So the results are in for our March numbers, and it’s our first report. One this blog’s primary goals is to show how we’re able to pay off debt quickly and to hold ourselves accountable for the money we’re spending and paying off.
I admit I haven’t had much of a plan for how I want to share this information. It leaves me feeling quite vulnerable, if I’m being honest. Before I got married, I carried no debt for many years. I had no credit cards, and carried only medical debt for some time. This became a big problem for me when I had no credit and also no full payment for a new car when mine died. I took on a car loan in order to buy a new (used) car, and then more when we got married. We paid for much of our wedding upfront, but we also put a lot on cards. And of course, I did open my own card after the painful experience of needing to find a co-signer for my new car. I wanted to have some credit history in case I needed to use it again.
Added to this is the debt my husband has racked up on his own with various cards, loans, and other lines of credit, and our debt feels like a crushing weight. The most crushing of those is the student loan debt, which stands at well over $100k.
I find the debt embarrassing. By nature I prefer not to have debt. I’m quite risk-averse, and debt just feels so wrong. I like keeping the number of bills to a minimum too, so the sheer number of lines of credit we’re paying off hurts. But, these are still the numbers, as much as it hurts to share.
So, here’s what our numbers looked like on March 7th, and our comparison on April 1st. Note that because we started at a time other than March 1st, our numbers will look a little off this first month. Still, we paid a lot of money toward our debt in the first month.
In the chart below, you’ll see our starting debt for each line of credit, the interest accrued during the month (if none shows, it’s because the interest hit before March 7th or because we paid it off before the interest hit for the month), the total we made in payments toward that line of credit (if it shows $0, it’s because it was paid before March 7th—we didn’t miss any paymentsin March), and the balance as of April 1st. For this first phase of debt payoff, we are not including the student loan debt. Also, I am rounding off to the nearest dollar.
March 2020 Debt Ledger
Places to Improve
You might have noticed that even though Kyle made sizeable payments to his second personal credit card, the balance went up. This is helpful so we can figure out where we’re spending in ways we shouldn’t be.
When I asked Kyle about this, he indicated that he uses this card to earn rewards but then works to pay it off quickly.
Unfortunately, because he’s carrying a balance, this tends not to work in his favor and he collects interest payments that are more than the cash back rewards are worth. This was a great time for me to remind Kyle that if he wants to use the card in this way, he has to be ready to pay it off at the time he uses it; otherwise it’s just more debt to pay off each month and spreads him thin.
I do think that using a card to earn cash back rewards is a neat strategy, but only if you actually do use only the money you can pay back immediately. A lot of people fall into the trap of thinking they’ll use that method, but then end up with a balance that accrues interest, as you see here. If you’re going to use that trick, you should only put on the card what you actually have in your account to cover it, and not a penny more. Use the card, then immediately make a payment to the card.
Happy days for me! I was able to completely pay off the last of my personal credit card, which had a balance of about $2,000 right after Christmas, and put more on Joint Card 2 for March than I normally would (previously I was making a single $200 payment each month). Once my card was paid off, I put the extra amount I normally would have put on that card onto Joint Card 2. Now that my personal card is paid off, I expect to apply about $840 per month to that one. If I keep up that pace, I estimate that I can pay off Joint Card 2 by mid-September.
Once Joint Card 2 is paid, my plan is to take over payments for Joint Card 1, which is currently Kyle’s responsibility, and start paying that one down. This will be the last of our wedding debt. Meanwhile, Kyle can use the $150 per month he’ll be saving on that debt and can apply it to his PayPal line of credit, which is the debt he’s decided to pay off first.
We Could Do This Faster
We could absolutely crush our debt faster. If I followed the Dave Ramsey plan to the letter, I’d be using the money we currently have saved up to pay down our debt faster. We always have at least one extra month’s worth of rent in reserve for emergencies, and we save money from our tax return to cover car insurance for the whole year, plus we’re saving to replace one of our cars next year. But, for us, since we know we have the car replacement coming next year, we’d prefer not to incur more debt by taking out a car loan and would like to pay cash for our next (used) car.
We also feel safer having a month’s extra rent in reserve in case one of us unexpectedly loses our income, and the emergency savings fund is also key for us right now with everything going on with COVID-19.
We have no desire to deplete our savings and prefer to fall back on our monthly minimums if we absolutely have to in order to meet our basic needs. This will keep us from incurring more debt in case of emergency. So we’re a little out of order, but this slightly altered Dave Ramsey plan works for us, even if it means we have to pay extra on interest for a little while longer.
We have also chosen not to live an ascetic lifestyle, foregoing all fun and joy until the debt is repaid. We could do this, but we enjoy getting out and doing things, so I set aside $150 per month into a special savings fund that we use to go out and do fun things. It sounds like a lot, but it doesn’t go far in Los Angeles. The bowling alley nearest us would cost about $100 for the four of us to play two rounds—a far cry from the $8 we used to pay per person for Sunday afternoon bowling!
Anyway, yes, we absolutely could work the debt faster, but we’ve decided that it’s harder to stay in line when we don’t give ourselves any wiggle room. If we plan for the dollars and set them aside, fun becomes part of our budget and we don’t feel guilty and spend more than we otherwise might have because we didn’t have budgeted dollars.
Of course, we can’t really go out much right now, but we’ve been dying to take the kids to the Harry Potter part of Universal Studios, so we’re hoping that by the time the theme parks open again (July maybe?), we’ll be able to afford to take the family for a day. If it goes on longer than that, we can always use the money to fund home activities and birthday gifts as well.
Of course, if things get dire, adventure funds would immediately become bill-paying funds and all payments to adventure fund would be put on hold.
Over the next few months it’ll be nice to start including line graphs to visually see how we’re doing over the long run and how the snowball method works. Once we have some more data points it’ll be nice to see everything graphically.
Tracking to Goals
In addition to reporting on debt, I’ll be using this space each month to report on how well I’m tracking to my goals. I have three goals to accomplish by the beginning of March 2020:
- Pay down $17,000 in debt (for debt phase 1).
- Write 24 quality pieces of content for my blog.
- Figure out how I want to monetize my blog.
Pay Down $17,000 in Debt
We made a total of $2,099 in payments to debt between March 7th and 31st. If we just look at the payments made and not the interest accrued, this puts me at about $682 over target. Nice! If we take away credit for debt repayment by subtracting the total interest accrued, I’m still $363 over target. We are doing good on this so far.
Write 24 Quality Pieces of Content for My Blog
I realize that because as of April 2020, none of my content is actually published, the dates on this may look a little weird on my blog, but in the month of March, when I decided this was what I wanted to do, I prepped for blog launch by immediately starting to write content. I consider quality content to be any writing for my blog, including my About page, e-mail giveaways, and e-mail list content.
March has started off well, with 6 unique pieces of content. I realize there’s still some work to do in order to get these up and posted, but even with that, I am still ahead by 4 pieces. Going beyond my goals is something I’m absolutely down for, so I don’t intend that this will slow me down in future months and feel “safe” enough to take a break. I have a lot of ideas for things I want to share with my readers and a lot of things to explain about how we run our finances, plus I’ve got ideas for things I want to start looking into for future investment purposes.
This is perhaps the one where I really fell down. I have been lulled into a sense of complacency given that I’ve been studying blog monetization for years and have a fair idea of the ways a blog can be monetized.
In the past I’ve gotten overly caught up in the idea of doing such a thing without actually putting in the work to build a blog (the hardest part—continuous content development). I have gotten bogged down in the planning of a blog and never gotten around to actually starting, so my focus has been on ensuring I continue to write content, even when I’d rather be reading. And I’d rather be reading a lot!
The good news is, I am a bit ahead of the curve on this one since I’m familiar with most blog monetization methods, but I do have a bit of a way to go to learn about how to monetize on a personal finance blog. If any of you are connoisseurs in this area, I’d love your ideas!
Since I didn’t do any work in this area in March, I plan to step it up in April by critically examining others’ personal finance blogs and seeing how they’ve decided to monetize. I’m particularly drawn to the idea of info products, as I like the idea of project work that is ultimately passive. I’ll keep you all posted on my thoughts there.
To be honest, I completely forgot I was even working on goals until I saw my goals sheet reminder, which worked out perfect. It’s a great way to keep me on track in future months, and it’s already helped me by forcing me to think how I want to approach the blog monetization goal in April!
I hope you’re all kicking ass at your own personal finance goals! Let me know what they are below and how well you’re tracking to them. If you don’t have any goals yet, now is the time to set them. You don’t have to wait until the new year. There’s no better time than right now.
View the April 2020 report.