Fiscal Friday: VICTORY!

So if you've been following this blog for any amount of time, you'll probably know that the summer after I graduated college in 2010, I had a lot of debt. I mean, there were no student loans, so it wasn't an unmanageable amount, but between my car, my credit cards and a few other things, I was smothered under something like $15,000 in high-interest debt. No joke, one of my cards was charging an unbelievable twenty-seven percent APR, and I was barely able to make minimum payments.

For the first three months after college, I was working as a catering coordinator at Panera making $10 an hour, plus tips. I also did monthly freelance work that added $600 to my monthly income, but it was untaxed and I had to set aside some of it to pay taxes the following year. Often, I couldn't afford to set any aside. It all went to bills. I constantly felt like I was drowning. I had panic attacks over whether I'd make my next payment. I lost sleep wondering if I'd make enough tips the next day to get the $40 I was short on my bills. Just thinking about how stressed I was makes my stomach tie up in knots, even now.

Then I got a job at Columbus Monthly magazine, making $12 an hour. The drowning feeling didn't really go away, and at one point I had to take on a third job for a few months to save up enough money to cover my impending tax payment and my car's clutch, which was about to give out. For a while I was working 70 to 80 hour weeks and still barely making ends meet. I helped myself a little by transferring my high-interest credit card debt to a low-interest line of credit (more on that here). The lower interest and condensed payment made a huge difference. But I was still drowning.

Then, two things happened. I read Dave Ramsey's Total Money Makeover, and then I got my current job, which pays a wage I can actually live on. And not only live on, but have surplus money with for the first time in my life. And for the last two years, I've been putting all of that surplus money toward my debt, per Dave's instructions.

And then this month, something amazing happened.


I paid off the last of my debt.

No joke guys, at one point I had just accepted that I would be struggling under the yoke of debt for the rest of my life. I just assumed I'd never get ahead. I had made peace with it. If, two and a half years ago, you had told me that I'd be where I am today, I would have laughed in your face. And then probably gone home and cried a lot.

It wasn't easy. It required a LOT of discipline, which is not something I had a lot of to begin with. I had to radically alter the way I looked at money, and credit. I had to make a billion tiny lifestyle changes. I had to learn to wait for the things I really wanted. I had to learn to say no. But just this week, I made my final car payment (10 months earlier than my loan repayment schedule, no less) and right this second, I could just about cry with joy. I apologize for all the bragging, but really, no I don't. Because I am fucking proud of myself. And really, I don't think I should have to apologize for that.

In the interest of full disclosure, I will say that I technically have one tiny hurdle left to jump. I make most of my monthly purchases on my rewards credit card (more on that here), and I kind of fell a bit behind last month and this month. It's nothing terrible, and I'll be fully caught up again in just a couple of weeks, so I'm not really counting it in terms of "real" debt. But still. For all intents and purposes, I am free from the chains of overwhelming debt. Can I get a hell to the yes?

That doesn't mean the end of Fiscal Fridays, by the way. Eliminating debt is just the first big step in Dave's Total Money Makeover. So as I take the next steps, I'll continue blogging about my journey.

Okay. Not-so-humble-brag over. #sorryimnotsorry. Stay tuned for my accountability post for the past week's "no-eating-out" vow!

(Sidenote: Image was one of many ubiquitous results of a Google image search. Couldn't find an original source, unfortunately. If this is your image, please let me know so I can credit it appropriately!)

Fiscal Friday: Achievement unlocked!

Warning: Slightly boring update on my debt situation ahead. Feel free to skip this post if you're not interested; it's really for my own documentation as much as (if not more than) it is for anything else. So. Last weekend I made my final payment on my "school loan" that I owed to my dad! I still have a really long way to go — as in, several thousand dollars long — but this was a particularly rewarding milestone because I got to see the look on my dad's face when I handed him that final check. And it was made even sweeter because my final "debt snowball" payment was supposed to be next month, but I made a double payment this month as a surprise birthday gift to him. So in total, I paid that debt off about a year and a half earlier than I was originally supposed to!


Now all I have left to tackle are my car loan and the personal loan I took out to transfer my credit card balances. And with the way the debt snowball works, my payments will get bigger and bigger each time I pay off a debt and start to focus on the next one. So my payments on the next lowest debt (my personal loan) are about to quadruple (or maybe even increase even more than that).

Also, I noticed that I've mentioned the Dave Ramsay debt snowball plan here on the blog before, but I don't think I've really properly explained it. Basically, here's how it works. Say I have four major debts to pay: $500 on Credit Card A, $1,000 on Credit Card B, a $2,000 Personal Loan and a $5,000 Car Loan. For the sake of simplicity, let's say my minimum payment for all four debts is $25 a month and all four have a 0% interest rate.

The debt snowball dictates that you focus on paying down the debts one at a time, in order from lowest to highest. So in this case, Credit Card A (CCA) is my main concern. I make payments as large as possible on it every month, while making minimum payments on all the others. So say I pay $100 a month on CCA, while making the $25 minimum payments on the other three. In five months, my debt is reduced to: CCA - $0, CCB - $875, PL - $1,875 and CL - $4,875. One debt down!

The next month, I take the amount I was putting toward CCA ($100/month) and add it to the minimum payment for the next lowest loan, CCB. So I'm now paying $125 on CCB, and the minimum on the other two. In seven months, CCB will be completely paid off. And at that time, my debt will stand as: PL - $1,700 and CL - $4,700. I then take the amount I was paying on CCB ($125) and add it to the minimum on PL, making my new payments $150. And by the time PL is paid off, CL's balance is down to $4,400, and I'm ready to start making payments of $175 on it until it's paid down.

Now, where the snowball really takes off is when you start adding your "extra" money to the "snowball" payments. Plus, in real life, interest is a factor that extends the length of payments, but minimum payments are usually higher. So instead of having a "snowball" of $175 at the end, I'm looking at payments in the $700+ range. If all goes well, I expect to be debt-free before the end of this year, and maybe even before Halloween! Let me tell you how I feel about that.


| via |