January 2021 Debt Payoff Report

Ah, January.  January is the soul-sucking month right after December when you take stock of all your crazy Christmas spending. The days are still bleak. There’s no Christmas excitement to look forward to. Your house looks drab and boring without all the Christmas bling and cheer.

For us, though, January was a month of crushing our debt goals!  We had some funds come in that were unexpected but welcome, and we had to decide how to put those things to good use.

If this is your first time joining me for these debt payoff reports, you can follow my story from the beginning. Or, yanno, just recap here to see where we’re sitting.  I’m on a mission to pay off almost $27,000 in debt in under two years.

One Month to Go! (Ish)

First things first—it must be said that I write my debt payoff reports at the end of the month for the month prior. So as I write my January report, it’s actually February.  I’m officially in the last month of my first year of debt payoff!

Technically, March 7th is the anniversary of the day I got my financial ass in gear. But going into my new financial goal year, I’d rather start clean at the beginning of March.  That means that next month, as I close out February, I’ll have to set some new financial goals, and I’ll also be able to see how I did with my first year’s goals.  I’m really looking forward to that!

Because I started in mid-March, it makes the timing a little wonky, but I’m not upset that I didn’t wait until the beginning of April to get started. I’d just be that much further from getting to zero on our debt.

Changes This Month

This month I made the transition to my new employer, but still earning the same rate of pay.  I didn’t see a huge difference to my pay schedule in January since my official start date at the new company was the 28th, but February’s pay will be a little skewed due to the change.

January was exciting because we had our second stimulus check come in (woohoo!). We immediately applied the whole thing directly to our debt.  Kyle also received a bonus check in December. We applied the bulk of that to debt, although we did reserve about a quarter of it for a couple of larger purchases we’ve been putting on hold for some time.

This means that our January debt payoff looks incredible.  We were able to take our debt from more than $10k to under $6k!  We paid off 45% of the debt we had left as of January 1st, and that feels damn good.

While we won’t be able to pay a similar amount in future months, January really showed us what we could do when we applied extra moneys earned toward our debt.

Here are January’s numbers.

January Debt Ledger

As you can see, between the bonus and the stimulus check, we were able to finish paying off TWO lines of credit: Joint Card 1 and Kyle’s PayPal account.  We now have only two debts left to pay off, which feels oh, so good.

I anticipate that we’ll be able to pay about $1,500 each month in debt. So even if we don’t get any other pleasant surprises, we can anticipate having all our debt paid off in less than four months.  This means the total time to complete our debt payoff will only be about fifteen months.  Not too shabby!

Also, take note of the declining amount we’re paying in interest.  When we first started out, we were paying nearly $400 a month in interest alone.  That’s outrageous!  We’re now paying a little under $200, and that number will drop even more dramatically this month, with so much additional debt paid off.  This means that more of our $1,500 each month goes toward the debt.

They call it debt snowballing for a reason.

Finally, we’re already seeing savings from having decided to go down to one car.  Our auto insurance bill is coming up, and where we’d normally spend $1,000 to cover both cars for six months, we’ll now be spending only about $700 for the same timeframe, saving us $50 per month in car insurance costs.  Kyle also has freed up money by no longer having maintenance or gas costs for his vehicle.

We Could Do This Faster

Every month or two, we talk about using our savings to just pay off the rest of our debt. But we always ultimately decide that it’s worth having money in the bank in these uncertain times.

We’re also planning to replace our car in the next couple of months.  We have been anticipating this purchase for about eighteen months now, so we have been saving large amounts of money for this purchase and will be able to purchase with cash.

We could use that cash to pay off our debt, but with our upcoming move toward the end of the year, we decided we wanted a more reliable car to cross the country with. My car still runs great, but it’s starting to show some wear and tends to whine when driving on road trips longer than about 300 miles.  We’re planning to gift it to my son as his first car, as he’s approaching driving age later this year. He’ll need something reliable for driving around town.

Looking Ahead

February will be interesting because I won’t really get a good idea what my regular pay will look like with my new company until my second pay period in February.  I’m having to revisit how I pay my bills and will have to keep a closer eye on my bank accounts now that I’m going from weekly to biweekly pay.

This will be an adjustment for me because I’m used to having an “extra check” every third month or so, and now I will only get an “extra check” every six months. The good news is those semi-annual “extra” checks will be twice as big.

February will also be the month when my contributions to debt drop from $840 to $600.  We had to make a change to our health benefits, and so I’m bringing home that much less each month.  This was a  necessary change for us, so while I won’t be able to contribute as much to debt payoff, it’s for a very good reason. I expect that at our current rate, we should have our debt completely paid off by June of this year.  This is assuming no unforeseen circumstances.

Y’all, I am getting extremely excited!

Goals Tracking

Let’s take a look at how I’m tracking to my annual goals, which I set in March of 2020.

Pay Down $17,000 in Debt

Since we got serious about paying down our debt, we’ve made a total of $23,728 in payments.  After adjusting for interest payments (so far totaling $2,934), we’ve still managed total debt payoff of $20,339!  YES!  We crushed this goal by more than $3,000 and with a month to spare!

Of course, the extra stimulus payments are to thank for the bulk of the extra and for being ahead of schedule, but we still would have hit the $17,000 goal regardless.  We have been consistently paying debt with no excuses.  I am super proud of this achievement and the consistency needed to hit this goal.

Write 24 Pieces of Content

At 36 blog posts, I have officially hit 150% of my goal, which is fine, except that in recent months I have slowed to a crawl on blog content. I am extremely motivated to kick that up a notch.  If I’d kept up the rate I was working at earlier this year, I could have easily hit 200% of goal.

Blog Monetization

As previously mentioned, I should have set a different goal here.  I knew it would be relatively easy to hit—I just wanted to research the ways I wanted to monetize.  This is a side hobby for me that I hope will one day earn some passive income, but it’s definitely not necessary to my long term retirement plan. It’s more like the icing on the cake, which means I can take it at my own pace.

I hit this goal early in and decided the first step for me to monetize is going to be with good old fashioned ad revenue—something to get my feet wet.  I know there are many other ways to monetize, but ads, once placed, are the most passive income stream. I’m learning that with enough content they can be lucrative, too. This is helpful for me as I look at building my goals for next year.  I’ll be taking a harder look at this next year.

Almost There

Below is my usual chart that helps us visualize our trends for paying off debt.

The most important thing for me is that our lines are continuing with incredible consistency, except where you see the big jump in January when we came into some extra cash.  This moved our goal line up by a couple of months. And, it means we’ll finish in the May/June timeframe instead of July/August.

See you next month!

View the December 2020 report.

View the February 2021 report.

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