So I promised y’all a longer answer about why Team Too Thrifty Chicks is still in debt, (read this post if you just got here and welcome) two years after the start of Operation Do Better. And here it is from 1/2 of the team.
The Long Answer
2014 was rough on our ability to adult. For a time, after I quit my job, we budgeted, but the reality of a drastically reduced income meant that we did so with limits and no goals other than survival.
And because we had no goals, there was no fun and there was nothing to reward. We were in survival mode. Survival mode without a strategy for how to get out paralyzes you. You can’t think about tomorrow when there is only today. It kills your will to think about the future.
Hindsight informs me that quitting my job
might have been was very good for my emotional, spiritual and mental well-being, but it was hell on a sista’s bank account. Reese and I were still on Dave Ramsey’s Baby Step 2: Debt Snowball. We still are. We had not reached Baby Step 3: Save three to six months living expenses.
Had I had that kind of savings when I quit my job, I might have stuck out freelancing a bit longer. Ideally, I would not only have saved that money, but I would not have left my job unless I had a certain number of regular clients, or a real strategy for how to get more.
By the time I realized that I was in the middle of the ocean in a very leaky boat, and I only had my two hands to bail out the water, it was almost too late. I am not going to lie, had my depressive state not broken when it did, had I not accepted that this experiment had failed, and had I not realized that I needed more than a bigger bucket, but I needed to be saved, I would have drowned.
Recovery Is A Process
When I finally landed a job, the funny thing is that survival mode didn’t immediately end. I thought returning to the Land of the Steady Paycheck would allow me to get back on the Operation Do Better train. But things were different. Reese was in Memphis and I was New Haven. It was the first time since we became friends that we had to “do better” on our own. Solo Adulting is not as much fun as Team Too Thrifty Chicks Adulting. Just sayin.
For probably the first three months, I barely spent money. My student loan was still deferred, so I often had money left over. I also was scared to spend it. Funny thing about that is when the student loan payment kicked back in the following February, I suddenly felt like I didn’t have enough money to get through the month.
But even crazier than that, at least to me, is that knowing that my paycheck was going to show up like clockwork eventually freed me of the fear of survival mode for about 3/4 of the month. That means I always had this euphoric, “I’m rich” feeling when I got paid, but by the end of the month I was pinching pennies like a miser.
I also had low-key started using my credit cards again. I had started using the only one I still had when I was in survival mode after quitting my job with no savings. We had saved cash for our trip to South Africa, and I had bought my plane ticket before I quit my job. But life after that trip for me financially was a downward slide.
One of the few smart things that I did do before I quit my job was consolidating the last of my credit card debt through a loan from Lending Club. The interest rate was lower than my remaining credit card and knowing that they snatch the money out of my account every month meant I couldn’t play around with not having the money to pay the bill. Not that I do.
I automated all my monthly payments a long time ago so I have a stellar on-time payment history. The other reason I liked the loan is because unlike a credit card, you can’t spend against it. I also reduced the credit limit on the one credit card I kept. I still ran it up, but not as high as I could have.
If At First You Don’t Succeed
When I got the new job, I refocused on paying off that one credit card. And by refocus, I mean I applied for and received a zero interest for 18 months credit card that I could transfer some of the balance from the card I had.
My thinking was that I would pay down a portion of this balance and avoid some of the high interest for the card that I still had. The plan was never to use that credit card except to pay down the balance quickly and transfer more of the other balance before the interest free period ended. The reality is that that never happened. Though I set up payments that would have paid the card off long before the 18 months were up, I couldn’t resist the temptation of using the card.
I was shelling out all this money, but the needle wasn’t moving. And to be honest, when I really look back, I wasn’t doing anything different about it. Sure, I was still freelancing, but I wasn’t being intentional about how I used my steadiest resource — my regular pay check — so you know I wasn’t being strategic about extra income. I invariably used that money for travel that I had committed myself to, but hadn’t properly planned, and to CYA when I had spent money but was falling short.
Reese, Tasha and I started talking about money — how to save it and how to grow it — during the summer months. But it was more in a post mortem fashion, after all the damage had been done. (To read a funny, but serious spending analysis I wrote for the month of July and shared with my girls click here.)
I realized I was quickly slipping into my old financial habits. I had already been down that road and I knew there wasn’t anything but a ramshackle house at the end of it. That road led to broke. I wanted to get serious again about slaying debt and saving, but it seemed like the old tried and true — $1,000 emergency fund, attack the debt — wasn’t enough. I wanted it, but I didn’t feel that excitement to go after it. I needed something to help me mentally engage in the process and align my behavior accordingly.
When we first started Operation Do Better, Reese and I spent a lot of time reflecting on our personal money management histories. But we also talked extensively about what we were taught about money from our families: the good, the bad, the ugly and the just plain ridiculous.
We come from two different financial backgrounds, but we still have similar fears around not having enough money to give, to save, to exist. Operation Do Better was about not only addressing those fears, but making sure that financially our whole family could do better when we’re little old ladies rocking Chuck Taylor’s in assisted living.
I’ve learned over the last couple of years of focusing on my finances that success in this game is mostly behavioral and psychological. What you think about money influences how you behave with money. And though I wanted to do better, my mindset was doing broke. I’ve been working in some capacity since the summer after I graduated from high school, but I don’t have any money that is 18 years old. You feel me?
I’m 36 now. If the Universe allows me to live at least another 18 years, I want to have money that is 18 years old.
When I embarked on what you now know as the failed OktoberFast Challenge, I did a few smart things that have benefited my overall life, not just my finances. As I mentioned in the post, I gave up the procrastination ministry. I have this wonderful planner called the Passion Planner, that I will write about in another post. But it is saving my life and helping me reach my goals.
It’s a struggle every day not to procrastinate, but I plan everything that can be planned. I meal plan and guard against eating out by keeping a few things on hand that mimc eating out.
I haven’t ordered a pizza at all in during the month of November. I only ordered pizza once during the month of November. (I was hangry Nov. 30 after covering a three-hour meeting!) New Haven-style pizza is something that I have come to enjoy so much. Resisting it, at least for me, is akin to walking on water.
Like I also mentioned in a previous post, I stopped watching so many YouTube videos where people show you all the stuff they buy, and started watching a ton more about how to save money, plan and organize. I also bumped up the amount of email traffic I get about personal finance. Even if I don’t do anything with the advice in those emails, just reading them helps me psychologically stay focused on my goals.
But most importantly, I got a budget that works. When I wrote about the OktoberFast Challenge, a number of people liked the post. As I checked out their pages, I discovered the blog, Dad Is Cheap, that led me to YNAB (You Need A Budget). And more than 60 days later, I’m hooked. I religiously watch the videos on the YNAB YouTube channel — Whiteboard Wednesdays are my favorite.
It was there that I learned that 60 percent or more of people live paycheck-to-paycheck regardless of their income. That resonated with me because I know personally that it is absolutely true. I’ve made as little as $23,500 in my career and as much as $60,000 and the results were the same: BROKE! YNAB’s Four Rules has been a game changer.
I also listen to the YNAB podcast and read the blog. I love the mindfulness that the software and the phone app interjects into the budgeting process. And I love how the software functions like those physical cash envelopes that used to cause me so much anxiety back in the day — minus the anxiety, of course. As I mentioned in the OktoberFast update post, this is the first time in months that I have approached the end of the month confident that I have more money than month. A budget that works gives you confidence. Confidence is sexy. Therefore, budgets are very sexy.
Ironically enough, Dave Ramsey, the man who helped us get this party started, has also adopted technology that I have heard is kind of similar to YNAB, called Every Dollar. But I’m not switching to it because I am super happy with YNAB. I am still following my own right-for-me version of Dave’s Baby Steps. Right for me means focusing on Baby Steps 1-3 and completing them as quickly as possible in the next three years.
I have no interest in buying a house so I’m not saving for a down payment. As long as I live where public transportation is a real thing, I won’t own another car. The way I see it, my more than $28,000 in student loans is my house and car. And my goal is to pay that off by the time the clock strikes 40 on Sept. 13, 2019. I could probably pay it off a little sooner, but I was fortunate enough to only have federally subsidized student loans and to consolidate and lock in my ultra low interest rate of 3.375 percent years ago.
My monthly payment is incredibly low in the grand scheme of student loans. God bless you, but some of y’all got student loans that make my soul hurt. I also have been paying my student loans for a long time, and while I want to be rid of them, I am in that magic place that means even if I take another 10.5 years to pay them off (not going to happen), the end is nigh. Paying them off sooner obviously would save me money, but it is more advantageous to me, I think, to get out of consumer debt and save aggressively for emergencies and retirement during my peak earning years.
I work in the volatile world of journalism, where people get laid off no matter how good they are at their jobs. I’ve managed to stay ahead of the ax, but if for some reason I don’t, I want to be prepared. I also think I want to work for myself again, but I want to know that I can build a business and still eat. Because my loans were federally subsidized, I can always have them deferred if something happens to my income.
So I’ll keep you guys posted. And feel free to check in with me. Knowing you guys are watching is extra incentive to make you proud.