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Debt Repayment With a Teacher in the Family

Yesterday, I wrote about budgeting with a teacher in the family. Micah doesn’t get paid in the months he doesn’t teach, which means that our income ebbs and flows, depending on the time of year. I’d call it irregular income, but we do know ahead to plan for it.

For budgeting, it helps to have what I call a “cushion fund,” something built up during the teaching months to help us make up any shortfalls in the summer. This is particularly important for us because my freelance income varies by month.

What about the impact on debt repayment?

Our debt snowball was rolling a lot faster during the school year, when we had 2 incomes going. It makes me sad that we don’t have that momentum now. The timing of the economic stimulus and our giant refunc helped, since it’s making up for the lack of snowflaking money.

Before we knew it was coming, our plan was simple. We’d pay more on the debt when Micah was working and pay minimum payments + smaller snowflake when he wasn’t.

The ideal debt repayment is one long motivated snowball full of energy and snowflakes building and piling and rolling down a hill and gaining momentum. One reads about people’s passion and sticking with that passion.

There’s a lurking fear that slowing down means getting off-course. Yet bloggers like Paid Twice and Debt Hater, for instance, have written about some snags in their best-laid plans. Yet they come back ready to pay off more debt. Perhaps having a blog helps keep them motivated.

There is nothing wrong with deferring your snowball (or other debt repayment plan). Especially if it’s a planned deferment. What matters is being able to pick it up again. As it is now, we’ll make minimum payment + what extra we can add. But it may not be in terms of adding a couple hundred dollars a month and that’s ok.

Having to go back to minimum payments doesn’t mean you’ve failed. It means that you’ve hit a snag. Perhaps it’s a planned one like ours, with a short duration. Perhaps it’ll mean looking for another job or short-term job. What matters most is your motivation. If paying off debt is part of your goals, then a setback is only a setback. It’s only a failure if you treat it as one and give up (vs. reprioritizing and re-evaluating your goals). And even then, it’s not a permanent failure because you can always pick up where you left off and turn it into a mere setback.

Is your income irregular or seasonal? How does it affect your debt/investing/savings goals?

As I mentioned in yesterday’s article, Micah will quite possibly teach or do other paid work through this period once he’s finished his dissertation. That takes precedence for us over debt-repayment, since it’s a key to his able to earn so much more. And because he’s been working on getting here for years. And all the student loan debt might as well have a point, right?


{ 4 comments… read them below or add one }

Anitra June 18, 2008 at 1:52 pm

We’re preparing to have a baby (in 3 months!), so we’ve planned to pay off one last debt, and then all snowball money goes to savings; basically an extra-large emergency fund in case of medical emergency or other unexpected baby-related expenses.

The good news is, if everything goes well, we’ll still have that savings, and be able to roll it back into debt repayment. 🙂

Funny about Money June 18, 2008 at 9:30 pm

Lordie! Does his university offer summer fellowships for ABDs who are finishing their dissertations? This might be something to look into–as long as he’s registered for research credits, he might be able to land something along these lines. He might do better, if you can swing living on your salary for three months, to work like crazy on the dissertation and try to finish shortly.

Sounds like your strategy is as good as it can possibly be, under the circumstances.

Wooly Woman June 22, 2008 at 10:11 am

I hate that our snowball has slowed down too with baby on the way. I also worry that the motivation will drop off, but you are right, blogging helps, as does keeping track of progress regardless. Our debt will continue to decrease while we make minimum payments + small snowflake each month, but just not as dramatically as when I am working full time. Our savings are largely automatic to avoid “using” this money elsewhere which also helps keep us disciplined!

Frugally Yours June 22, 2008 at 11:43 am

As a fellow teacher that used to get paid on a 10 month system a strategy I found very useful was to set up an automatic withdrawal into an investment savings account each month for 1/10 of my monthly salary.

Then for the two months I didn’t get salary I simply withdrew half the money from savings each month and had it as income.

Now I don’t have to do this as my school authority forces employees to do it by taking the money off our cheques each month. A system I hate as I don’t get even a little investment income from it.

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