Our Financial Journey #1 – Facing Debt While Trying to Save

For us, 2016 was an extremely expensive year.  Sarah and I bought a house and began furnishing, we visited her family in the U.S., and went on vacation with friends.  We made it our goal to be more aware of our purchases in 2017 to focus on our saving and spending goals. We will give you frequently updates about our journey so don`t forget to subscribe 🙂

Our Debt

Within the first weeks of 2017, we received a letter from the tax authorities stating that they had not deducted enough from our salaries due to an error in their system and we had to pay back the difference of a meer € 3,000…not a big deal right? (*Que heart attack*).  For us, € 3,000 is a nice chunk of change, needless to say we were ready to look at our payment options.

We were given two payment options.  The first, pay the entire balance in January.  The second, pay the tax authorities on a monthly basis over the next two years.  With option two came an interest rate attached.  Thankfully the interest rate was not unreasonable, therefore we were able to make the decision to go with option two.  Although our remaining balance (also known as principal balance) would be accumulating interest, option 2 allowed us to not have to break our piggy banks in a panick.

Our total balance to the tax authorities less our first monthly payment.

Saving Goals

As Sarah mentioned in her post, Budgeting 101 – How To Get Started , creating savings goals are a great way to stay on track for the year.  The two of us sat together and made a list of all the things we want to do and or accomplish in 2017.  Some things that we decided on was going on a few vacations, fixing up the house, and ensuring we dedicated a fixed amount to our savings each month.  We brainstormed on how much each of these ideas would cost, and started jotting down some numbers.

This figure shows an overview of our saving goals for the year.

Now that we have reflected on our current debt and created savings goals, we are ready to put our plan into action!  . We will give updates on our progress on a monthly basis, so make sure you subscribe to our blog for the latest updates!

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