Debt Reduction and Savings Statement – August 2010 through February 2011

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I post these Debt Reduction & Savings Statements so I can continually compare our current debt against our starting debt from back in January, 2009 – when my wife & I began our Debt Free Adventure – and summarize our progress toward debt free living.  Our debt reduction charts are in the right sidebar.

Seven months without an update…

While it may seem as though I’ve lost interest in sharing our progress – I haven’t – life and laziness have just been stealing away my writing time and motivation.  It happens.

I’m happy to report that despite seven months without an update, our budget and debt repayment schedules have not wavered (although I haven’t published an official update, the graphs in the right sidebar are always up-to-date.)

With the exception of several adjustments to compensate for an employment change, our execution is solid and we’re more passionate than ever about paying off debt, saving money, and giving.

How did our 2010 goals pan out?

Our overall progress was pretty solid.  Compared to 2009, in 2010 we paid down more principal, paid less interest on debt, and managing to save more money… which is a combination I’ll take any day!

Based on our four financial goals for 2010 we paid off our Lending Club loan, came up quite short on our 2nd mortgage goal, doubled our Emergency Fund savings goal, and fell short on our side hustle earnings.  Despite the hit and miss success with our goals we did reduce our debt burden by over $15,000 lowering our monthly interest costs by nearly $200 – which means we have an additional $200/month of income than we did at the start of 2010 – which is awesome.  We were also able to give generously with both our money and our time, which is what it’s all about!

What are our 2011 goals?

I will publish a dedicated post for this ASAP, but in short we’re aiming to pay off at least $20,000 in principal debt and will continue making our 2nd mortgage the working victim of our hybrid debt snowball.  According to our current debt snowball plan the 2nd mortgage will be paid off by the end of 2014, but considering both our employment situations will experience great deals of change, the snowball could change with them… for better or worse.

Whatever happens, you can expect to see a more laser focused debt reduction plan.  This is because our emergency fund is sitting at a comfortable 2 month surplus which allows us to put all our available monies toward our highest interest debt… the 2nd mortgage.  I am very excited to watch its principal drop over the remaining 10 months of 2011!

Debt reduction and savings numbers

Overall numbers for 2010:

  • Debt reduction = $15,182
  • Savings = $11,962
  • Interest amounts paid reduced by $200/month
  • Giving = gave faithfully all year

For 2011 – accrued through February:

  • Debt reduction = $1,317
  • Giving = faithfully

Some people may argue that I should have used the savings to repay debt, but for our situation, saving this amount was the best decision.  The best decision will most likely be different for you, as it should be… personal finance is personal.

Thoughts

As I said before, I am very excited to watch my debt burden decrease more speedily this year.  With the solid foundation of savings and sound budgeting firmly in place, debt repayment can now garner our full attention. This is important because fixed monthly debt reduction plans can seem slow at times and the ability to focus your dollars on a single goal can be a big psychological boost (which is the foundation of the Financial Peace University plan.) For us saving more than $1,000 was necessary, but I sure am glad we’re finally at a point where our savings is sufficient for us to focus entirely on our debt snowball.

I am no longer working as an IT professional and recently made the decision to change my career to certified financial planning.  I am currently attending training and already have a position lined up once I pass my federal and state certification exams.  My federal cert exam is in mid-April and my state cert exam is in mid-June.  After that I will begin taking on clients, of which I already have a decent number lined up.  I mention these things because they will obviously have an effect on my income and thusly my debt repayment abilities.

Despite the volatility we can weather the changes in income thanks to blessings from our Lord, sound budgeting, savings, and alternate income sources.

All-in-all I am very optimistic about our financial picture for 2011 and cannot wait to watch things unfold.

How about you?  How is your financial outlook for 2011?  What do you think of ours?



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1 Jeff @ Sustainable Life Blog

Matt -
That is great news about the career transition – it’s going to be interesting moving from IT world into finances, but for you it’s probably a great switch. It’s always nice to see your passion for finance come through in your writing and debt reduction. Good luck!

2 Matt Jabs

Yeah… very interesting! I’m very excited for the switch. While I’ve been a bit a odds with future plans over the last year, things finally seem to be settling into a workable plan. Thanks Jeff.

3 Dominique Brown

Matt,

Congratulations on your new found career. We share a similar experience as IT professionals transitioning to the Financial planning industry. I am currently working full time as an IT consultant while studying for the CFP at night.. it’s draining but well worth it. I’ve already passed the series 62 and 65. But, I’m curious what made you leave your IT job prior to being certified and ready to begin working in the finance industry immediately? Also, what went into your decision making process for working for a broker dealer or advisor rather than starting your own RIA?

4 Matt Jabs

Hi Dominique,

Our paths are similar in deed! I was laid off from my last IT position and because we live well below our means the opportunity to study and change careers was feasible, so I jumped. I will be working through an independent financial planning firm, without binding contractual agreements, who is in the process of becoming an RIA. That said, because RIA’s work mostly with high net-worth individuals, I want to be able to help wherever possible. Good question.

5 Dominique Brown

Matt,

Sorry to hear about the layoff. But, ultimately it would be for the best when your new career works out. I hope you keep us posted on the progress for the new career. The one thing I learned so far is that it’s all about marketing. The more you market and network the more successful you will be. What books are you reading to prepare yourself for the job?

6 Matt Jabs

Thanks Dominique. I’m currently reading the bible, Early Retirement Extreme, The Investor’s Manifesto, Economics in One Lesson, and my Series 7 study guide.

7 Pete

Sounds like you’re on track towards reaching your goals, even in the face of multiple changes in your lives. I’m sure that the move to becoming a financial professional will be a good career move for you, and I wish you the best of luck on your upcoming exams. Study hard!

8 Matt Jabs

Thanks Pete, I think so too. You know better than most that I’ve been “searching” a bit over the last year… but thankfully God has laid this path before me and my spirit recognizes it, which is very refreshing. God bless.

9 Dominique Brown

Matt,

Will you pursue the Certified Financial Planner (CFP) designation or Certified Financial Analyst (CFA) designation after obtaining your Series 7? I found that studying for the CFP has exposed some serious gaps in my knowledge.

10 Matt Jabs

Right now I’m looking toward the CFP and yeah… it’s not simple stuff.

11 Jenna

Congrats to all your hard work in 2010! Hopefully 2011 will be just as successful, if not more!

My financial outlook is looking pretty good. Hopefully maxing out another year of Roth IRA and buying a home in 2011. Those are my two big goals financially.

12 Jason L

Hey Matt, interesting blog… I just found it and will be sure to be following along. Out of curiosity, why did you pay your LendingClub account first, instead of balancing out contributions to your Slush Fund account? Also, I’ve just started using Lending Club myself, and haven’t actually tried to liquidate any cash… have you had any luck doing that yet? (The uncertainty here is what keeps me from putting a lot of money into it).

Jason

13 Matt Jabs

Hi Jason, sorry for the delayed reply…
I paid my Lending Club loan off because it was a better investment to pay off my high interest debt loan than to save the same amount. Now that the Lending Club debt is gone, I am more freed up to choose where my money goes.

As far as liquidation for investing with Lending Club… the loans you invest in are 3 or 5 year notes, so the money is not fully reclaimed until the maturity of the note. Along the way micro payments are applied to your account so you can either continue reinvesting/rebalancing or just cash out.

14 Jason L

Hey Matt, no worries at all… I appreciate the time you take to run this blog and reply to individual messages. Your comment regarding paying down high interest makes a lot of sense.

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