“A ship in harbor is safe, but that is not what ships are built for.” – John A. Shedd
When you make the decision to become debt free, it can feel monumental. This HUGE burden that you’ve been carrying around (albeit, quietly ignoring) is suddenly greeting you, face-to-face, in all of its glory. These are the things you will want to do in that initial, transitional period:
- Run away
- Keep pretending your debt isn’t growing larger and larger every.single.day
- Cry again
- Call your friend, in tears, because your lenders are mean, stupid heads and won’t listen to anything you have to say
Eventually, you’ll put on your big kid pants and realize that even though this seems pretty sucky, the one thing keeping you going is reaching the day when you are DEBT FREE. Sounds pretty sweet, doesn’t it? Though I feel I’ve hit a temporary road block and am not gaining as much momentum as I would like, I know I will get back on track soon. That is one of the secrets here friends. You will run into obstacles that slow or halt your progress. You will give in at times and buy that pair of shoes you really, really want. You might even go over your budget one or two months. But, oh the places you’ll go!! You will grow in this and learn to say no. You’ll distinguish the difference between wants and needs. You’ll learn how to save and the purchases you DO make will have immense value to you.
We are going to get down to the nitty, gritty here. I’m talking actual numbers. (Eeek!!) I’ve been debating whether or not to share my debt with the Internet world but like most decisions in my life, I’ve found that I’m taking the leap because I feel it’s right in my heart. If others, who felt hopeless like me, can find some solace and strength in order to take those next steps, then I’ll have done the work I needed to. Here goes nothing!
I made the decision in June of 2016 to get serious about tackling my debt. I had a small amount of credit card debt, a car loan, and two (refinanced) student loans that were engulfing me in interest. I made all my payments on time and paid over the minimum wherever I could. Yet, I never felt as if I was making any forward progress. (Most likely because I would keep charging larger purchases on my credit card, hoping to pay them off later (travel, etc.), along with buying things I didn’t need.)
Here is what it looked like:
Credit Card: $2,324.16
Car Loan: $13,241.45
ECSI (Refinanced all my private loans through a credit union): $26,384.02
Navient (formerly Sallie Mae – refinanced my federal loans): $29, 523.74
Grand Total $71,473.37
As you can tell, one would get easily frustrated and overwhelmed when looking at such large numbers. Which, is precisely what happened to me. I thought of all the things I could do with $70,000. Travel. Put a down payment towards a house. Feel an overall peace for the simple fact that my money is actually mine. Once the initial shock wore off, I set my budget, saw myself making positive progress and finally began to feel like this was possible. It might not seem like it at first, it certainly didn’t for me. And while I am not yet anywhere close to where I’d like to be, it feels great to know that one day I’ll make my debt-free dream a reality.
Let’s look at where I’m at now:
Credit Card: $0 (Paid off in September!)
Car Loan: $11,638.60
In 7 months I’ve paid off $5,943.22! Which doesn’t sound like a whole lot when it averages out to $849 per month. Haha. But, my personal, minimum monthly budget for payments each month is $841 so I’m comfortable with the progress I’m making right now. That doesn’t mean I don’t want to pay more towards my debt because I most certainly do and plan on bringing in a side income this year.
Here are a few more details:
- All amounts include interest, which is as follows:
- Car: 2.74%
- ECSI: 6.14% (This one changes based on the LIBOR rate I believe, so that sucks a little bit. It’s a headache to understand it all at times.)
- Navient: 5.5%
- I’ve had to make adjustments after taking a new job this August.
- December was a bit rough for me since I ended up going over my Christmas budget and was gone from work for a week.
- I’m paying off my loans according to highest interest rate first, which is why there is not much headway being made on my Navient loan. I’m also using the snowball method (shoutout to Dave Ramsey!), which means that the $100 minimum I was previously putting towards my credit card is now added to the monthly loan payment for ECSI. When that gets paid off, the payment for ECSI will get put towards Navient plus what I’m already paying on it monthly.
- Your debt-free plan will probably look different from mine. Some people sell their car, pay off the loan, purchase a used vehicle and put that money towards their debt. That just isn’t where I’m at right now.
- I don’t have a high monthly budget of spending money (gas, groceries, entertainment, etc. is set at $400) but quality of life is very important to me. Therefore, I also tithe each month and make sure I save for both small and large goals along the way. (Yoga classes, hobbies, sinking travel fund, etc.)
So, in all of this, I want you to know that YES, you can get out of debt. I hear people making excuses for why they can’t (blaming the economy, politics, etc.) but what if you actually sat down and made a plan for how you CAN. Lord knows there isn’t a person on this Earth that is gonna change your life except you. You can push your little ship away from the harbor and tackle your debt goals or you can just watch the other ships passing merrily by you each day. The second takeaway is for those heading off to college. Listen to your parents and get those scholarships. Or, if it isn’t the right time then work for awhile and wait until you’ve saved a bit more. Take the advice of somebody who wishes she had done it right the first time.
I’m more than happy to answer any questions about my debt-free plan and to hear what’s worked for you. Next Financially Free post I will review some financial apps, as well as the site that I’ve used to track my progress. (Click this link to read up on my other financial posts, including student loan terms and how I set my budget—–>Finances) Enjoy your weekend!