Just to recap our debt payoff journey, we started off with just under $26,000 in debt on March 07th. We made some significant progress even in March. By the end of March I’d paid off my only personal credit card, which had a $750 balance on it. The remainder are two joint cards leftover from paying for our wedding, a personal loan Kyle took out to consolidate some of his debt, and three lines of revolving credit for Kyle. All in all, in March we paid off about $1,700 in debt after adjusting for accrued interest.
Seeing just how much we’re paying in interest every month is a GREAT motivator for me. When I calculated our March interest, we had paid over $300—for money spent months and years ago! When I think about having paid $300 a month for years, it breaks my heart. I can’t wait to have those numbers go down.
So Here We Are In April
At any rate, we started off April with about $24,700 in debt remaining. This doesn’t account for Kyle’s student loan debt, which comes up to well over $100,000. That will be more of a long-term debt payoff, and we will use a large portion of the funds we’re using now to help pay off his remaining student loan debt once our cards are taken care of.
Our goal will be to pay that off much more quickly than the 30 years originally accounted for, likely in under 15 years. We haven’t addressed that debt in detail yet, but we will take a closer look at it as we get closer to finishing off our other loan debts, since our circumstances can change pretty drastically before that point.
In the chart below, you’ll see our debt for each line of credit as of April 1st. You’ll also find the interest accrued during the month, the total payments made toward each line of credit, and the new balance. I’ve rounded everything to the nearest dollar.
April 2020 Debt Ledger
Given these numbers, our total debt payoff this month (after accounting for interest), was just over $1,500. Not bad.
At this rate, assuming about the same payments and interest per month, consistently applied, we should have all of the debts in this chart paid off not later than the end of August 2021. This doesn’t account, however, for the decreasing amount of interest we will have month over month as we continue to pay down our debt.
We should see more dollars going to principal payments and fewer to interest, which will actually speed up our debt payoff, but this works well as an estimate and a goal to shoot for, and it gives us wiggle room in case we have a bad month somewhere.
Places to Improve
Kyle’s second personal credit card had its numbers adjusted because he also spent a lot on that card and then paid down the balance. The numbers you see here are his total actual debt reduction rather than actual payments made.
He uses this card as a rewards card, meaning he’ll make payments on it and then pay down those payments. Unfortunately, as there’s usually a balance when the bill closes each month, the interest applied may cancel out any rewards he earns unless he immediately pays off a debt before it accrues interest.
Using cards this way is not unheard of, but it really only works if you’re only spending money you have in your account and not intending to pay it off “when you get paid again.”
I wanted to be able to increase the credit line to our second joint card as a way to improve our credit scores (increasing overall available credit while reducing the percentage of credit used), but the company declined the request for the increase. This is because we only actually use this card once or twice per year.
Credit companies like to increase lines of credit for clients who use their card frequently and keep their balance low. We will continue to pay down this balance to zero and I’ll consider the idea of using the card with a very low balance (think $20) in order to eventually increase this line, but it’s not a goal for my immediate future.
I know I did it in March and not in April, but I was very happy to pay off my own personal credit card. It’s the only one I have, so you don’t see it in the chart above. This month I started working on Joint Card 2 as my primary focus, and you’ll see that I was able to pay a significant amount on its balance.
I’m very pleased with how quickly the balance is reducing. I anticipate paying off this card not later than the beginning of October of this year, at which point I’ll take on Joint Card 1.
Meanwhile, Kyle has decided to tackle his Paypal line of credit as his primary. He has many more debts he’s working on at once, and ultimately he’s paying more on debt than I am, so he’s not able to focus $800+ dollars on a single debt the same way I can. This is okay for now. When I take over Joint Card 1 he can use the additional $150 every month he’s currently using on that debt to pay off Paypal faster.
We Could Do This Faster
We received our coronavirus stimulus check in April, and although we could have used this to pay down debt (and probably would have under normal circumstances), we are being very cautious about also saving money in event the pandemic eventually leads to job loss for one or the other of us.
Additionally, we’re also saving up for a new-to-us car, which we expect to purchase next year, and we intend to not take out a loan to purchase the car, so if we weather the pandemic okay we will end up using that money to make that purchase. Our goal is to save about $15,000 to $18,000 for that purchase, and we are still a few thousand away.
Ultimately, 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 (minus $1,000) to pay down our debt faster. We always have a month’s worth of extra rent in reserve for emergencies, and we save money from our tax return every year to cover the cost of our annual car insurance. With COVID-19 and the threat of a deeper loss of economy, we are being particularly cautious about savings.
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’ve 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 park at 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.
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 annual goals. At the beginning of March 2020 I had three goals for myself:
- Pay down $17,000 in debt in the first year (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 about $1,900 in payments to debt in April. If we don’t look at the interest accrued, this puts me at close to $6,000 over target. Nice! If we take away credit for debt repayment by subtracting the total interest accrued, I’m still $1,000 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. Quality content is any writing for my blog, including my About page, e-mail giveaways, and e-mail list content.
As of today I have 10 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 6 pieces. Going beyond my goals is something I’m striving for, so I don’t intend that this will slow me down in future months or make me feel “safe” enough to take a break. I will admit that I slowed down considerably in the second half of April when I became quite ill and spent the bulk of my time lazing on the couch and sleeping; however, I feel far better today.
This is perhaps the one where I really fell down. I have been lulled into a sense of complacency given that I have been studying blog monetization for years. So I already 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 blogging, without actually putting in the work to build a blog. Continuous content development is the hardest part of blogging. I’ve gotten bogged down in the planning of a blog and never gotten around to actually starting. So my focus is to ensure 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 ways 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 or April, I plan to step it up in May 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 perfectly. This should 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 May!
Until Next Time
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 March 2020 report.
View the May 2020 report.