Well friends, we did it! We smashed debt throughout 2019. We’ve all had ups and downs, wins and fails. In 2019, some of you made the decision to start tackling the debt that has been looming over you for years. Some of you celebrated debt freedom during the year! And lots of us are somewhere in the middle of the debt freedom journey.
Today I’m going to share the numbers from December’s updates as well as our totals for the year!
For those who are new here, in 2019 we had a Debt Smash-athon! Everyone was invited to participate by reporting how much you paid in debt each month. We also kept track of how much we invested for retirement and saved for our big goals. If you want to learn more and join this debt smashing movement, you can join the fun here.
Let’s start with the numbers, even though the best part is all of your personal thoughts and accomplishments. You’ll find those after the numbers.
December Debt Smash-athon Totals
During December, we collectively put $55,224 toward debt!
Way to go friends!!
Of the 32 of you who completed the Debt Smash-athon report for December, 88% reported putting money toward debt in December. That averages out to $1,972 per Debt Smasher, with a median of $1,152 paid in debt.
As a group, we invested $18,113 toward retirement! 59% of respondents reported retirement savings.
We also put a total of $20,724 toward big savings goals other than debt and retirement. 47% of respondents saved money for a big goal in December.
When you put that all together, the 32 total reporters made $94,061 of financial improvement in December! That is a great finish to the year! Way to go friends!
Monthly Winner
Each month I have a special prize for a randomly selected Debt Smasher who reported his or her progress.
This month’s winner will get their own copy of the Debt Snowball Calculator. A couple of months ago I shared what it does and why I think it’s great for anyone who is working to payoff student loans or credit cards (or any other non-mortgage debt). It’s definitely worth checking out!
The winner will also get the print version of Frugal Fresh Start, the book behind our January Frugal Fresh Start Challenge!
December’s randomly chosen winner is Alexa who said “I got a raise!” I’ll be in touch, Alexa!
Beyond the numbers
We all know that numbers aren’t the only indication of progress. Even with small numbers, we still make important progress as we change our course and build better money habits.
I was blown away by all of your accomplishments this month. I picked a variety of the wonderful responses to share with you below.
Big Wins
“Moved into my brothers basement while our house is being built. So we didn’t have a December rent payment. All of that went to our house down payment.” ~Ashley
“Got debt consolidation loan under $10K” ~Winnie
“Contributed the max to our IRAs and HSA!” ~Stephanie
“I took found money I forgot about in a savings account and paid the credit card balances down to $.00. I was earning less than 1% savings on the savings and the credit card debt was at 17%.” ~Deb
“I saved, paid off debt AND treated myself to a very necessary new smartphone (good and cheap ) and a not so necessary new fitbit charge 3!” ~Ingrid
“Stayed on our budget for Christmas” ~Linda
“$90 away from paying off another credit card!!!” ~Whitney
“On paper, December looks like it was a terrible month, but it was actually a big win! We actually stayed within our Christmas budget (for once), even though we had two smaller paychecks in the month!” ~Torrie
“$2,000 extra paid toward mortgage payoff” ~Elaine
“I feel good about how we handled Christmas this year – financially and simplicity wise” ~Kara
“Put 40% of our income toward debt this year reducing our indebtedness by $16,621.” ~Jen
“This month I upgraded my old vehicle for a newer SUV. The best part is that I paid for the newer vehicle with CASH! No car payment for me! I’ve been working hard at saving for this purchase and it feels good to have a reliable car now!” ~Emily
“Cash flowed a $400 Christmas trip and still put over $700 back to savings!” ~Brooke
“I was able to get my mortgage down to $166,000 for the year. My goal was $165,000 so while I missed the goal I wasn’t that far off.” ~Chris
” We fully funded every ynab budget category, including our savings goals, despite working considerably less in December than planned.” ~Austin
What was the key to your success?
“Consistency really does add up!” ~Danielle
“Sticking to the budget, which is sometimes harder that it sounds.” ~Linda
“Having money put aside in sinking funds for Christmas, heating oil, and other expenses so we could continue our normal loan repayment efforts.” ~Jen
“We put all year end bonuses and Christmas gifts into saving to increase our emergency fund. We will be starting 2020 with a decent emergency fund.” ~Sherrie
“Referring to what we spent money on in 2018 to better help anticipate Christmas expenses for 2019.” ~Jackie
“Patience and keeping Christmas spending to almost $0” ~Winnie
“Diligence, diligence, and diligence, sticking to the commitment we set, and then also making sacrifices like not traveling for the holidays and scaling down my daughter’s birthday party. It also helped that we had a specific deadline; we wanted to make sure we paid off the balances before 0% interest offers expired.” ~Ivory
“Listening – turns out I married a really smart guy. He could see the lack of balance in my budgeting mindset much better than me and patiently waited til I could see it as well.” ~Shannon
“Extra bonus from work was very helpful!” ~Becky
Join Us in the Debt Smash-athon!
It’s not just me who’s excited about this. This is what fellow Debt Smashers are saying:
“I am so glad to have found this challenge! 2019 was a big year in finances for me, and this has been such a fun way to stay motivated!” ~Becky
“Thank you so much for hosting this!” ~Danielle
“Thanks so much for doing this. It helped me stay motivated for my savings goals.” ~Kara
Well, $94,061 of financial improvement among us is fabulous! I can’t wait to see what you do in 2020!
Debt Smash-athon 2019– Year in Review
Throughout 2019, as a group we smashed $1,264,339 of debt! Wow! Over a million dollars of debt!! Our average number of monthly reporters was 43, so while we’re relatively small in number, that’s a HUGE financial improvement!
In 2020 we also saved $293,737 toward retirement and put $287,056 toward our big savings goals.
In total, that’s $1,845,132 of financial improvement in 2019, an average of over $42,000 per participant. Amazing!
Debt Smash-athon 2020
When I asked if you wanted to continue the Debt Smashathon in 2020, I got a resounding YES, so we’ll keep it going this year as well!
If you don’t already get the link to report your progress at the end of each month, sign up here! Be part of the group that accelerates your financial improvements and encourages others with your reporting. The link for your January progress goes out in the first week of February.
I’m excited to Smash Debt with all of you in 2020! Let’s see if we can surpass what we did in 2019!
I’m excited to start my debt payoff journey with y’all!!! I just sold some stuff online, refinanced my student loans at a lower rate, cut back on my utilities, closed some credit cards, and already started with over $1100 extra this month towards my debt!
Another famous financial advisor who shall go nameless (but really likes snowballs and baby steps) insists that when you start the path to paying off debt and frugal living that you should stop making ALL saving contributions until your debts are paid (except mortgage). This includes 529 contributions and 401k contributions. This advice REALLY bothers me. I can see cutting back from $200/month to $100/month for my 2 year old daughter’s 529 until my debts are paid, but I work for the federal government, and our TSP plan is pretty solid and they match 100% of the first 3% and 50% of the next 2%, so I’ve always contributed 5% because that is like throwing away free money if you aren’t contributing. Or so I’ve thought. What are your thoughts on pausing or cutting back on these contributions for the short term while you pay down consumer debt?
I’m not Stephanie, and this is just my personal opinion, but I am a qualified financial planner married to a practicing financial planner and CPA. We are not huge fans of that other guy. Among other things, he tends to downplay the systemic problems which contribute to a debt-ridden society and put too much blame on personal choice, equating debt with moral failure. (Mind you, personal choice *is* important; but if you’re low-income with crap health insurance and your child breaks his arm and you have to choose between paying the rent or getting treatment, or going into debt to get treatment, that’s a situation which shows systemic failure more than moral failure.) Without knowing your personal circumstances and without having a complete idea of your personal situation, and keeping in mind this is my personal opinion only and does not constitute professional financial advice, I would say you are probably doing the right thing by continuing to take advantage of matching contributions. After all, your future self and her financial security is important, too.
Thank you – I appreciate your input. In my gut it feels wrong to not take advantage of those things. I can’t invest in a Coverdale for my child (my income is too high) and the 5% I’ve been investing for 8 years plus the company match is keeping me on track for where I’d like to be for retirement. I’m looking to cut in other ways and increase my income in other ways without affecting those right now.
I also appreciate your assessment on the other guy. I’ve been reading a lot of personal finance stuff lately and some of his advice just doesn’t quite pass the smell test for me….
I totally have this going on in my head. We’re just about 40 and seriously, I do not want to find myself in a few years wishing I had put money into retirement. Yes, we are working on debt but I can’t get behind further mortgaging our future by not planning on both fronts. A money guru you might enjoy more is Gail Vaz Oxlade – she has a much more balanced view of life/debt/planning. I’d leave out the name, but seriously, lots of US friends have not heard of her but she is huge in Canada I guess. Glad to have someone mention this as it has been running around in my head for a while.
Welcome Ginger. You’re off to a great start! Your question is really good because 1) it shows you’re a thinking person, and 2) it brings to the front the point that we can’t really over-emphasize–that personal finance is full of personal circumstances, personal priorities, and personal decisions.
The famous baby steps are what Mr. Ramsey has come up with as his best simplified plan to work most effectively for the largest number of people. It’s not an easy thing to come up with one plan that matches every person’s circumstances, and there are bound to be some areas where the general plan isn’t the best fit for an individual like you or me.
Stephanie and I absolutely appreciate the work he does, but we don’t always agree with his advice, and that’s fine. He’s helped millions of people get their finances in order and we’ve helped thousands. He has some room to claim he’s doing things right.
How to optimize your own financial outcomes is as much a question of psychology as it is math. There is something to be said for focusing with extreme intensity on a single debt-reduction goal to the expense of all else, even retirement. Stephanie and I are an example I know well, so let’s us that one. We stopped retirement contributions while paying off student loans. We weren’t getting a match, so it’s not the same situation as yours, but let’s follow it through. Even for someone as numbers-centric and painfully rational about finances as me, I know that our student loan debt smashing went much farther and faster than it would have, not only to the degree that we added money to debt payoff in lieu of retirement, but because the degree of focus led us to do all sorts of crazy expense-cutting and income-earning activity that we wouldn’t have otherwise done. It wasn’t just that we cut retirement, it was that we cut EVERYTHING. The laser focus itself was the force multiplier, not the extra we could put in because we had paused retirement savings.
On the other hand, I love employer matches. The numbers guy in me goes nuts about them. If we had the chance, we probably would have contributed up to the match because it would be so painful to give up the free money. That would have inevitably made it take longer to pay off our student loans because we were diverting some money, but would it also have dulled our focus and made it take even longer than just the numbers dictate? I hope not. But I don’t know.
We’ve seen many, many people who try to get rid of their debt while also working on other financial goals, and it’s really hard. Some people manage to do it. Stephanie and I are in that boat right now–we’re not putting the rest of our financial life on hold while we pay off our mortgage early. Honestly, I sometimes question that, because the lack of intensity makes it really hard for us to keep on our goal, but that’s our choice right now and we’re making it work.
So, your really good question is not really about which financial advisor you should listen to, but about your ability to successfully split your focus. Here’s what I would do. I would contribute 5% to the TSP, but focus EVERYTHING else on debt reduction, both by cutting costs like crazy and by earning extra. I would skip 529s contributions altogether. Paying for your child’s college education is a luxury, and debt preempts extra luxury purchases. In the end, focusing on debt smashing will get you out of debt and you’ll be able to cash flow much more into education savings if you choose to.
That’s what I’d do, but you do what you think will work best for you. Just be really careful. Once you’ve made one exception for the employer match as a truly extenuating circumstance, it’s so easy for life to become one long series of extentuating circumstances. Before you know it, your debt free date is twice as far away as you had planned.
Welcome again, and happy debt smashing!
–Mike
Thank you for that thorough explanation, Mike! I agree – I don’t want to discount his (or your) advice, as it has absolutely worked for those who have committed to it. I can’t contribute to a Coverdell account for my child because I make too much money, but NOT saving for her scares me as I know my parents never saved for me, and it was part of the reason I got into over $250K in debt with student loans ALONE. I’m not saying I’ll be able to save THAT much for her to go to college, but I at least would like to lessen the burden upon her so that she doesn’t have to go through what I went through should she decide to pursue college.
I’m leaving my retirement alone. I have already cut by half what I’m contributing to her 529 every month, and will crunch the numbers into the snowball calculator to see what totally pausing it would do to my overall debt reduction plan as well as what it may do to her overall savings in the future. I appreciate your insight on this, as adding another $1200/year would pay off at least one credit card, so I have to look at it in that light. I’m not closing the account, I’m simply pausing while I clean up my other messes and I commit to get back to it once everything is back in order.
Thanks, everyone!!!
Again – systemic problems. In Australia we have HECS. The government pays for your degree and then you repay them through higher taxes once your income reaches a certain point. We’re not saving for our children’s tuition because HECS will cover it, and while it will leave them with a debt, it’s a debt that grows at something like 1% interest per year and only has to be repaid to the government through your taxes once your income reaches a certain point – the cheapest loan at the most reasonable terms you could ever have. We do plan to help them out with room and board and other expenses, but for that, there’s Austudy, which is a fortnightly stipend for full-time students to help cover those expenses (and it doesn’t have to be repaid.) Australia isn’t as generous as a lot of other countries when it comes to tertiary education; but it’s a more equitable system than the US system. (And before people come on here and jump all over me with the “yes but socialism” argument – my US university education was fully-funded by relatives who got a lot of money through farm subsidies, largely money they got in the Reagan era for NOT farming their land, which was then invested to create a crapload of personal wealth. The US is plenty socialist when it wants to be. The difference is, US socialism is only on offer to certain subsets of people, whereas Australian socialism is available to all.)