One of my goals moving forward (it’s more than a new year’s resolution; it just happens to be January) is to get a grip on my current financial situation and works towards a place of greater financial stability over the year. I have made some pretty poor money choices in 2018 (and 2017 + 2016). I put the first half of my twenties (I’m 25) on a credit card, accrued a lot of student loan debt unnecessarily, and also took on a car payment (that one was a pretty smart investment).
With the amount of debt I have, it will take multiple years to fully pay off everything. I don’t want to go into my thirties with a mountain of debt from my twenties. I want to be able to buy a home, start a family, and move around the country if and when I want to do so.
So in 2019, I’m focusing on my financial situation and making progress toward improving it.
Where am I now financially?
I’m posting this blog post in an effort to be vulnerable and to seek out accountability and support as I go through this year with my goals (outlined further down). First, I think it’s necessary and helpful to be transparent and share what my current status is with different types of debt as well as what I am making for an income.
- Credit Cards: By far my most concerning source of debt and where my focus will be this year because of the interest rates and impact to my credit score. Balance is $18,000 and I have been paying around $300 each month in minimum payments.
- Student Loans: I got a $0 monthly payment for the first year, starting this month (January), because of the income-based repayment plan. I’m also qualified for public-service loan forgiveness in ten years. Therefore, I’m least concerned about this debt right now. It’s there, though, and the balance is $48,000 (for two degrees).
- Car Payment: I’m in year 3 of a 7-year term on my car loan/payment. It’s a longer term than I like, but it got my monthly payment down to a reasonable amount. It’s set and will be paid off soon enough, so also not a priority right now. It’s just a bill to pay. Balance is $17,000 and the monthly payment is $340.
Other Fixed Expenses
- Phone Bill: $78.87 (Sprint service + phone payment – fairly good deal)
- Car/Renter’s Insurance: $181.02 (State Farm – lots of discounts applied)
- Streaming/Cloud Subscriptions: $34 (Netflix, Hulu, Spotify, iCloud)
- Massage Envy Membership: $65 (nice for self-care, but I want to get out of it)
- AMC A-List: $20 (considering getting out of it because I don’t use it enough)
- ISU: Without overtime and after taxes/deductions, I make $900 every two weeks for a total of $1800 each month. It’s somewhat common to make overtime at least every other month, sometimes every month. I’ve only had a handful of “regular” paychecks since I started the job in July, which is helpful to add some extra income. I plan to use as much as the overtime I make in 2019 as possible to go directly to credit card debt, along with some of my regular pay as well.
- Online Business: I’m still developing this and haven’t brought in much income from it (talking about my t-shirt store). I want to develop it more in the coming months to bring in some sort of income, that can be applied to credit card debt as well. Starting out, I’d like to start bringing in $100 a month by mid-way through 2019.
- Selling Stuff: A lot of my credit card debt comes from buying ‘stuff’ over the past few years. It’s resulted in an accumulation of clothes I never wear, items I never use, and things that just collect dust. I spent the last weekend cleaning out my closet and identified several items I can get rid of and make money off of. Through apps like PoshMark, the Facebook Marketplace, and places like Plato’s Closet, I’m adding another stream of income by selling stuff I no longer use or need. I’m also using this as a way to work on living a more minimal and intentional lifestyle (not something I’ve been the best at before). I’ve already made $120 at the time of writing this in January, and I’d like to get up to $500 in the first couple months of the year.
- Uber: When I lived in Florida (and got my new car that qualified), I drove a bit for Uber and was able to bring in some decent income from that. Being around Orlando/Tampa, theme parks, etc. was great because tourists are an ideal source of trips + tips. Terre Haute isn’t as hot of a market, but it does have Uber and Indianapolis + Bloomington aren’t far away. I’ve already gone in the app to work on getting my driver account re-activated for this area. I can see getting around $100 a month from Uber to be realistic.
I’m definitely living paycheck-to-paycheck, even with the addition of some new streams of income, but I do believe I can live within my means, focus on living more minimally, and make a significant dent in my debt print this year.
Forgiving myself for past mistakes
I’ve talked about not making the best choices and shared the mountain of debt I’ve accumulated. I didn’t open my first credit card till I started grad school in August 2016. Looking back, I wish I had never opened that card – or at least been more intentional and opened one card that was the best fit with rewards/points, a low limit, etc. I can play the “should have” game all night long – and I have on many sleepless nights. My financial situation has been the source of a lot of anxiety and even depression over the past few months.
Moving into 2019, I will of course carry this debt with me but I won’t continue to carry the guilt over the debt with me. I made all of the choices that led me to where I am on my own, and I have to accept that. I also have to forgive myself for making those choices. I have learned from them and I will come out of this a better person. I will manage my finances better for the rest of my life because of the last two years – and that’s worth something.
Goals moving forward
- No more credit card purchases (except for true emergencies)
- The first step to paying off debt is to stop accruing it. If I can’t afford it with the cash I have in my bank account/wallet and haven’t budgeted for that purchase at the moment, I won’t buy it.
- Impulse buying is one of my biggest issues and caused a lot of problems in the past. I need to avoid putting myself in situations where I could make an impulse purchase; this means not going to the mall or a store “just to look” and not browsing Amazon or online shopping unless there’s something I am looking for and need to buy.
- The caveat to this are true emergencies, of course. I currently don’t have much savings because any spare money is going to paying down debt, so as I free up space on cards, I will leave some open in case of a legitimate emergency.
- Contact credit companies to negotiate lower interest rates and other options
- It may or may not be successful, but I can at least ask and the worst they can do is say no. Based on my research though, it seems it’s somewhat common to get some help even if it’s not exactly what you ask for from credit companies. They want me to pay off what I owe as much as I do, after all.
- I’ll update on my progress once I get through this step with another post, for those interested in how it works.
- Focus on paying off one card at a time
- If I continue to divide up income among multiple different cards (9 right now), I won’t make a dent and it won’t be much better than making minimum payments and barely paying more than the interest each month.
- I will allocate any money I can, after covering the rest of my expenses, to one card a time until it’s paid off and then move on to the next. This will make bigger dents at once and also allow me to see more progress, which will be self-motivating and keep me going when things are hard or money is especially tight.
- As mentioned, I will use any overtime pay + income from each side hustle I have to pay down credit cards, as that is money that is extra and not needed to live on.
- I will of course continue to make at least minimum payments on everything else.
What does this look like in real time?
I’m on track, based on my planning, to pay off one card (with a low balance) in January – thank you Res Life training for the overtime! By January 18th, my Gap credit card will be at $0.00!
That brings me down to 8 credit cards with a balance. I plan to pay off one more by the time of spring break (end of March).
I then plan to pay off my third card of the year by the halfway mark (end of June). This will be more difficult based on the balance and timing, but I’m hoping by negotiating with the credit company and some extra income I can make it work.
From there, I will continue to focus on one card at a time. I wan to pay off at least two more cards in the second half of the year, leaving me with 4 outstanding credit card balances going into 2020. That’s less than half of what I started this year with!
Showing myself grace throughout this process
This process won’t be easy. It will require me to be much more strict with myself when it comes to spending and buying things I like and want. It will be force me to have a very different money mindset than I have had the last few years. Just as it is important for me to forgive my past money decisions, it is important to also show myself grace for my future decisions.
I will likely mess up and make some choices that revert back to my previous money mindset. That’s okay. I can bring myself back in and pick up where I fell off. My current relationship with money and spending is, in a lot of ways, an addiction. Kicking an addiction is never easy and also not a linear path. I will do the best I can and make the most progress I can.
Thank you for reading this post and being a part of this journey with me – because now that you know what I’m doing, I need your help. Hold me accountable to not using credit cards, to not buying things I don’t need, to living within my means, and practicing a minimal, intentional lifestyle. Call me out and pull me back in when I slip up. I may not thank you in the moment, but I am thanking you now and I will definitely thank you later.