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March 9, 2018 · Leave a Comment

Retirement Contribution In Debt Repayment

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Debt Free· Debt Free Tips· Our Journey

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When you’re just starting on your debt free journey, you’re encouraged to find things in your budget that you can cut back on, or cut out entirely, to help increase your income and pay off your debt faster.  For some people, cutting back on, or stopping your retirement contribution entirely, falls into this category.  But I’m here to tell you this is one aspect of our debt free journey where we do not budge, and will not change on.

Retirement Contribution in Debt Repayment

Now before you start saying “but Kate, stopping our retirement contribution is totally helping us get out of debt fast!”.  I’m my reply is going to be “Great!!  Good for you!!”

But here’s the thing… I’ve mentioned before that when you are on your debt free journey, you have to do what is right for you and your situation.  If you’re single with no kids and living in the city, your situation will be a lot different than a family of 6 living in a rural area.  If you’re able to cut back on, or stop retirement entirely for a short period of time, and have it work in your favor, then by all means, DO THAT!

Bottom line is this: every one’s situation is unique, and your journey needs to be tailored to your path.

I’ve already mentioned how our path doesn’t follow the debt snowball method for getting out of debt to a “T”.  Another area where we diverge from the traditional debt free steps is when it comes to our retirement contributions.  It’s something we both agree on, and here’s 4 reasons why.

 

Our age when retirement savings became an option.

Hubs didn’t get a job with the option for retirement until he was almost 30, leaving an entire decade of potential savings behind us.

We were undergrads in college from 18-23, and Hubs was in grad school until he was 25, while I was in grad school until 27.  From 25-28, Hubs worked either part time or seasonal jobs.  Neither gave any option of savings towards retirement.  I stayed home with our kids, who were 6 and under at the time, to save on fuel and daycare costs.

 

Our debt won’t be paid off in the average 18-24m timespan.

I’ll admit, I’m jealous of those who have such little debt that they can get it paid off in 2 years or less.  But the fact is that our student loan debt from all those years of undergrad and grad school leaves us in 6 figures of debt.  No matter how much I want to, I can’t sell my diploma to the highest bidder and repay my loans that way.  I also can’t will high paying jobs to come to our area where the unemployment rate is higher than that of the national average.  We can only use what resources we have available to us, and work with them.

 

We have employer match.

Like I had mentioned, before 5 years ago retirement wasn’t even an option for us.  So when we got the news that we could put aside some money, tax free, and the employer would match up to a certain percentage, we went for it.  At a minimum, it would take us another 10 years to repay off all our debts, and we didn’t want to go without anything in a retirement account before we were 40.

 

We don’t know what the future holds.

There have been seasons where Hubs’ company has laid people off for the season with the promise that the job would be waiting for them in a few months.  There have also been seasons where employees have been laid off and they’ve had to find employment elsewhere.  The money we have set aside in retirement comes with us if we decide to leave, or the company decides to cut employees.  And who knows what the retirement options at a new company would be, and whether they would offer a match.

 

 

I’ve run the numbers, and leaving that money in our paycheck isn’t bumping up our debt free date by any major milestone.  It’s literal months.  If this weren’t the case, if we were able to pay off our debt and hack years off our timeline by not contributing to retirement, I would go for it in a heartbeat and make up for the time by adding more to our contribution.

As I mentioned before, this is our decision, based on our current situation.  That does not mean that it will work for you.  I suggest you run the numbers and see which method works with your goals.

 

Do you still contribute to retirement, or did you decide to put it on pause to get the most out of your money during your debt free journey?

 

Retirement Contribution in Debt Repayment

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makingcentsmatter

makingcentsmatter
Only you can determine what your financial goals a Only you can determine what your financial goals are. If that means you're adding money to your savings account, or contributing to your retirement, while you are paying off debt, then so be it!⁠
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Do what looks right for you and your personal finances.⁠
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The trick to meal planning is to make it predictab The trick to meal planning is to make it predictable. But predictable doesn't mean the same thing week to week. You could have a chicken meal, a soup meal, a pasta meal, a leftovers meal, a family favorite meal, and so on.⁠
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We always try to go with themed days, but some weeks are so hectic the theme is literally "fast". Thankfully that hasn't been the case lately.⁠
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I can only hear about my extended warranty I never I can only hear about my extended warranty I never purchased so many times. 😣⁠
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#makingcentsmatter #budgets #monthlyincome #debtfreecommunity #realbudget #savingmoney #payingoffdebt #savings #frugalliving #frugalblogging #budgeting #monthlyincome #zerobasedbudget #financialgoals #personalfinance #personalfinancetips #financialfreedom
March Debt Paid numbers are in!⁠ .⁠ House: $51 March Debt Paid numbers are in!⁠
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House: $511.13⁠
Citi: $0 – this has a residual $3 in interest charges since payoff, due in April⁠
D NelNet: $100⁠
K NelNet: $100⁠
K Chase: $600⁠
Explorer: $336.27⁠
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Total Paid in 2021: $8,258.84⁠
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Extra Payment: There isn’t one this month since we were $25 away from zeroing out the budget for our February 15th monthly paycheck. That $25, and monies left from our January 15th paycheck, covered our OOP costs for Hubs’ filling. We also have some savings goals coming up that need to be met, making our debt payments a little lower for the time begin.⁠
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The battle for who can charge what tonight is abou The battle for who can charge what tonight is about to begin. 😬⁠
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My kids run off with my charger, plug it into one outlet 5 feet from where they found it like that particular outlet is the only one in this house, and then proceed to fight over who can charge their device first at night.⁠
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Then they get grumpy when it's their turn and it's not the proper input cable. #itwasmychargerfirst #dontlikeitgofindyourown⁠
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A needs his wisdom teeth taken out. I've talked a A needs his wisdom teeth taken out. I've talked a bit in our February Budget Check-In about how much of this I think we'll owe, and you can check that out on my YouTube channel if you're interested, but I wanted to say here...⁠
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To the mother with little kids struggling to get your finances in order, it will get better. I wish I could have heard those words years ago.⁠
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Nearly 10 years ago we were facing a $1,400 out-of-pocket portion for A's Phase 1 orthodontic work (I looked it up after I uploaded the video... we had a $1,400 portion).⁠
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It was a lot of money for us at the time. Our kids were 6, 2, and 3 months old. I don't think we even had $500 in savings, and I just left a part-time teaching job because it wasn't paying the part-time daycare bill, so paying our portion in full was just a dream I didn't think was achievable.⁠
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I was even stressing about the monthly $100 payments. We were so strapped. It was our breaking moment to start cutting costs and budgeting more effectively. We've learned a lot in that time period.⁠
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What we've learned is that it does no good to stress about it all the time. Life happens. All you can do is try to plan ahead, and if it's something that's unplanned, readjust. It won't always be easy, especially at first, but it will be worth it.⁠
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Nearly 10 years later, we are still paying off our debts. Student loans suck. But I see this bill as a reminder of how far we have come. Seeing a bill like this doesn't stress me out like it used to, and I know we can easily create a plan that can get it done and out of the way.⁠
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Will it delay our debt-free date more? Yes. But it's not worth stressing over. Life happens, readjust, and continue on down the path. It's called a journey for a reason.⁠
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It's almost payday! Here's how our variable budget It's almost payday! Here's how our variable budgeting categories are working out for the pay month.⁠
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Food is looking good this far into our paycheck, probably because miscellaneous - which includes eating out - took a hit with unexpected purchases. Pet is low for this time of the month, and Household is spot on.⁠
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Fuel looks like it'll be lower than last month (yay for weeks of snow days & delayed school starts), and Therapy had one more appointment than initially planned.⁠
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Garden, Dental, Medical & Propane are not included in these estimates so far because those expenses are coming from sinking funds. Once we're done with the month and review the budget, I'll move over the total amount spent from those sinking funds.⁠
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How's your paycheck budget coming along?⁠
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#realbudget #monthlyincome #monthlybudget #budget #budgetupdate #budgeting #savingmoney #variablecategories #savingmoney #savings #debtfreecommunity #debtfreejourney #cash #financialgoals #personalfinancetips #personalfinance #frugalliving #frugalblogger #budgetblogger #makingcentsmatter
Automating your finances makes saving money and bu Automating your finances makes saving money and budgeting more convenient, and therefore easier on you. Out of sight, out of mind, right?⁠
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What's one thing you can automate this week to make your finances easier?⁠
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Me? I'm going to set up our sinking fund transfers to automate every payday (the 15th of every month). Our bank set up a feature on their app where we can schedule savings transfers now, and I'm going to take advantage of it!⁠
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#personalfinance #personalfinancetips #budgeting #budgettips #personalfinancemadeeasy #savingmoney #savings #sinkingfunds #cash #frugalblogger #frugalmom #frugalliving #debtfreejourney #debtfreecommunity #debtfreeprogess #financialfreedom #makingcentsmatter
Oh my word... our miscellaneous category has gone Oh my word... our miscellaneous category has gone a smidgen overboard this month!⁠
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I foresee a goal for March's paycheck to at out less than twice. That's where this category went awry. $99.16 of it went to eating out. 😑 Some of it was avoidable, but not all of it. Having to drive to multiple appointments in one day during snow squalls and rearranging our whole day was one of those unavoidable instances.⁠
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Tracking our expenses - much like a budget review - is vital to sticking to your budget!⁠
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#makingcentsmatter #debt #debtfreejourney #debtfreeprogress #debtfreecommunity #realbudget #budgetcategories #monthlyincome #savingmoney #savings #frugalliving #frugalblogging #budgeting #zerobasedbudget #financialgoals #personalfinance #personalfinancetips #financialfreedom #expensetracking #budgetfail
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