This is a post that I've been debating on whether or not to publish. I don't want it to seem like bragging, I don't want to give too much information, and I even feel a little guilty when I see the numbers on paper. On the other hand, I feel like we need to give ourselves credit from time to time when we make big strides in our journey. Last night Tim and I were going over the budget numbers trying to wrap up February and start planning March. I started totaling up our debt snowball payments this month and almost lost my breath. When the scheduled payment clears on Friday we will have paid $8,046.33 in debt payments this month. Amazingly, since our house payment is deferred this month because of the refinance, all of that money will be going toward my school loan.
I keep asking myself where that money came from. Trust me, that's not a normal debt snowball payment for us. It seems to fall in to three general areas:
Refunds and Reimbursements: Part of that is a $900 refund from our recent refinance. We had been making larger than normal payments toward escrow for the past several months because my County couldn't figure out how to calculate taxes. I'm happy to have that money back and putting it to good use. We also got a $150 rebate from our cell phone company this month (we recently switch carries) and a Dependant Care FSA Reimbursement to cover the cost of childcare.
Reconciliation: Over the past year, we've been setting aside money here and there to cover a variety of unknowns. This is one of those areas where we don't exactly stay focused on Dave's plan, but it's what we're comfortable with. In addition to our $1000 emergency fund, we worked money in to our budget throughout the year for possible expenses - medical expenses (we had a baby this year), taxes (we knew our tax accountant messed up and set aside some of our refund to cover her mistakes),etc. We've tracked this in a separate tab on our Excel sheet so that we were still accounting for it and making sure it stayed in the appropriate category. With the 2nd month of the new year well under way, we were able to sort of reconcile those totals and re-evaluate what we really needed. We kept a very minimal amount in a couple areas and placed the rest in our debt snowball.
Living within our means: What a novel concept, huh? One of the ways we've been able to really attack our debt is by doing every thing we can to live on Tim's income. I am very blessed to have the opportunity to work from home and make significant contributions to our household income. However, it's an irregular and inconsistent income so we've gotten in the practice of living without it. Not only does this help us attack our debt, but it also helps us be realistic in the case we ever decided that I should stop working (or if some one else makes that decisions for us). Because I also like to reward ourselves a little, we do allow a portion of my income to go to the blow fund but we try to use the majority of it (about 75% after taxes) to pay our debt. I received some payments on past work this month that went a long way in bringing that total to a mind-blowing amount. What a rewarding feeling.
I know we can't have huge months like this every month, but I love it when it happens. For the first time ever I feel like there is actually a light at the end of the tunnel. It's an amazing feeling. Now I understand that common phenomena that Dave talks about where people tend to gain momentum and intensity in paying their debt when they approach the end. I also now fully understand why it's called a snowball. What a great feeling!