How we are going to pay off over $175,000 in debt FAST
Sorry I know y’all missed me. Things have been crazy with me working extra hours so I didn’t make time for my blog….
I promise I won’t be doing that again. You all ask for this craziness so I am going to make sure you get it.
The important thing that you all must know is that we sat down and went through the first step of creating our budget as well as writing out our plan to pay off our debt. Do you want to know the most alarming part?
We have OVER $175,000 in debt!!!
We knew that we had some work to do….but $175k??? That was completely jaw dropping. But you know what it doesn’t matter….because we already know the best way to pay off debt fast! We have a system and I know once we start following it (notice I said once we do….stay with me here)…we are going to be out of debt in NO TIME!
According to our Spreadsheet (because y’all know I am an excel nerd) we can be out of debt entirely including our student loans no later than 2020! Do you think the banks are going to tell you what’s the best way to pay off your student loans in less than 3 years?
Go ahead I’ll wait……..
They won’t! But if you follow us long enough on this journey I am going to show you how we are going to do it. And if you’re in a position that you want to pay off your debt fast too don’t wait for us to finish…come on and join us!
If you haven’t seen our plan already go ahead and read it here and then come back!
But wait…Why did I say once we start?
I know I am the one who said don’t procrastinate….
However, we are having the HARDEST time getting this budget together. One of the first rules of thumb when getting started on a plan to pay off your debt fast is to make sure that all of your necessities are in order and your bills are current.
DO NOT start paying extra towards debt if your light bill or gas bill is behind. You have to keep a roof over your head first! Sallie Mae and Discover Card can wait. Trust me their balances aren’t going anywhere but ComEd (or whomever your utility company is) will cut your lights off!
Anywho….We had gone through so much the past year or so that it is taking us a little time to make sure that we are back on track with some major necessities. But we are getting there and things are looking better. We should be able to start making those additional debt payments within the next month.
But do I have to cut off my cable, stop dining out and drinking Starbucks to do this?
The simple answer to this is no. The better answer is how bad do you want it?
I told y’all I would be transparent with y’all through this journey so here is some more truth for you…
We could probably be out of debt about a year earlier OR even sooner if we were to cut back on some of these things. But we did not cut them all out of our budget.
That is what works for us right now. Once we start back up and get things rolling that may change. We may start to see that the opportunity cost of paying $100 extra on our debt instead of paying $100 towards the cable bill is much more beneficial to our goal.
But I wanted you all to see a realistic point of view as well. We hear so many success stories from people who were able to save up to buy a house because they ate ramen every day.
I know that is not a normal way of living….and to be honest I don’t want to live that way. I also know though that living paycheck to paycheck is normal, and that isn’t necessarily a good thing, and I also don’t want to live that way either.
So it is about balance.
We looked at what we were spending (A LOT) and started with what we felt we absolutely couldn’t live without. Then we looked at it again and trimmed that list even more. I’m sure there will be more trimming later (especially once we start seeing progress).
So Cris you’re saying I can pay off my student loans before I die?
BRUH! I know every adult expects that they will have to be paying their student loans forever. I’ve even heard some people say they will just have them until they die so that they will go away. But you do know some student loans aren’t even forgiven when you die right???
So what is the best way to pay off a student loan? The answer is….FAST
The bank is depending on you to make minimum payments for the rest of your term because they earn interest on your balance every month. That interest is compounding the longer you take to pay it off.
Here is a simple example:
If you owe $1,000 and pay 10% interest, then next month your balance is $1,100.
Now let’s assume you don’t make any payments (just for the sake of math, not factoring late payments or anything). The next month you aren’t paying the interest on that $1,000, you are paying interest on the full $1,100 balance PLUS another 10% interest so your balance is now $1,210. This amount continues to build because in the beginning your payments are usually only going toward interest so your principal is getting higher and higher.
The faster you pay off student loans the better. The power in the compounding payments you will be making is what is going to kill that compounding interest that you would have been paying if you planned to make the minimum payments for the next 30 years!
So how are we going to pay off over $175,000 in debt FAST
I know you are not going to believe this……but it is going to start with just $100
Yes that is it….$100 is going to help us in paying off debt faster than the paycheck to paycheck plan we have been on. Actually there was never a plan when we were paycheck to paycheck that is why we are in so much debt!
I know to some of you $100 may seem like nothing and to others it may be a HUGE deal. There were times that we couldn’t find $100 to pay a bill that needed to be paid and our household income seemingly should cover that.
This is why we are fake rich! Our paychecks may look big but our bills WERE bigger! However now we have a plan to tackle all of that.
It all starts with a plan.
$100 extra towards our first debt…LASER FOCUS on that debt until September and it will be PAID IN FULL! Then we will take that minimum payment that we paid off that balance with PLUS that extra $100 and get LASER FOCUSED on our next debt.
My SUPER focused face
We will continue to do that and in about 2 and a half years of PURE FOCUSED INTENSITY we will be DEBT FREE!
You heard it here first!
It is on the internet so it is true right? By the end of 2020 the Travis’ will be debt free and well on the way to building our wealth for our future, our children’s future, and their children’s future.
I look forward to you joining us on our journey.
Leave us a comment to give us a high five and come join us!