Where we stand today

It’s been almost exactly a year since my last post. What a different world we live in now. Let me start by saying, we’re safe and healthy here, and I hope that you are, too. This pandemic has broken a lot of hearts, and if yours was one of them, I’m so very sorry.

Here, in our house, fortunately, we have good news to report. I’m not sure exactly how I feel about sharing a happy update during this time of so much difficulty for others. That’s probably why it’s taken me so long to post this. But, if you’re on a debt-free journey, maybe these words will offer some hope.

Let me start by saying that we squashed our personal credit card debt and student loan debt last spring, right as the pandemic hit in March. With so much uncertainty, having the weight of that debt lifted from our shoulders was an incredible relief. It made us so grateful for our family’s steady income, and our decision to go into a budget lockdown to achieve this goal.

So, on the personal side of things, that left us with our house payment, and our car payment. We also had credit card debt for our farm.

With the pandemic looming, we opted to decrease our farm operation for the year. We dropped our CSA (community supported agriculture) program from 70 members to 50, in case one of us became sick or injured during the season. A 50-member CSA is doable for one person. Frankly, the idea of us both becoming ill was too much to even comprehend.

We weren’t sure if or when farmers markets would be open, so we planted enough produce specifically for the CSA, special orders, and a few retail accounts.

Prior to the pandemic, we expected this to be the first season where we pocketed an owner’ s draw, meaning actual money in our personal pockets. We’d also hoped to pay off the farm’s credit card debt. As the global situation grew more dire, we accepted that an owner’s draw probably wasn’t happening this year, but we kept our eyes on paying off the credit cards.

Throughout 2020, Julep applied the Dave Ramsey debt-snowball method to our farm credit cards, knocking them off one by one. Then, on New Year’s Eve, we made our last farm credit card payment. There are no words to describe how this felt. Everything we’ve grown and harvested for the past six years has gone toward investments for the farm, expenses for the farm, or farm debt. The reality that the next leaf of lettuce we cut will go toward us makes my heart hammer with joy. You don’t realize how much debt weighs you down until you’re free from it. Just like our personal credit card debt, if we hadn’t paid off these cards, the farm would have been under this crushing commitment for about 20 years. It makes me shudder to think about it.

Climbing this hurdle energized us to go after our personal car debt. As of December 2020, we owed about $10,000 on the car. We resolved to pay if off by June 2021. Then, the idea of being out from under the car payment was so exhilarating, that we decided to make a mad dash for it. We decided we could live with a smaller emergency fund in reserve, and put a big chunk toward the car’s principal (see note below).

Most importantly, we remained on budget lockdown. Out of our income, we paid our bills and purchased only essential needs (gasoline, groceries, and only absolutely necessary personal and home items). Every remaining penny went to the car’s debt. Any other money we received, such as stimulus checks, also went toward the car. Now, we expect to pay off the car as early as February 2021.

PRINCIPAL-ONLY PAYMENTS

When we first decided to funnel all “extra” money toward our car payment, I made the mistake of not selecting the option of a “principal-only payment.” When you apply additional money toward your regular payment, you may get out from under a few months of payments, but you’re still shouldering all the interest. If your lender lets you make principal-only payments, you can reduce the length of the loan by making a payment that goes directly toward the principal (the amount you borrowed). When you do this, the momentum you gain is astonishing.

Here’s our vegetable farm. With no more credit card debt, the future is wide open!

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