God willing, March 30, 2017, I will be DEBT FREEEEE. By that point, I will have paid off over $30K in student loans. My daughter will turn 3 that month, and by April 1, 2017, I will have completed the required hours for my LCSW license, which, by the way, takes 2 years to complete. And when my daughter turns 3, I will legally be able to relocate closer to my support system…hopefully. My stomach churns when I think about how much money I will be throwing towards my debt over the next 20 months but I’m all in. I’m soooo ready to save money in the long run. If you’re ready to make the next step towards becoming debt free, these are some tools that help to guide my progress:
1. Read Dave Ramsey’s Total Money Makeover or participate in the Financial Peace University class. I bought the home study program because I wasn’t sure that I’d be able to commit to attending every week. Purchasing the class will temporarily gain you access to online member tools including the Gazelle Budget software (which is basically the same as the budget worksheets except on a computer) and the Debt Snowball- which is where you list all of your debts, and you can calculate your payment schedules and enter the interest rates in order for it to compute your debt payoff date.
2. The FREE Excel app. So, I recently downloaded the mint app and DR’s every dollar app to track my budget and spending, but they are a little too complicated. For me, less is more. I don’t need several apps to control my money, I do that on my budget and the excel app. I prefer to keep it simple. I really like the excel app because it has SEVERAL blank spreadsheets with formulas already entered for you. For example, it has a “credit card payoff” spreadsheet, which I use for my student loans. Enter the total amount, the interest rate, your minimum payment, and a proposed monthly payment, and then it gives you a BAR GRAPH that gives you a visual of how many months it would take you to pay off your debt with a higher monthly payment vs. just your minimum payment, AND it compares how much you would spend in interest if you pay just the minimum payment vs. your proposed higher monthly payment. See the pictures below to see what I’m talking about. For example, my student loan payoff bar graph in my excel app shows me that if I continue to pay $300 a month, I will end up paying over $21,000 in interest and it would take me 200 months to pay off all my loans. 200 months = 16 years. No thanks. The same graph shows me that if I pay the maximum amount that I’m [hopefully] able to pay, God willing, that it will take me 20 months to pay off all my loans and I will only end up paying $1,800 in interest.
Excel app examples:
Sooo hopefully these pictures are not complicated for anyone, but it’s ok if they are since this might be new. Basically, the grey picture on the right is your monthly budget. The red box at the bottom next to “student loans” is the money you have left over after all of your monthly expenses to apply to your debt. My student loans are highlighted red because that is currently the debt of focus while I’m working on my debt snowball. The picture on the left is that amount in the red box, $1077 that is the proposed payment amount to your student loan debt of $32,400 and it shows you a comparison of how much interest you pay if you were to pay $1077 every month vs. just paying the minimum payment of $270.
Who doesn’t like to save money? The quicker I eliminate my student loans, the more money I save in the long run. Now, I don’t know about you, but I can think of A LOT of things that I can do with that $20,000 difference in interest that I would save if I pay off my loans ASAP. Let’s see…I could beef up my emergency fund, I could take my dream vacation to Bora Bora, and I could save up for a down payment on a house. Saving the difference in interest would allow me to do all three!
By the summer of 2017, I will head to Dave Ramsey Headquarters (Located on Mallory Lane 🙂 –coincidence? I think not) Anyway, I’m going to head to DR headquarters to do my debt free scream live on his radio show.
Mark my words, everyone! March 30, 2017 is the day that my chains will be broken free!