Using a windfall wisely – Kill Debt!

Greetings my upwardly mobile friends,

Once in a while, we all come upon a windfall. It might be a gift, a bonus, a tax return, money from selling something unneeded, or maybe just money you forgot you had. When coming upon found money, you have a choice: blow it; use it well; or save it.

What we do with our windfalls is generally a reflection of our priorities. If we really want to travel, the windfall is going toward that sweet trip to the Greek islands that we want. If we really want to be debt free, we’ll practically blow our load at seeing even a modest reduction to the loan balance. If we have no financial focus, it’ll eventually be squandered on work lunches, lattes, and “avocado toast.” (Despite frequently wasting money on extravagant food, I cannot say I’ve ever seen “avocado toast” on any menu ever. Why is it so frequently cited as the source of all economic waste for millennials?). The saver will put it in a high interest savings account, or invest it in their investment vehicle of choice. I tend to think saving is for people that aren’t drowning in student loan debt. You can comfortably save or invest a lot more when your only debt is a low interest mortgage.

If you have debt, using the money wisely really means debt repayment. This is the case for Mr. Up. Windfalls pay debt. End of story, period. Everything else is budgeted and there is nowhere else it should go.

The most recent windfall in my case? A bunch of left over Euros and Chinese RMB from vacations with Mrs. Up last year. As it turned out, we had more than $1400 worth of foreign currency that we forgot to convert back to dollars after our trips. I knew we had a little left, but apparently we actually had a ton of left over currency. Seriously, I’m not entirely sure how we spent so little while enjoying so much while we were overseas.

The worst thing about this discovery is that we were just letting this money go to waste. Upon realizing our folly, I promptly converted the foreign currency back to dollars, deposited it into our account and made a goodly payment toward the ~$91,000 in student loan debt that lingers over our lives. It’s $1,400 more than we thought we could do in January 2018. That’s $1,400 closer to the goal of being debt free. When the payment clears on Monday, we’ll have passed the next benchmark and our balance will be below $90k.The total interest is now accumulating that much less principal.

It’s like I fired 1,400 rounds of ammo at the claustrophobia-inducing burden that shackles us down and deprives us of freedom. The psychological impact is huge. I cannot fully articulate how much seeing the balance decrease is a boost to my morale.

Every extra payment is just one step closer to

It’s a huge motivator to keep killing this loan balance so that we can reach the wealth accumulation stage of our lives. It makes me want to get there even faster. In fact, I think I’ll go scrounge through the couch, and the cars, and see if I can amass another payment from loose change next.

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