It’s time to say goodbye to the first month of 2018. I can’t say I’m sad to see it go – January tends to be a tough one. We indulge in December and then struggle to dial it back to our usual routine for the […]
Some recommend avoiding all luxuries while paying off non-mortgage debt – no travel, no meals out, no purchases other than necessities. I’m not one of those people. A few of my friends and family members have passed away at young ages, and I know that […]
Being transparent with your finances online is interesting. I know it helps to see real numbers which is why I share everything, but there are obvious downsides. Like, all of the times people tell me that they wish they had my income.
I can’t help but think that if they knew the full story, they might not be so quick to take the positives weighed down with their accompanying negatives.
Sure, my starting salary at my first full-time job was $65,000 – after I negotiated it up from $58,000! I’m earning 30% higher than the average in my area, which is substantial. That’s in Canadian dollars – make sure you find your currency conversion before you get too excited.
The number on its own can be misleading, so let’s look into the details.
For nearly all of the first ten years of my working life I was also attending university full-time, with several casual and part-time jobs wherever they would fit. Over that decade, I earned roughly $130,000 – an average of $13,000 per year which is well below the poverty line in Canada.
Still wishing for that income?
Friends who started out earning $20,000 in a minimum wage job would have made over $200,000 by that point – assuming they stayed in the same position for a decade and were never given a single raise or promotion.
Even now, after two years of full-time work with my shiny new salary, I’ve just reached the $20,000, on average, that my friends started making 12 years ago. I estimate that I won’t hit a $65,000 average until I’ve been in the working world for at least 20 years.
Adding in my $130,000 of student loan debt to that total, I’m actually at a net of $0 over ten years.
It will take me almost five years to pay off my student loan debt, which requires minimum payments of $1,300/month – 1/3 of my net income. I won’t be finished until I’m 32, a full 14 years after I started university but six years earlier than if I would have followed my original repayment plan.
Not to mention the years of compound interest I missed out on by delaying retirement savings! Ouch.
I feel behind in many ways, and it will be a while before I’ve caught up. That’s not something I focus on, but I think outlining these factors is important to understand the full picture.
I don’t want to sound ungrateful for my opportunities. I’m very privileged to have the education and experiences I did. When I do catch up, I’ll have much more financial stability than most. I just want to put my current earnings in context, and hopefully encourage others to ditch the unhealthy comparison habits that we all seem to fall into. It’s pretty freeing, actually. I know this because I used to envy the salaries of some of my friends too – until I stopped to think that they were often putting in longer hours in higher pressure situations, traveling away from their families for extended periods of time, or working in dangerous conditions.
There’s always more to the story than a number.
I’ve tried many different spending challenges over the years – not buying clothing for a year, setting up a budget for specific categories, not eating out for 100 days, aiming for a certain number of $0 spend days every month. I can’t argue with the […]
My relationship with debt has never been a resolute one. I’ve made a lot of mistakes along the way. I’m not an expert in personal finance and I still have a long road ahead, but I hope my experiences might help you along your own […]
Well, December happened. I took two weeks off but ended up having to work from home for the first week. A seemingly brief time for family and friends followed and then I came down with a cold to cap off the year. Happy New Year, by the way!
I received a raise with a few months of retroactive pay that mostly went to student loans, so my debt repayment was higher than usual. If you’re curious, my net income is now around $4,500/month.
Including interest, I’ve paid $4,516.68 to my debt this month!
I made it under $90,000 in total debt – and that feels great. Since September when I broke the $100,000 mark it hadn’t really seemed like I’d put the six figure milestone behind me. Now I’m starting to feel the weight lift slightly with every payment I make.
I’ve also paid exactly $30,000 in principal this year, which was a stretch stretch goal for me! I think I had originally planned to pay off $20,000 (I paid $10,000 off in 2016) but then increased it to $25,000 and then $30,000 over the course of the year as my income went up and my spending went down.
What’s up in January?
I’m taking a vacation for the first time in almost three years, so I’ll be making minimum payments. We’re headed to a quiet B&B by the ocean for a little while, complete with a fireplace and crashing waves! With over two years of debt repayment finished and two years to go, it feels like the perfect opportunity to take a break and replenish my motivation.
In some ways, the most enjoyable moments of our life are when we haven’t started yet. We haven’t added up the debt we owe, we haven’t calculated how long it will take to pay it off, we haven’t started saving or investing. All we know […]
If you’ve seen the movie Talladega Nights starring Will Ferrell, you’ll remember that Ricky Bobby, #1 NASCAR driver, lived by the last thing his father, Reese Bobby, said before walking out on their family: “If you ain’t first, you’re last.” Years later, Ricky and Reese were […]
My former roommate and one of my best friends in university was the textbook example of an overachiever. She would study at all hours, survive on coffee and adrenaline, and exist only in a frazzled, constant state of imposter syndrome. At times I was so worried about her that I’d do her grocery shopping so she wouldn’t starve at her desk.
One night, we’d invited friends over to our dorm. She came out of her room, textbook in hand, and proceeded to continue studying while she ‘socialized’ with us. At that point, I had a bit of a moment. In front of everyone, I told her that she was pushing herself too hard, that she shouldn’t be there if she wasn’t going to be fully present, and that the additional effort she was putting in wouldn’t even show up on her transcripts.
It wasn’t my finest motivational speech, to say the least. I found out later that I’d made her cry, which was awful and something I still feel terrible about. I’ve never been the best at tactful communicating – I want nothing more than to see my friends succeed but sometimes my commentary comes out more judgemental than caring. I’m working on it. Fortunately, after my words had settled she did see the logic behind them. The extra hours of work she was putting in and the stress she carried to get 95-100% on exams and assignments were giving her diminishing returns. It doesn’t show on a transcript whether you received 91% or 100% – once you hit 90% it’s all the same grade: A+.
Fortunately, this story has a happy ending. My friend started to enjoy herself a bit more, still received stellar grades, won awards for her research, and went on to medical school where she tried (unsuccessfully) to encourage her new classmates to lighten up just a little.
90 Is Still An A
At some point I realized I’d fallen into the same trap of aiming for 100 when I really should have been aiming for 90. I’d read too many near-perfect expense reports from too many near-perfect spenders. You know the ones. Grocery bills less than someone else would spend on their pet food because they only eat oatmeal, lentils, and rice; one coffee in their meals out category but they’ll try harder to kick that vice next month; and zero other non-housing costs because walking and thinking are free. I admire these people, but I am not one of them and I never will be.
If you haven’t already guessed, I’m not naturally frugal. I’m frugal sometimes, in some categories, because I’m prioritizing other things, but I don’t naturally gravitate toward low spending. I’ve had to come to terms with the fact that that’s okay. Just like I don’t need to aim to earn billions because I’m not interested in a life of luxury, I also don’t need to aim for minimal spending because I’m not interested in retiring that early. I love my job (when I don’t hate it), I’m finally at a place in my life where I’m earning enough to enjoy my success while contributing to my financial goals, and I do value some things that cost money.
In my life, for my situation, retiring at some point in my early 40s is what I’m aiming for and what I would consider a 90 in my books. I’ve limited my lifestyle enough to reduce my career by 20 years. Sure, I could try to cut more and reach financial independence even earlier, but I’d be trading things I truly value for the next 10-15 years just to reach a milestone a few years earlier. The last 10% isn’t worth it to me, because it wouldn’t change the transcript.
I’ll always fall somewhere in between, and above average is not failing. I’ll still be able to leave mandatory work behind on my own terms if I buy new things and travel and go out to dinner occasionally. I’ll still be able to save 50% of my net income when many Canadians who earn much more than I do are saving less than 5%. It’s okay to delay a milestone for a few months or years if you have other goals that you want to tackle first. It’s all about prioritizing – 90 is still an A!
…Except When It’s Not
I couldn’t talk about financial goals without acknowledging that sometimes, 100 isn’t even an A. Sometimes you’re pushing yourself to the limit, doing everything that you can, and you’re still not making it. I used to earn $10,000 per year while I was in university, barely enough to cover my rent even with two roommates, and no amount of budgeting or reducing my grocery bill would have made that math work.
At the time, I had to choose between having more debt, not spending time with my spouse, or less relevant work experience for my future career. I chose having more debt, because I didn’t want to sacrifice my relationship or the higher probability of a solid job after graduation. Fortunately, it all worked out. My experience at part time jobs, my success in university, and a significant amount of luck landed me a great position within a few months – and my relationship stayed intact. If I didn’t get that first job, my life with six figures of debt could look very different right now!
As much as I despise my student loans, I’m also grateful that I was able to use debt to attain my goals without giving up other things that were more important to me. I’ve had my cell phone cut off, my credit card has been declined, I’ve lived out of the pantry because the month lasted longer than the money – but I’ve never been in a long-term place of financial insecurity. I’ve always known that if I was in a dire situation I could ask family for help, or move back in with my parents. Living in your childhood bedroom again is often seen as an undesirable last resort scenario, but it’s also a major luxury that I’ve tended to take for granted.
Money is not as easy as we sometimes make it seem. Part of being on a debt free journey or pursuing financial independence is trying to stay motivated. We tell ourselves it’s easy and that we can do it and that anyone can do it because we need to tell ourselves that to be able to keep going. The reality is that it’s hard, and it’s harder when you have less of a safety net, or no safety net at all. I hope that if you have space to breathe, you take it. I hope that if you don’t have space to breathe, you find it. If you can, remember that it’s okay to aim for 90.