February 2019 Financial Progress Report -

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Welcome to our monthly Financial Progress report series. We started recording the progress of our journey to Financial Freedom in February 2018. Our Financial Progress report has allowed us to document our journey and hold ourselves more accountable. We are amazed to see the progress that can be made by finding different ways to decrease our debt, make more money and save more.

Each month after we have received all our financial statements and updated all our financial data, we then compose our financial progress report for the previous month. This typically falls within the middle of the month as some bills fall on the 1^st of the month and many others towards the last days of the month.

In our Financial Progress reports, you can expect to see an outline of our debt, savings, expenses, and income. Also, we will include a small snippet of what we did or what we need to do to improve each area. As time goes on, you can expect these progress reports to evolve and improve as we learn more about taking control and cultivating our money.

Budget

We currently use Dave Ramsey’s Everydollar website as our main budgeting tool. Below you will be able to see the main categories that we have broken our budget up into. There are additional sub-categories within these main categories. The last time we updated our main categories was in April of 2018. Since then these categories have served us well in the ability to see trends in our spending habits. As we move through our journey to Financial Freedom we will adjust our budget categories. When was the last time that you reviewed your budget categories?

In our June 2018 Financial Progress Report, we provided a small snippet of the methods behind our monthly budgeting and tracking. Each month we review our previous month’s expenses and evaluate where we need to adjust the amount we budget for. To keep track of our monthly bills so that they are inputted in our budget correctly, we keep a list of all our fixed bills, their amounts, and their due dates. We make sure that our bills are listed in order from the earliest due date to the last due date in the month. Then, as we pay each bill, we will check off by dating each item paid.

Right now I and my SO’s earned income is on a bi-weekly pay period. This provides us the need to stay organize and continue keeping track of every bill and expense that needs to paid between pay periods. Doing this ensures that we are paying bills on time or sooner which also saves us money by avoiding late fees and unnecessary interest.

To keep track of every bill in between pay periods, we make another list that breaks down our bills by their due dates into a weekly due date list. Even though my SO and I are both paid bi-weekly, our employers are on different pay cycles. What this means is that each week we are getting a direct deposit from either company. This does help us tremendously in how efficiently we are able to manage our money. Keeping track of our spending on a weekly, monthly and yearly basis gives us so much knowledge and insight into our spending habits and staying accountable to our money goals.

Now that you have some background knowledge on how we budget, let’s take look at our overall month progress towards Financial Freedom!

Debt

January 2019 Total Debt: $126,700.10

February 2019 Total Debt: $125,821.30

Credit Card Debt: $16,074.98

Car Loan: $0.00

Student Loans: $109,746.32

February was an interesting month, to say the least. It was a month that we added new debt to our existing debt. However, we paid off some of the new debt added as intended. We technically ended up paying more in debt then what this section will depict. When comparing our total debt from month to month, we look at the ending balance on each monthly statement. We then compare this ending balance with the next month’s statement.

We paid down a total of $878.80 in our consumer credit card debt in February. However as mentioned previously, we actually put 28% of our total income towards debt including minimum payments. Much of this was due to the fact that we received our Tax Refund in February. We paid off 2.5 of our lowest credit card debts and also paid off the remaining balance of our personal loan.

You may notice that we haven’t reported on a personal loan debt before. There is a reason for this! We didn’t initially report on this personal loan because while it may be a debt, the debt did not currently impact our monthly income. This personal loan was unique in that we provided a monthly home cleaning that counted as payment each month until the debt was paid in full. We continued to do this for a few years until last year after we had our second daughter. We found it harder and harder to fit in those monthly cleanings and knew that it was time to consider paying the debt in full. So, that is exactly what we did this month when we received our Tax Refund.

As we continue down this journey to debt freedom we are actively learning and adapting solutions to our money woes. Every few months we like to evaluate our current debt repayment strategy. We are currently still utilizing the debt snowball method and it is giving us results. However, as we approach our credit cards with similar balances it is important to us that we continue to evaluate our debt repayment method. We are total believers of the debt snowball method, but we also understand there are different methods available that could potentially save us time and money.

When it comes time for us to review our current debt repayment strategy we head straight over to undebt.it. We love using their free debt snowball calculator to track our journey! You only need to have a list of each of your debts, their current total balance, your monthly minimum payment, and your current interest rate. After you provide that information, the calculator will do the rest. You can determine which method will help you reach your debt freedom faster. It is hard to say where we would be on our finance journey if we had not stumbled upon undebt.it. They have helped us gain more focus and clarity when it comes to our debt free journey.

Needless to say, we are excited about the progress we have made so far in 2019 towards our debt. It still feels surreal that we have already paid down more than $4,000 in the last year towards our debt. However, we are not stopping there. We are hoping to be credit card debt free by 2020. After we reach that milestone we will be focusing on aggressively tackling my student loans. When did you start feeling the momentum of your debt free journey?

Savings

January 2019 Total Savings: $6762.20

February 2019 Total Savings: $7030.19

Emergency Fund: $4,256.43

C’s Retirement Fund: $2773.76

Our total savings grew again by the end of February. While our emergency fund only received interest, my retirement fund did grow due to me and my employer’s contributions. I expect to see my retirement account grow even more as I chose to increase my contributions per pay period starting in March.

Last month, we moved our unused Christmas Sinking fund back into our Emergency Fund. We are still discussing the best way to use this funding such as paying down more debt or starting new sinking funds for the upcoming year.

The last month we have been discussing how to automate our savings more as well. We are considering what the best methods are such as setting up direct deposits through payroll or setting up automatic transfers through our bank. We would love to hear what others are doing to automate their savings!

Overall, we are excited about the possibilities that continue to develop as we work to increase our savings contributions.

Expenses

Total Expenses: Largest Spending Categories

Debt: 28%

Food: 7%

Housing and Utilities: 5%

Insurance: 4%

In February, we saw quite the shift in the rankings of our largest spending categories. Much of this drastic shift is due to the temporary increase in our Income as we received our Tax Refund. We saw the largest increase in our debt expense percentage. This specific category jumped 13% moving it into our largest overall category for the month. Over a year ago our debt category averaged around 28%. However, we were making less and had almost double the number of credit cards and the majority of it was going to minimum payments only. We have so far to go on this debt-free journey but have already seen tremendous progress in the last year.

Our Housing and Utilities cost moved down to our third biggest expense with Food remaining in second place. Again much of this shift is due to the temporary increase in income which altered our percentages tremendously in each category. We expect these categories to shift back once we are no longer reporting on the short term surplus of our income. However, we are still working on ways to keep our Housing and Utilities cost lower during our debt free journey.

Last month, we mentioned that we have been working to adopt habits that promote being energy efficient within the home. These little habits are things like unplugging your chargers when no longer in use, increasing the temperature on the refrigerator and installing a smart thermostat for your heating and cooling system. We have also explored the idea of utilizing more and more sources of clean energy. As we continue to learn more about these sources, we have linked our current energy usage with Arcadia. This has been a great experience for us as we learn how to lower our energy use and save money at the same time!

If you have been following us, then you may already know that we are steadily finding ways to cut our food budget. This includes dining out, groceries, coffee, alcohol, snacks & drinks and Bring a Dish event. In January we cut back 5% which was mainly due to a decrease in dining out and maintaining a semi-strict grocery list. Due to the temporary surplus in income this month, we were able to drop our food budget down an additional 12%. This is definitely not realistic every month for us, but it sure is great to see that spending category so low! Ideally, we would like to see our food spending stay between 10% and 15% based on our current consistent monthly income.

Our last largest spending category in February changed again to our Insurance. We realized we could save money every month by paying for our policy on a semi-annual basis. Moving forward we will still budget our Auto Insurance monthly by moving it to a sinking fund versus paying the company directly. Just by making this decision we are saving about $15 a month which adds up!

Overall, February brought us many opportunities to control our spending habits especially with a drastic increase in income for the month. I believe we managed to navigate this change well and stay focused on our priorities. This experience made it very clear that the more income coming in, the more transactions there is to track. We are still researching ways that can automate how we track our spending. By finding ways to automate our spending trackage, we can utilize our energy and time more efficiently. Did you encounter any major changes in your expenses this month?

Income

January 2019 Total Extra Income: $94.66

February 2019 Total Extra Income: $5204.00

As I had previously mentioned this month we expected to receive a surplus that is a Tax Refund. With the anticipation of this, we did not put a lot of energy and focus on earning extra income. This month we earned a minimal amount of extra income. Much of this is contributed to the fact that we put little effort and time into earning extra income. We realized that if we are going to create multiple streams of income, it is necessary for us to put more time and effort then we gave in February. We are working to improve on our extra income options in March especially since we cannot rely on another short term surplus of cash.

Needless to say, Ibotta has been a great way for our family to receive cash back on our everyday grocery shopping this past year. We have already earned over $200 since we started using Ibotta in 2018. Are you interested in learning how you can maximize your Ibotta’s earning potential? If you decide to start taking advantage of cash back through Ibotta, we invite you to join our team here. By joining our team and redeeming one offer within the first month, you will earn $10.00!

Ibotta: $3.25

Mystery Shopping: $0.00

User testing: $0.00

Online Surveys: $.36

Misc: $5,200.00

Monthly Goals

Every year we set out to reach certain milestones. We learned in 2018 that if we really want to reach our long term goals, we must start setting monthly goals that reflect our long term goals.

Every month, we try to break down the 5 biggest areas that are priorities for us for the year into smaller and measurable goals. Many of these areas for this year are financial, personal development, health and fitness, family, and career. Each month we intend to share our results of the goals that we set for additional accountability. Below after we post the results of our past month’s goals, you can expect to read a snippet of our successes and our setbacks during that month.

In February our 5 goals focused on paying down debt, enjoying new activities as a family, read half a book, continue an exercise routine and post new listings on Etsy. By the end of the month, we were able to successfully decrease our debt by more than our original goal. Our family completed six different bucket list activities found on our February 2019 Budget-Friendly Bucket List. While I did manage to find some time to read this past month it was not enough to mark it successful guilty free. Lastly, I stuck to my workout routine and did get new postings listed to Etsy. The best part is that all of these goals are that they are small actions that are important in taking me to my bigger goals.

We have really enjoyed using this process to commit to monthly goals. It aids in keeping us on track and allows us to break down those big dreams into smaller achievable ones. We look forward to continuing to do this each month. Check out our Instagram feed if you’re interested to see where our focus is going in March!

Recap

Overall, February felt like a successful month for us. We managed to make a decent dent in our existing credit card debt. Additionally, we found monthly savings and decreased our overall spending categories. This month we have really found the motivation we needed to continue meeting our goals. We are constantly learning how to adapt to the continuous changes that take place in our lives from month to month. We are finding ourselves to be moving forward in the right direction so far.

Previous Financial Progress Reports:

We are so thankful for the support that we have gained from the debt-free community. Additionally, we have improved our accountability by reporting on our progress. This has really allowed us to remain determined and confident in our abilities to keep meeting goals. February will continue to bring differences that we have to plan for. We are certain that we will continue to make progress towards our journey to Financial Freedom.

What is something you do to hold yourself accountable to your goals? Comment below to share your responses.