- DH = dear husband
- DD3 = dear third daughter
- DD2 = dear second daughter
- DD1 = dear first daughter
“You’re worried about what you’ll write on your blog.”
Last week, I wrote rather cryptically: “Ironically, with our total debt-freedom only weeks away, DH and I were off our game.” I then vaguely stated that “we faced our current mess. What would we do to deal with it? A mortifying thing, but we got it figured out.”
All week I’ve had a nagging stress about this “mess” in the back of my mind. “I don’t think it’s so much that you’re worried about the state of our finances,” DH said to me when I talked about it yet again. “You’re worried about what you’ll write on your blog.”
Not quite true – but partly true.
One of the bad money patterns from our past that DH and I have come to recognize through the 6+ years of our journey out of debt has been what we call the income-tax-return-effect. When our children were younger, DH and I received significant income tax refunds each year. We’d do our taxes, and it would be all about the refund. “We’re going to get $1,380!” And we’d start fantasizing about what we’d buy with it. (Already this is painful to write about!)
Since we knew the money was coming, we’d go ahead and buy the things we had settled upon ahead of time – and put it on credit. And then when the money came, guess what we did. We spent it again!
A bad old pattern seeps in
DH and I allowed the income-tax-return-effect to seep back into our finances this summer. Since the beginning of 2018, I have made reference to our projected debt-freedom date of September 2018. This summer, without being aware of it, DH and I gravitated back to that “We’re going to get a tax refund!” disconnect.
I believe (though DH doesn’t) that this disconnect was compounded by the fact that I received the second – and bigger – part of my inheritance in July. It falls in the range of an average inheritance, but it is by far the most substantial amount of money we have ever dealt with. We’ve been very intentional about using it to speed up our mortgage pay-off (by 8 months) and to invest. However, I’m convinced that good intentions and even good execution have not stopped our brains from becoming a bit addled by it.
So my theory is that we unintentionally allowed the promise of debt-freedom + the knowledge that an inheritance had increased our wealth = seeping in of income-tax-return-effect. “You just got excited a little too early,” DD3 very kindly said after I’d explained it all to her.
The anatomy of our mess
What did we do this summer?
- We rented a cottage in the Bruce Peninsula with 2 other couples for 5 days.
We hadn’t had this sort of trip for over 6 years – “this sort” meaning that we paid for our accommodation instead of staying at people’s houses. It wasn’t crazy expensive, and it was such a beautiful part of the world! I’m glad we went, and I hope we go back again. It’s just an indication that we were exiting debt-payoff mode a few months early.
- We went camping for 10 days with DD3, DD2, and our puppy Kobe in August.
The last time we camped for any amount of time was 5 years ago – and I was racing between the park and my summer school job in the city the whole time. It was l-o-v-e-l-y to sink into the relaxation that comes with camping. And we had a great time introducing Kobe to swimming, camp fires, and tents. DH and I upgraded to cots instead of air mattresses – again, a purchase we wouldn’t have made in full-on debt-repayment mode.
- DH doesn’t get vacation pay.
We did not take into account that DH’s income for August would be reduced by half – because he was away for half of the month.
- We bought 2 bicycles.
DH and I had been riding bikes that were old (about 25 years), heavy, and worn. We decided that the one treat we would would give ourselves from the inheritance was the purchase new bikes. We bought them, and they’re great! But as DH pointed out last night, we spent more than the amount we gave ourselves. With lights, fenders, bells, carriers, water bottles and their holders, not to mention taxes – we ate into our budget.
- I did a celebratory debt-free spa day with our 3 daughters.
Ever since we started our journey out of debt, I planned to treat our girls to a spa day once we were out of the red. DD1 studies out west, and we see her only 2 or 3 times a year. She came home at the end of August – so close to our debt-freedom date of September – and we decided that this would be the time to do our spa day. It was f-a-b-u-l-o-u-s, exceeding even the high expectations each of us had for the day. But it was also e-x-p-e-n-s-i-v-e. And while I don’t want to take away from the great experience that it was, we should have waited for DD1’s first visit after we were truly debt-free.
Debt-freedom in September?
The line graph of our debt-repayment isn’t smooth. Its bumps reflect the differences in progress that we’ve achieved over the months and years. But it goes in one direction: down. We never went back into debt once we started our journey out of debt in June of 2012. Until August of 2018. (Noooooooooooooooooooooooo!)
In September, we will pay off the last of our mortgage: $1,400. But will we be debt-free? Because of our summer self-sabotage – even after a mad scramble to throw all available reserve money at our bills – our line of credit sits at $3,800. (U-G-H-!)
DH and I had our budget date last night. We plugged our numbers into the new and improved spreadsheet he designed last week … and it looks like we’ll be able to cover it! The dream of debt-freedom in September is still alive! I wasn’t expecting that, and we certainly don’t deserve it. 3 things are working for us:
- August was a 3-pay month for me, so we’ve got the money to cover the remaining mortgage without dipping into September’s income.
- We have been maxing out our monthly mortgage payments at $3,000, so the lower payment this month is significant.
- We don’t need to keep any income from this month in reserve for October’s mortgage payment – because we won’t have one!
If DH has a good business month, we might pay off the line of credit before the end of September. Otherwise, my 2nd pay of the month – the last Friday of September – will do the trick.
“You don’t need to write about it,” DH said to me last night – knowing how mortified I am by the whole thing.
I considered that option, but decided against it. Could I really let out a virtual debt-free scream when we’d paid off the mortgage – even though we’d dug into our line of credit? No. When I started this blog, I committed to honesty – to giving a genuine account of the good, the bad, and the ugly of debt-reduction for us.
I would never have guessed that we would make such a colossal mistake so close to the finish line! But we have. And I think there’s value in knowing that the forces that kept us in chronic debt for so long are still waiting in the wings – ready to attack once we think we’ve arrived. DH and I were dumbfounded. “We can’t take our eyes off our money,” he said. “It so easily gets out of control. We have to stay vigilant.” Amen to that.
Can you believe this?! Have you ever sabotaged yourself in reaching a goal SO close to the finish line? Your comments are welcome.