I’m Debt-free!

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DEBT-FREE!!! No…not really…not even close!!

Sorry to fool you but you got excited there for a minute didn’t you? I did and I knew it wasn’t true. Achieving debt-free status is a high priority on my life to-do list. I’ll be honest though, it’s not nearly as easy getting out of debt as it is getting into it. In an effort to combat Frugal Fatigue, I like to daydream/plot out what life will look like once I am debt free.

My debt is comprised of the following items: credit cards, student loans, car loan, and mortgage. Part of this debt is stupidness on my part like buying too much house my first time out, subsidizing vacations with credit cards, etc. Some of the debt is medical debt because diabetes is a stupid, crazy-expensive disease. And some of the debt is just a result of years of a modest income not stretching far enough in the land of single-parenthood despite my best attempts at living a frugal life. I’m ready to dump this debt once and for all though.

Credit Cards…The Bane of My Existence

First plan of attack? Credit cards of course. I have four credit cards and I’m not going to tell you how much I owe on them but it’s too much. I pay more than the minimum due each month but not enough to make a real dent. First things first, got to stop using the cards. Next step is to use the Debt Avalanche to pay them down/off. I currently pay approximately $455 a month towards my credit cards (I know, I know, sigh, it’s horrible… stop judging!).

Currently I look to see what the minimum payment is and try to round up and pay a little extra each month. New plan of action is to pay the minimum on all but the card with the highest interest rate and I’ll throw the rest of my money towards that payment (the Avalanche method). Any extra money I can scrounge up during the month will also go to paying towards that card. Once that card is paid off I’ll put all my extra money towards the card with the next highest interest rate until they are all paid off.

Cars: Bad Decisions and Bad Luck

Here’s a little note about my car loan and my history with cars in general. I got caught up early on with the car lease trap. It was great for a great while, I got to drive new cars all the time and my maintenance of said cars were generally covered under my lease. Here’s the thing with that though, eventually I realized I was ALWAYS going to have a car payment this way. So… I decided enough was enough and when the car lease for my Nissan Maxima was up a few years ago I decided I was going to purchase the car when the lease was up and drive it into the ground.

That was a pretty good plan. Unfortunately a flash flood drowned both that car and my son’s new to him car. My car was covered under insurance but we only had liability on my son’s little beater car. The result was getting a car loan that wrapped a used car for me and another one for my son into one loan. This loan should be paid off in two years. The good news is that I should be able to keep that car for many more years after payoff and hopefully pay cash for my next vehicle.

Making Progress….

I’m still going to be paying on those horrible credit cards after making my final car payment. I’ll take that car payment amount and add it to the payment I’m making on my highest interest credit card. Assuming all goes well, that card should be paid off 4 months later. That payment gets added to the payment for the next highest interest card still remaining and will hopefully knock that card off 4 months later as well. I’ll keep following that pattern until all my credit cards are paid off. According to an online calculator I found, this whole process of paying all of my debts off, with the exception of my student loans and mortgage, will take 46 months.

46 months is a long time. It’s a little sad but as I said earlier, getting into this much debt didn’t happen overnight so it makes sense that I won’t get out of debt overnight either. Okay, so we’re almost 4 years out and and now my credit cards and car loan is paid off.  Wow, now I’ve got an extra $782 a month. Who wants to go on a cruise with me? Kidding… I’m not done yet. Still got those pesky student loans to pay off. So now I’m ready to move on to my student loans. Here’s the good news though…my student loan payment is $233 a month and now I have an extra $782 a month I can throw at the loans on top of my regular payment. Another 5 months and my student loans will be paid off.

Possible Roadblocks

A lot of assumptions went into this plan. I’m assuming I won’t add to my current debt with this plan. Guess what? Shit, I mean life, happens, and it tends to happen to me a lot… My current financial life is precarious…definitely not much wiggle room.

Medical debt is always an issue in our household. I’m going to attempt to boost my emergency fund along the way as well to hopefully offset deductible and out-of-pocket costs.

Kid stuff. My sons are pretty responsible. They both generally have at least one part-time job going. They pay for their car insurance and payments, gas, food, etc. That being said, I do try to help them out when they are running short since I expect their schooling to be the priority right now. Helping them out when I can is a priority for me.

Opportunities to Accelerate the Process

The good news is my sons should both be graduating college within two years. Once they secure their fabulous post-college careers they’ll hopefully be able to get on their own insurance plans. My current job pays my health insurance and I just pay the difference to add my sons. That’s quite a hefty amount though so once they secure their own insurance I’ll have quite a bump in my pay that can hopefully accelerate these debt payoff plans.

I’ve worked multiple jobs in the past and I’m not opposed to doing that again. Ideally I’m going to find a side gig that pays with my writing, either through this blog or some freelance writing.

I also do a variety of other little things to add small amounts of money that I can use to snowflake some extra money onto debt payments. I included some of these in my article on creating an emergency fund.

Debt-free Life

Debt-free except my mortgage. That is going to be awesome!!! We’re talking an extra $1,000 a month to save or spend. I can pay extra on my mortgage, help my sons out with their student loans, or take a fabulous vacation. The best part of all this will definitely be the options it provides me in life. What would you do with an extra $1,000 a month?

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