It's been on my Bucket List for a few years to be debt free by 30, but beyond making minimum payments (which wouldn't get me there), I wasn't really doing much. Then I finally read Dave Ramsey's Total Money Makeover and got inspired. The updated version with all the stories of real-life people becoming debt free and wealthy (many of them younger than me!) was the push I needed to make a serious plan.
By the way, did I mention I met him once? In Times Square? At Jon Acuff's S**** Book Launch?
In March I sat down, added up my debts and faced the music: at 27-years-old I owed $25,393. That's a big number. A lot of money. No credit card debt (I've been good about using that thing wisely), but between my student loans and my brand new car, it really added up. Now I needed a great way to get rid of it.
So, I started to plan. While I know Dave Ramsey has some great advice, I don't love everything he advises. It just doesn't work for me. I also love Suze Orman, so I kinda threw their philosophies together and created my own plan that would work for me. For example, I didn't cut up my credit cards like Dave says to do. Suze says it's okay for the Young, Fabulous, and Broke to have and use credit cards as long as they do so wisely. And given that I have an irregular work schedule or sometimes only get 4 shifts a month, I like the security of back up just in case. (I also like the bonuses I get from my one store credit card. I only use it when I'm buying something anyways, and pay it off that same week). I also kept more than $1K in my emergency fund, for the same job-insecurity reason. I have one month of spending/billpay in my emergency fund.
I knew I wanted to pay off before I was 30, preferably even sooner, so I started doing some math to see how much I was really paying each year, and how soon I could get rid of all that debt. After playing with the math, I figured two years would be very doable (And it puts me debt free a year before 30!)
Before making this plan I had $50 automatically going from my checking to savings every week. I stopped that and now divert it to my Debt Snowball. According to the plan, for this year, I make all my minimum payments on each debt. I pay and $50 every week. Then I need to pay an extra $414 each month ($96/week). Based on Dave's Snowball technique, my student loan will be the first to go, so the plan is for it to be gone in one year. Then everything I'm currently paying towards that loan will "snowball" over to my car loan. I made a chart to visualize it, but it was too boring.
Now that I had my plan, I needed a way to keep myself motivated. I did the math and found that becoming debt free according to plan would take 244 payments. I started to think about making some kind of coloring page, but that didn't work like I wanted it to. So I started looking at puzzles. I found that Shutterfly makes custom puzzles of 252 pieces, and they were on sale for less than $20! So I hunted for one of my best Living-Life-to-the-Fullest pictures that represented why I want to be debt free. I settled on this one:
Once I had it in hand, I sat down with my boring chart and all the puzzle pieces and wrote $$ amounts on each piece. I went all out: minimum payments, weekly $50, extra $96, the rollover starting next year, every expected payment has a puzzle piece waiting, plus a few extra pieces. I started labeling the edge pieces with all payments for the first few months, so I can have that done quick, then just divided the rest. It was time and brain consuming, but worth it.
Now every week I make my payments and add the appropriate pieces to the puzzle, which is in a nice $3 frame from Walmart, where the glass pops out instead of the back! Now I'm only 3 months in and the puzzle is coming together. Look! I've got an eye and Kathryn's got hair!
I also keep track of it all in my journal and take a monthly assessment of where I'm at. It's exciting to see the numbers going DOWN in a big way! I've also got the plan listed right next to the tracking page to keep it in front of me.
So far in three months I've knocked out $1500!! That's $1050 more than making minimum payments would've gotten me!! I've also gotten into the habit of paying an even $100 instead of the $96, which is making a nice mini dent, too. Every little bit adds up! If I can keep up this pace I'll have it all paid up even before the two year goal date!