2020 Financial Review

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 1Pass! This loan was paid off as of August 3, 2020.

2) Pay off  Private Student Loan 3 2Altered. 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.


Blogiversary: Year 1

Excuse me while I put on a bit of Tony! Toni! Toné! and host a very low key celebration of my first blogiversary. This is a rough moment in many ways but I owe it to future Ms. Afro Penny, as well as to the sacrifices made by immediate past Ms. Afro Penny, to celebrate this milestone in debt repayment and keep chugging along.

I started this blog a year ago, on July 4th 2019 with the intention of documenting my student loan debt repayment journey. In my first debt post I shared that my current debt stood at: -$133,259.74; and, I set a payoff date December 9, 2025. So, a year later, am I any closer to my goals?

As of July 1, 2020, my debt stands at -$119,119.98. That is a reduction of $14,139.76. Yay! Not bad. Not…great. If I continued at a similar rate of repayment for the rest of my desired payoff term, I would not make my goal.

While it is my usual pattern to do a deep dive into the numbers and create new and elaborate plans for what the upcoming year will bring, I’m just not mentally there at this moment. Instead I will outline my list of five very moderate goals. 

Second Year Goals

1) Move my blog from Blogger to another platform and improve the overall appearance and readability.

2)  Post at least twice per month including a student loan balance update post on or about the first of the month.

3) Establish an alternative income stream bringing in at least $500.00 more each month.

4) Reduce student loan debt below $100,000.00.

5) Refinance student loans at more favorable interest rates.

That is it. I could be a lot more elaborate with my goals and do a much deeper dive as to the feasibility of any of these goals, and perhaps I will, but for the moment, this is it.
 

I hope this extended weekend finds you and your loved ones safe.

2020 Trimester 1 Financial Review

May 1st officially marked the end of my first financial quarter trimester for 2020. And while 2020 has been pretty terrible overall, financially, for me, it could have been a lot worse, even if it could have been better. What follows is my 2020 Q1 first trimester financial review.

((Note: I know this isn’t true for billions of other people around the world. This blog functions as a personal diary about my personal finance and is not meant to represent the perspective or experiences of anyone other than myself. I don’t seek to offer advice or sell you anything (not that there is anything wrong with folks who do.) As I have said before, my current financial situation produces a lot of shame and anxiety for me and this blog helps me manage those feelings.))

Debt Repayment

1/1/2020 Debt Total: -$127,688.14

5/1/2020 Debt Total: -$121,891.82

Difference: $5,796.32 (Note: This is just the difference in my balances and not the total amount paid.)

Almost six thousand dollars over four months feels like a success, even more so than looking at the declining balance each month. While much of this success was due to uncommon/less predictable events, such as the COVID-19 stimulus check, tax refund, etc., it would have been even more substantial had I been able to make the debt payments on January 1st and February 1st that I am making now thanks too a stricter adherence to my budget. On January 1st, I was paying off the extravagances of December and on February 1st, I was paying off the unruliness of January, but I got it together in February which allowed me to make a $1000.00 extra student loan payment on March 1st. This pattern held for March for a $900.00 extra student loan payment on April 1st. 

Savings

Thus far, it has been a serious fail. Between my “emergency fund” and my “life fund” I have a little over $1000.00 in savings (I have more in my 401K but I don’t really count that as it isn’t cash on hand). This is pitiful and I really need to beef up my savings to at least $3000.00 which would cover two months of expenses. 

Challenges/Disappointments

The biggest challenges and disappointments for the first quarter were the early effects of the COVID-19 pandemic that will be more fully realized as lost opportunities in Q2. For example, I participate in an extra curricular activity for which summer and day camps are common during the summer. I had been offered a teaching role that would have resulted in me bringing in an additional $4,500.00 over a two week camp in June (this would have been addition to my monthly salary from my main employer). Unfortunately, the pandemic meant that this camp was cancelled. While this was undoubtedly the right move, I’m not gonna lie, in my mind I had already envisioned and dreamed about using that check to make a large debt payment.

I have applied to other jobs for side income but I believe I may be getting screened out due to seeming overqualified. Which kinda stinks because I love retail/customer service work but…eh. Hopefully it means someone else who needs the job a bit more than I do is getting it.

Progress on 2020 Financial Goals

On April 18th, I revised my 2020 Financial Goals to account for the pandemic and decreased opportunities for earning income; and, the loss of expected bonuses and merit based increases. My new financial adjusted financial goals for 2020 are:

1) Pay off Private Student Loan 1 ($8,600.00 remaining as of 1/1/2020) by the end of the promotional period. – As of 5/1/2020 there was $3,700.00 remaining on my PSL1 balance. This is  a considerable improvement from the 1/1/2020 balance of $8,600.00 and the balance difference represents all of the additional loan payments made during Q1.

2) Pay off  Private Student Loan 3 – This goal was removed/adjusted based on expected diminished earnings during the pandemic.

2) Start a small business AND generate an additional $500.00/month in income. – This will look difference based on the pandemic but is still something I hope to achieve by  December 2020.

3) Save $ to purchase a vehicle outright at the end of my car lease term in December. – This won’t happen until I payoff PSL 1. However, despite my ah-ha moment, I am still waffling here a bit…I will write a post on my current car lease and the cost associated with all three lease-end options in a future post.

2020 Blogging Goal: One (1) student loan balance post a month AND one update post a month. – Success so far! (3) ADDED – Transition from Blogger to another blogging platform for a more aesthetically pleasing blog. – I have added this goal for myself and hope to have achieved it before my official blogging anniversary on July 4th.

I will admit that these goals are exceptionally modest, however, given the uncertainty of the current moment, they feel achievable given the things within my control.

Q2 Second Trimester Financial Predictions

In Q2 the second trimester, I expect to achieve my first 2020 financial goal and begin to make progress towards the others. I will share one thing…there might, might be a move to another university in third trimester. But it is still in the very early stages so more on that when there is more on that.

April 2020 Budget Forecast / March 2020 Budget Review

Budgeting in the era of COVID-19… Some things have changed, some things are very much the same.

Okay, let’s get to the numbers…

Below is my reconciled March budget with the “budgeted” column being my expected income and expenses and the “actual” column being my actual income and expenses. I guess perhaps I should change the “budgeted” column to “expected” for conceptual symmetry…

In my original March 2020 Budget Forecast post, I broke down my budget so below I will only review the changes…

Income
– I receive my state income tax refund of $197.00. This amount accounts for the “Emergency Fund Deposit” that appears in the last row. While any extra income is usually shuffled towards debt, I withdrew $500.00 in November to cover my insurance deductible and I’m just getting around to back-filling it (I know…I know, I should have done this sooner).

Food, dining, gas, and miscellaneous (FDGM)
– There was an overspend here which accounts for the $107.71 overspend you see in red at the bottom. In the comments of my March 2020 Budget Forecast folks mentioned that they thought my budget was pretty bare bones and left little room for flexibility. That is…correct. However, the overspend here was not on essential items and really just happened because I turned cooking into “entertainment” during COVID-19, got my father’s watches fixed (he earns far more than I do and could afford to get them fixed himself but it would take him forever to get it done), and because the spring pollen and construction around my building had my car looking really raggedy.

Onto April!

Income – I believe my income increased because the university stopped billing me for my university gym membership as the facilities are no longer accessible.

Unplanned Spending from March 2020 – Obviously, the unplanned spending from March had to be paid. Ultimately, I had to decrease my student loan payment by $100.00. (The other $7.71 was covered by the increased income).

Food, dining, gas, and miscellaneous – I know! I know! I really did listen to your thoughts and comments and I know this budget seems awfully slender. However, I think I will actually make it this month because 1) I am working like home like millions of other fortunate Americans so I don’t have transportation costs except the occasional trip to the grocery story. However, gas is currently ridiculous cheap and I still have a little over a half a tank left from March. 2) Now that I know I am working from home, I took time to do some meal planning. I have also done some self-care work to address my overeating. 3) Because of social distancing, the need for miscellaneous spending as a result of spending time with friends or out and about drops significantly. 4) I am using this time to force myself to use up some of my stashed goods and de-clutter. Like the million bottles of lotions, soaps, toothpastes, and half rolls of toilet paper I have saved because I might be able to use them “some day.”

Because I know there are folks who are concerned I’m not eating enough (I am so appreciative of your concern), I am planning to do an update post later today to show you an example of my super cheap and healthy dinners.

Okay, I know some folks aren’t going to be happy with this budget and I LOVE and appreciate that. If you think I should make changes, let me know exactly what you think I should do. Should I be pulling away money from debt repayment? Beefing up my emergency fund beyond $1000.00?

Celebrating the wins… (2019)

Image result for twists back

2020 has started off pretty well for me. And as I continued to reflect on 2019, I realized that while I could always do more, I had some significant financial wins and I have much for which to be grateful. So, counting down Afro Penny’s top three financial wins of 2019…

#3 – I learned to braid/twists my own hair – This may seem less significant if you are not African American/black/have highly textured Afro hair, but learning to do my own hair was a game changer. And I am only sad that I did not learn to do it much sooner, especially while I was living abroad.

Braids/twists, even in cities with significant populations of African descent, are not cheap. While you can find bargains on Craigslist and the like, a decent stylist is still going to charge you between $150.00-$200.00 for an average style not including the cost of synthetic hair, which is often used to add length and durability to the style (note: braids/twists can be worn for at least a month, and take between 2-6 hours to install on average). If you want trendier styles like stitch braids or spring/bomb twists, the cost only gets higher. I will confess that in August, shortly after I moved here, I used some “found” money to pay almost $400.00 for shoulder length bomb twists. Despite being assured that it would last for at least three months, and look better as it aged, the stylist had a poor technique, and it looked raggedy after four weeks. Through headbands and other creative styling, I managed to extend the style to seven weeks just so that I didn’t feel like a total fool.

After that experience, I said enough was enough and I attempted to twists my hair myself. After six hours and $30.00 worth of synthetic hair, I had a style I liked. A month later, my confidence improved, I tried again with different hair. The second style came out even better that the first and the hair I used was not as heavy and cheaper (only $16.00) for the two packs I used.

Since I did my hair that first time, I have done my hair three more times and my technique and the outcome improves each time. To date, I have saved at least $500.00 and my only regret is that I didn’t do it sooner.

#2 – Only a two week gap in employment – By the time I departed, I was really unhappy at University A. If I’m even more honest, I put in my letter of resignation/intention not to return/contract non-renewal in February, with the hope that I could find a job before the academic year came to an end in June. Not only did I find a job in a pretty great city, at a better resourced university, much closer to my parents, there was less than a two week gap in my employment. While the move from a bi-weekly to a monthly paycheck took some adjustment, I am very happy with my new employer, and excited that the decision I made to switch employers, for my health and happiness, was a relatively smooth transition.

#1 – I paid off the personal (student) loan to my best friend – This was huge for me. Even though I had time to see it coming, I didn’t realize how much of a relief it was not to owe my best friend money anymore. While she was as kind, considerate, and as generous a lender as one could hope, owing her money was a constant reminder of how far I had fallen financially and how long I had been in such a place. There was so much shame. It was a small step of which there will need to be many, but at the moment, I am nothing but relieved and grateful.

2019 Financial Review

Image result for 2019 to 2020

2019 was…bumpy. I am genuinely hoping to make significantly more progress on my debt in 2020 but before I can get to my goals, I need to do a bit of reflection.

2019 Goals Financial Review

So…it’s difficult to review your goals when you didn’t set any. Seriously, I started this blog on July 4, 2019 and the closest I came for setting a goal for the year was a goal I set to have paid off the Citibank portion of my balance transfer and if you looked at my January debt update, you realized that didn’t happen. *puts head down* So…instead of reviewing concrete goals (something I will set for myself in 2020), I am going to look at the wins and losses for the year.

Wins

Reduced my debt by $16,413.25. – On January 1, 2019 my debt balance total was $144, 101.39 (this was prior to the start of this blog) and on January 1, 2020 my debt balance is $127,688.14. That means in 2019 I reduced my debt by $16,413.25. It could have been a lot more. It should have been a lot more. But it was something. Considering I make just a bit under $50,000.00 and this is just the amount my debt was reduced and not all of the payments made (that number is over $20K but it would depress me to calculate it so I’m not going to do it), I’m going to say not terrible. I’m grateful it is something.

Declining Costs of Living – I have made my very cheap apartment very habitable on very little money and believe I will be able to stay here for the foreseeable future. The cost of living working at University A was significantly cheaper than it is at University B because my former position included housing. However, despite being a much bigger city (you know, a proper city) the cost of living in University B city is cheaper and my quality of life is much better.

Improved Health – I know I said I was going to look at my financial wins and losses, but I think there is a cost associated with having poor health. My physical and mental health have improved significantly since I have moved from University A to University B and for that I am incredibly grateful.

Losses

Private Student Loan 1 – This loan is still festering and the balance sits at $8,600.00 as of January 1st. If you read my balance transfer post then you know my original goal was to have a portion of this paid off by December 2019. That didn’t happen for reasons I will discuss in a moment, but I still plan to have it paid off before the end of the balance transfer.

Bumps – My student loan payoff in 2019 wasn’t quite as aggressive as I would have liked for a number of reasons including a change in jobs and a cross country move. Additionally, in the months of November and December I was in two separate auto accidents. One was my fault and I had to pay a ticket (following too closely), my insurance deductible, the taxes on a rental car while mine was in the shop, etc. The second one was not my fault and was a hit-and-run WHILE I was in the rental car. Unfortunately, I had declined the rental car insurance at the rental counter like and idiot. Ugh, it could have turned out a lot worse than it did.

Unplanned Spending – A friend came to visit me for ten (10) days and we road tripped quite a bit. While I was happy to see her and had a wonderful time, the trip was very last minute (she needed to not be where she was) and not something for which I had planned and set aside money.

While my December/Christmas spending was a bit higher than I would have liked (the unexpected visitor came in December), due to a bit of frugality prior to her arrival and a transportation reimbursement from University B for mileage I have put on my car during the semester, I was able to cash flow almost everything and as of today, January 1st, all of my December/Christmas spending has been paid off. The only sign of my rough end of the year was that my Emergency Fund is still missing my auto insurance deductible, which I hope to replace out of my tax refund or bonus in early February.