the total I am putting towards my student loan debt each month) AND the net reduction (how much my balances decrease). I realized that to get a better picture of my “effort” I also needed to include dollars that get siphoned off by interest. Once I did that, I was at more than $20,000 this year in student loan debt payments and savings. On a net income of $37,000.00 that IS something of which I am proud; and, reflects some of the daily choices I am making that is better than my past choices.
As I said above, super gratified to hear that. I certainly appreciate that you all read and take time to interact with me.
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Of course! I can’t remember exactly what I had said in my previous comments, but I can tell you what I’ve been working on this year. One of my most significant, ongoing goals is to pay for my kids’ college educations in cash, and I have continued to do that this year, and continued to save for that at the same rate (for this, I save $1425/month, plus my year-end bonus of about $15,000). I may have mentioned that I had paid off my previous mortgage, on my single-family house, but then I sold that and bought a two-family, and I have a big new mortgage on that, but I also have rent from my tenants, which pays the majority of that. I also have some work I’ve had done on the new house (I had the backyard fenced, the electricity updated, both furnaces switched from oil to gas, new counters and backsplash for my unit, and a shed removed), and some work I have still planned (a patio in the backyard (about $1500), and a ventilation fan in the tenants’ unit (about $500).
Between buying the new house, and getting the work done, I didn’t really have any new financial goals in 2020, so I’m excited to have concrete goals for 2021.
1. I will continue to save at the same rate for college.
2. I will build my house/emergency fund up to $20,000. Currently, it’s at $17,200, and when I subtract the $2000 for the patio and ventilation fan, that brings it to $15,200. My stretch goal is to be able to put $1000/month towards this goal, which would mean it would be paid off in May.
3. Once the house/emergency fund is back to $20,000, I want to use that $1000/month for a new goal. I have been considering purchasing another rental property. Real estate is so expensive in Massachusetts that it feels out of reach to be able to purchase a second property here. I brought my older child back to their campus in Rochester, NY this past weekend, and I looked at a couple of properties there, with a realtor. While they are much less expensive there, it’s also pretty overwhelming to contemplate buying something out of state (or even in state, if I’m honest!). On my drive home yesterday, I started wondering whether it might make more sense to put the $1000/month into my IRA after May. I keep being drawn to the idea of real estate, though, so this is still to be decided.
I knew the extra $1000/month would be ridiculously challenging. This month (I’m paid monthly on the 15th so I’m talking about December 15 – January 15), I have a week and a half to go, and I have $40.00 in my checking account and $251.06 on my credit card (which is not due until NEXT month)…so that’s not great. I should be able to make it on the $40, and pay the credit card next month, and be more careful next month. This month did include some Christmas gifts, so that explains some of the overage.
I enjoy stretching myself, so although it’s tight, it’s also satisfying to have something new to work towards. I track my net worth monthly, so that keeps me motivated too. And reading your posts is very motivating too!
Thanks for asking, Ms. Afro Penny!
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Lol…so you are basically who I want to be when I grow-up financially.
Previously, you briefly mentioned the mortgage/rental property goals. I am so glad to hear you continued making progress in 2020.
1) What fortunate children. Also, UoR is an awesome school. Rochester is also a great place to go to school.
2) *Drools*…emergency fund of my dreams.
3) What an awesome dilemma. Please let me know what you decide to do!
“This month (I’m paid monthly on the 15th so I’m talking about December 15 – January 15), I have a week and a half to go, and I have $40.00 in my checking account and $251.06 on my credit card (which is not due until NEXT month)…so that’s not great. I should be able to make it on the $40, and pay the credit card next month, and be more careful next month.”
Ha! This is me so many months. I find the having very limited funds over a short period of time forces me to be creative. I also really enjoy pushing/stretching myself and moments like those allow me to see how each “choice” I make puts me closer or further away from my goals.
Thank you so much for sharing. I’ll make sure to remember to check in with you later this year.
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Well, you know what I think: this is an amazing job on that income! You’ve been really dedicated this year and it’s paid off in a really substantial amount of progress. Here’s to a 2021 where you not only make more financial progress but also move forward (in one direction or another) on a more rewarding job.
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Thank you, C. I appreciate you so much; and, especially that you took time to answer a panicked email that essentially amounted to: what am I doing?
I’ve decided to come clean about the job stuff a bit in my post tomorrow and in a bit more in my post planned for next week. One of the things I have appreciated about this blog is the ability to just really be honest about where I am. Based on the interactions I have had, I see no reason to stop that now.
I hope you, and we all, have a better 2021! Especially those folks who have lost loved ones or dealt with financial setbacks. I have a few ambitions for 2021 financially for myself, but honestly, if I made the exact same progress I did in 2020, I would be very grateful.
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Hi Ms. Afro Penny, Thank you for sharing your debt repayment journey with this community of readers. I’ve been following your blog for awhile now and I look forward to each new post. I decided to step out from the shadows because we all need encouragement on this journey, maybe now more than ever.
I appreciate that you are sincerely “putting it out there“ and owning it. To echo the other comments, you HAVE made amazing progress this year, so be proud of it!
I’m on a similar path as yours (started with nearly 140k in debt) and I am expecting to be debt free by the end of 2021. It has been a long and difficult road, but I want to encourage you that you can get there too!
One of the hardest things this year for me was to pause debt repayment to build up my emergency fund. It is fully funded now, but I still struggle with wanting to throw it at my debt. I have to keep reminding myself, on an almost daily basis, that doing so would be too risky. It’s very hard to stop the momentum, so congrats also on your e-funding.
Here’s to wishing you (and all of us, really) a brighter 2021.
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Hello, Hope. Well, first let me congratulate you on being so close to being debt free. If you never feel the desire to comment on my blog again, please at least come back once you are debt free so that I can congratulate you. Like everything, finding out someone else did what you are doing makes you feel that much less alone and that much more encouraged.
Thank you so much for your kind words. Glad to know I am mostly not pestering those who happen to stumble across my small patch of the internet.
“One of the hardest things this year for me was to pause debt repayment to build up my emergency fund. It is fully funded now…” THIS! It was so hard. Especially if you have mostly gotten by without ever having a more robust emergency fund. You think, well, why do I need more now? It was the right call but yea, it was rough.
I hope you, and everyone, has a brighter 2021! Yours will be especially memorable becoming debt free. I am so excited for you…and a tiny bit envious. 😉
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