The Debt Report – May 2020

Paying off our debt has been one of the major focuses we’ve had, however taking advantage of opportunities when they present themselves can also end in good results.  During this current pandemic with the Coronavirus a couple of things have happened that made me pause to think about the options that have currently presented themselves.  When you goet down to the numbers you’ll see there wasn’t much activity towards paying off our debts.

A few things have happened in the past few months that have made me reconsider paying everything on our debt for the next few months.  First, we received a notice from our student loan servicer that due to the pandemic the government has granted a forbearance on the loans.  For us this means that there will be no interest accruing and no payments required until September of 2020.  My loans are currently at 6.55%.  One of my mental debates was should I pay off my loans or invest the extra funds as they come available.  At 6.55% it becomes close as to whether or not we would achieve better results in investing all of our excess cash.  If the market historically could earn 8% we’re better off investing the money.  Psychologically though, getting out of debt is liberating.

A second thing that occurred recently with the current pandemic is a crash in the market.  The Dow Jones Industrial Average has dropped from its highs of almost 30,000 to recent lows hitting almost 18,000.  That’s a huge decline in such a short time.  Warren Buffett said, “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble”.  To me this is one of those times.  The stock market is on sale at a huge discount, so I decided to take the extra cash that had previously been designated for paying off debt to invest in the market.  So far, it’s working out well as the market has climbed up again to over 27,000.  I guess time will tell if it was the right thing to do in the long run.

There was nothing major to talk about this month as far as paying down debts go.  With the pandemic and stay at home quarantine going on in much of the country there was little to do.  Although, I don’t really like having to stay at home so much since my Amazon Arbitrage business depends on going out and finding deals to resell, the quarantine has been good for helping me stop paying for some of the little unnecessary things I probably should have been avoiding anyway.  You know, things like eating out and frequent stops at the store.  To comply with the quarantine rules we opted to stay in and go out as little as possible for most of the month of May, so I feel like we did make a little progress.

Here’s the update on the debt report for May 2020:

As of the last report published we were at $496,369.67 in total debt.  Even though the focus wasn’t there we still paid down the total balance by $1,821.66.  I know, it’s nothing to write home about but it’s still a win.  We are still heading in the right direction even if we could have done much better.  However, the money did go somewhere productive adding to our investment account which is helping us get a small step closer to financial independence.  It wasn’t necessarily by getting closer to being debt free, but by increasing the amount in our investments.  Basically, I purchased a little bit more of the perpetual money making machine, like the guys over on ChooseFI call it.  So we’ll call it a win for now.

I’ve also started creating a graph to show the history.  I’m not an expert in making these so they will hopefully evolve over time to get more information included. This is kind of motivating to me, so here’s a copy:

If you’d like to take a look at my other debt reports you can check them out here:

• The Debt Report – The First Edition
• The Debt Report – December 2019
• The Debt Report – January 2020
• The Debt Report – April 2020