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Debt Free Update: $130,947 Paid Off!

Debt Free Update_ $130, 947 Paid Off!

This post may contain affiliate links. Check out my Disclosure Policy for more information.

Whenever I hit a milestone like this, I like to reflect on my journey. It’s not easy paying off $201k in student loans, especially on a teacher’s salary. But, I have paid off $130k in 3 and a half years. So, it obviously can be done.

I still have $70k left to pay off, but this feels like nothing when thinking about where I was. I panicked when I hit my financial breaking point and received my first bill in the mail for my private loans. While in grad school, my minimum payment was $1,400, not including my federal loans or grad school.

Of course, I got things squared away so I didn’t need to pay that at that moment. Since I was in school full time, I could defer my loans. But, I knew this would be my reality on graduation day.

I’ve completed changed my priorities over the years. Some of them were definitely sacrifices solely for paying off my debt. Like moving back home to my parent’s house. At first, I moved home because I had no other choice. After my student loan minimum payment was paid, I’d only have about $1,000 leftover every month.

This was with me earning a New Jersey teacher’s salary, which is typically higher. But, that is because cost of living is so high. I would never be able to afford to live on $1,000 in NJ and move out.

After paying off some of my debt, I have stayed to pay off even more. As my income grew from teaching and my side jobs, I continued to throw more and more at my debt. I have now lived at home for almost 4 years and I’m getting ready to move out in 2 weeks!

This will obviously slow down my progress a bit, but I am now ahead of my goal by about a year. I am confident that I will still be able to get my loans paid off by my 30th birthday in 2022.

Here’s an update of where I’m at in my journey.

Private Loans

I am destroying these things with everything I have. I want these things out of my life so bad. Generally, I don’t hate them as much since I refinanced with Earnest, use my referral link to get $200 when you refinance! Earnest is a thousand times better than my previous provider.

But, since private loans are near impossible to get rid of, I want them gone ASAP. This month I was able to get them down to $17,500. I still can’t believe that when I refinanced, they were at $46k, just in September. The lower interest rate that I got has been allowing me to put so much more towards my principle.

When I first started my journey, these were about $142k, with very high interest rates. I was making very little traction because of it. That’s what motivated me to refinance and I’m so happy that I did.

These will continue to be my focus account until they are gone. I originally wanted these gone by the end of the year. Now that I am moving out and have a new job for next school year, I just don’t know if that’s possible.

Federal Loans

My federal loans minimum payment increased this month by about $50. I am currently on an income based repayment plan to lower my minimum payment while I pay off my private loans. This means that every year I need to re-apply and I get a new payment based on my taxes from the previous year.

No matter what my payment is, I always pay off the interest every month. This is because I don’t want the interest to capitalize into the principle. When this happens, my loan principle grows, which means I’ll pay even more to interest. You can read more about this in my post all about making blind student loan payments.

Having my minimum payment is actually great for me. Now, my minimum payment covers the interest the accrues each month. I no longer need to make an extra payment to pay off the interest.

I will continue to do this until my private loans are paid off, then I will use the avalanche method to pay off each of my federal loans.

Debt Free Plan

My plan is a bit up in the air at the moment. There are so many changes coming in the next few months. I’m super excited for all of them and I have created a mock budget, but I won’t know definitely how it will change my journey until it gets here.

In the next two weeks, I will be moving out of my parent’s house and into my boyfriend’s house. This will obviously increase my expenses. Also, the school year is ending at my current school and I will be the reading specialist at a new school for next school year.

All of these changes impact my budget and my debt payoff. I know my debt payments will be decreasing, especially because I am going from 10 month pay to 12 month pay. This I am very excited about because I will no longer need a summer sinking fund and that money will be able to go to debt.

But, it is definitely an adjustment getting paid less each month. I’m excited to see what happens with my debt free journey and plan to track it closely in undebt.it to make sure I still pay off my debt by my 30th birthday.

Debt

The Habits You Should Continue to Remain Debt Free

The Habits You Should Continue to Remain Debt FreeThis is a guest post written by Good Nelly, founder of My Way Of Viewing, check her out for tips on all things personal finance.

Paid off debts? What habits should you continue to remain debt free?

It requires no mention that life without debt is what we all want to achieve. No one of us want to be in debt. There are so many things to do in life than wasting your precious time worrying about how to pay off debt.

But, what happens when you pay off all your debt… Do you go back to your old habits and routine which led you to debt? No!

On the contrary, when you have finally been successful of getting out debt, don’t leave any stone unturned to put debt away from your life.

Few debts you should always avoid are credit card debt, payday loan debt, personal loan debt, and so on. However, you can take out a mortgage or an auto loan but make sure you manage them efficiently.

Here are a few habits which you should continue or develop to keep debts at bay.

Revisit your budget and make modifications

Instead of thinking ‘budget’ a thing that existed in the past and you no longer need it, revisit your budget and make modifications. I won’t attach the line ‘if required’ because most likely, you need to make modifications from time to time and it’s not a one-time affair. Then only, you’ll be able to manage your financial life the way you want.

First of all, revisit your budget at least once in three months to be sure that everything is working in your favor. However, if you’re expecting any financial change, then I would suggest that you revisit your budget every month.

Making even minute changes can help you follow it and at the same time, help you attain your financial goals.

Carefully examine what and how much you’re spending

You were compelled to change your spending behavior to clear your debt. Continue that habit. I would say that now you should scrutinize it even more since you’ll have to get back on track and build a good financial future.

So, stop splurging your hard-earned dollars and maintain strict vigilance on what and how much you’re spending. Curb your desire for spending since you have some liquid money after a long time.

However, celebrate occasionally but not spend more. And, when you want to spend on something, think and plan it carefully.

Allocate a significant amount towards achieving your financial goals

If you look this way, you have wasted a few years struggling to pay off debt and not able to pay attention to achieve your financial goals. So, now devote time and save a significant amount to attain your short-term and long-term monetary goals.

You should deposit an amount into your retirement fund, buy a house if you don’t have one, save for your children’s education if required, and plan for your financial future.

Also, have an emergency fund if you don’t have one. It may help you avoid falling into debt in the future.

Continue checking your credit reports at regular intervals

The financial advisers always say to check your credit reports at least once a year even when you’re into debt and you know that there are negative listings in your report.

However, keep this habit as you can dispute inaccurate negative lists, if any, which can reduce your score. Pull your three major credit reports, which is usually free of cost, once a year.

Make sure the spelling of your name, your address, and other important personal details are accurate in the credit reports.

Manage your credit card accounts and don’t close them

Paying off credit card debt is a bit tough since you have to deal with relatively high-interest debts. So, when you pay off debt, make sure it doesn’t come back again.

So, what habits will you follow even after you pay off all your debts?

Do not make the mistake of closing your credit card accounts, especially the oldest one. The length of your credit history is an important component of your credit score. Another thing, when you close a credit card, your credit limit decreases, thus increasing your credit utilization ratio.

Therefore, keep the habit of managing your credit cards by paying back the outstanding balance at every billing cycle.

Above all, make a promise not to fall into debt again!

Do you know the most important habit which you should continue? Just as you promised yourself to get out of debt, now, make a promise every day not to fall into debt again.

Believe me, it will help you make the necessary decisions and maintain certain habits to achieve it.

You make certain rules to follow like:

  • Not spending above a certain amount during weekdays
  • Allot a certain amount, to spend during the weekends, beyond which you won’t spend. This will help you to enjoy but within your limit.

One important piece of information:

If you can foresee that you’re about to experience a financial hardship, inform your creditors beforehand. For example, if you guess that you can be laid off, inform your creditors instead of waiting for that to happen.

When you inform a credit card company about your situation, it can reduce the interest rate temporarily. It may also extend your payment deadline so that you have some time to make the payment.

So, maintain these habits, have faith in your decisions, and a enjoy a debt free life!

Good Nelly analyzes financial happenings and writes articles to aware and help her readers plan for their financial future. You can go through her blog My Way Of Viewing. She has been associated with Debt Consolidation Care for a long time. However, she has contributed her articles to other websites, too. Be sure to follow her on Facebook, Twitter, and G+.

Debt

5 Tips to Avoid Burning out While Paying off Debt

5 Tips to Avoid Burning out While Paying off Debt

This post may contain affiliate links. Check out my Disclosure Policy for more information.

Being on a debt free journey is hard. It’s hard to change habits, it’s hard to say no, and it’s hard to see how much money you are throwing away in interest. That last one kills me every month, literally makes me want to throw in the towel and be done with all this nonsense.

I’m being dramatic, but you get my point. It’s hard. There is nothing easy about this journey and burning out from it is very real.

Whether your journey is less than a year, or is going to be more than 5 years, it’s important to recognize how you are doing throughout the journey. Check in and make adjustments if you feel like you’re slipping into burning out. Throughout the last 3 years of my journey to pay off $200k in student loans, I have come to, or close to, this feeling a lot.

But, there are ways to avoid it, and handle it when it actually happens. These are the tips I have learned through my journey so far:

1. You can do anything for a short time, but not for a long time.

You need to determine your debt free date before you do anything else. If your date free date is 6 months to a year away, I say go absolutely gazelle intense until your debt is gone. The sacrifices you make for that year will be totally worth it to be debt free in a year or less. Do everything in your power to get them gone, so you can live your life on your terms. However, if your journey is going to be longer than that, I would highly suggest not going crazy gazelle.

I’m not saying don’t pay off your debt, I’m saying that you need to plan your budget a little differently. For example, I sat down with my budget when I started this journey and decided what I valued and what I didn’t value. Things that I value that stayed were saving and investing money for my future (I cut down this category, but it stayed), my health, and spending time with friends and family. This means that I have a higher grocery budget and I keep fun money in my budget to go to happy hour and dinner with friend and family.

My journey was planned to be 8 years and I was definitely not giving those things up for 8 years. I would go absolutely insane and definitely risk burning out. Of course, you’re going to have to spend money on things you don’t value, but you can find creative ways to make them more affordable. For example, I moved back in with my parents to save money on rent.

2. Celebrate smaller milestones before burning out.

This is important, especially if you’re tackling a mountain of debt. If you wait until you have completely paid off you’re debt, you are going to burn out. If you don’t, you’re amazing and I give you major kudos because I could never do it. Figure out what you need to keep motivated and celebrate those wins. This might be celebrating every $10k paid off, or it might be celebrating every loan paid off.

For me I do a combination of both, it really depends on how big the loan I’m focusing on is. Now that I’m more than halfway paid off, my loans are rather larger. I celebrate percentage paid off and paying off individual loans. It’s important to note that I don’t go crazy with my celebrations. I treat myself to a meal out, or I get my nails done. Something small that I don’t normally put in the budget, but will when I know a celebration is looming.

3. Make your money go further.

Budgeting allows you to make your money go a lot further. What I mean by this is that you know exactly where your money is going. This allows you to stop your money from going to certain things. This goes back to number 1, cut out all the things you don’t value. Do you really need that subscription service, is there a cheaper alternative that provides the same service? When your money is going to so many different things it can seem like you have no money to go towards debt.

When I fist started cutting my expenses I was scared to change my lifestyle. When done properly, you probably will see that your money is going towards a lot of things that don’t bring much value to your life. Once your budget is more simplified and only the things you truly value, you will see that you have a lot more money to play with. By taking the time to simplify your budget and your expenses, you will avoid burning out in the future.

4. Recognize your accomplishments.

When paying off a lot of debt I definitely recommend focusing on what you have accomplished. Yes, it is important to know how much debt you have, but try not to focus on that. To avoid burning out, you need to focus on what you have done so far. There are many different ways to do this. I recommend using undebt.it to track your progress and to always know when your debt free date will be.

When you focus on what you have left, it can feel more overwhelming. By focusing on what you have done, it acknowledges what you have done and doesn’t make the rest of the journey seem so hard.

5. Don’t be afraid to stray from the plan.

When you’re on a long debt free journey, it’s important to listen to how you’re feeling. I wouldn’t recommend making rash decisions based on emotions, that’s just a recipe for disaster. What I do recommend is sometimes changing the plan based on how you’re feeling about your debt.

For example, I was so angry at my private student loans and how much money I was losing on interest that I ended up refinancing with Earnest to save me money. I only recommend this if you are doing it to save money in the long run, not to lower payments and cost you more long term. I am happy to help you through this process, if it’s something that intimidates you. I totally was before I learned about refinancing and making it work for you.

Another example is to change your debt payoff order based on how you’re feeling. I was struggling through one of my large loans and was getting pretty annoyed that I hadn’t paid anything off in awhile. So, I decided to switch my focus to a smaller one that I could pay off in a month. This gave me the quick motivation I needed and freed up some cash to go towards my snowball.

Remember: This is your journey, do what you need to do to keep going.

Make your journey your own and listen to your body and your thoughts. If you feel yourself getting worn down, do something to fix it. If you’re frustrated, find a quick win that will keep you going. I’m always here if you need help getting through this, I love helping people figure out their debt free journey 🙂

Debt

How to Get Out of Debt Fast

How to Get Out of Debt Fast

This post may contain affiliate links. Check out my Disclosure Policy for more information.

I know I’m not debt free yet, but I have paid off a hefty amount of debt in a very short amount of time. In my first two years, I have paid off $70,000 of my student loans. So even though I haven’t completely paid them off, I have clearly created a solid plan to get out of debt fast. This didn’t happen over night, it takes time and clear planning to create a strategy that works for you. Follow my steps to get yourself out of debt fast!

How to Get Out of Debt Fast Step 1: List Your Debts

The very first thing you need to do is figure out just how much debt you actually have. Create a list of all of your debts, including the total amount and interest rates and total them all up. This is going to be a tough step, it was for me at least. It was a total reality check and made me realize just how much debt I actually had. When I first started, I had about $201,000 in student loan debt. Don’t get discouraged by your number, get angry and motivated!

How to Get Out of Debt Fast Step 2: Track Your Spending and Income

You need to figure out how much money you have coming in and how much is going out each month. This is going to help you create a budget. I created a Mint account for myself that allows me to track all of my spending and create budgets within the app. Once I figured out how much money I had coming in and going out each month I was able to see how much I would need to budget for each month.

How to Get Out of Debt Fast Step 3: Create a Budget and Stick To It!

This is one of the most important steps in this process. After you’ve tracked your spending for a month you can see exactly where your money is going. This made me realize how frivolous I was being and quickly made me look for ways to cut my budget in certain areas to get more money towards my loans each month. Once your budget is made you need to stick with it and do whatever you can to find ways to come in under budget each month. In the beginning my budget was changing every month, that’s okay! I got super creative and found unique ways to cut my spending more than I originally did when I first created my budget. Your budget can be changed at any time, but I don’t suggest adding more to your budgets because that is just enabling you to spend more and put less towards your debt. This will also let you know how much you can put towards your debt realistically.

How to Get Out Of Debt Fast Step 4: Create a Payoff Plan

This was the most exciting part for me. You need to figure out what strategy you want to use. My suggestion is to use a website like undebt.it to create a plan for you. This way you can pick the type of plan you want, snowball, avalanche, combination, and see your debt payoff date. Also, you will be able to see how much adding more money to your snowball will change your payoff date. This continues to be incredibly motivating for me because when I make a large extra payment, I see my debt free date get closer immediately. Once your plan is created, you just need to make sure you follow it each month.

How to Get Out of Debt Fast Step 5: Create More Income

Now that you have a plan and a budget, it’s time to find ways to make more money. I have my teaching job, but I spend about 10-15 hours each work working my side hustles of tutoring and occasionally babysitting. I’ve gotten to the point now where I can comfortable live on my side income each month on my current budget. My entire paycheck, plus some of my side income, goes straight to my debt now. This absolutely took time, about a year and a half to be exact, but it was a wonderful day when it finally happened.

How to Get Out of Debt Fast Step 6: Live and Adjust

Now that you have a plan in place for your spending, income, and payoff, you need to stick to the plan, reflect, and adjust. At the end of every month I look over my budgets, income, spending, and debt payoff and I reflect on the month. If I notice that over a few months I was under budget in a certain category I change that budget to free up more money to go to my debt. My budget has changed drastically in the last two years, mostly because I’m constantly thinking of ways to save more money each month to put more money to my debt. In order to really pay off debt fast, you will need to constantly be doing this step each month to find more ways to make your money work for you.

Once you have your plan in place, this crazy debt free journey doesn’t seem so daunting. I know for me, once I created my plan I felt a huge weight off my shoulders because I finally saw that I could do this sooner then the 20 years that my loan provider said. It is possible and you can do it, as long as you create a plan and stick to it. What is your plan to get out of debt fast?