This is the May report for my debt journey. If this is the first report you’re reading in my series, start with the April 2020 Debt Report. I started off with very nearly $26,000 in debt on March 07, 2020, and I’m working to knock all that debt out as quickly as possible. I’m working with my husband on this goal, after which we’ll be figuring out how we want to tackle his massive student loan debt of almost $160,000.
As part of our agreement to crush this debt, we’ve decided that a monthly check-in would hold us accountable. We estimate that paying off our debt would free up an extra $18,000 per year. We’re really looking forward to freeing up that money for investments. We are both interested in owning our own home as well as owning some rental properties that would supply us with passive income. But, first steps first, and paying off debt is our top priority.
We already have a good emergency fund saved up (about $4,800), so we are one step into Dave Ramsey’s wealth building plan. We aren’t following the plan exactly for a few reasons, including our personal risk aversion, our desire to still live a little while we’re working on our goals, the pandemic, and our need of a new car in the near future. So we’ve made some adjustments that work for us.
We’ve made pretty good progress against our debt so far. At the end of April we had just over $23,000 left to pay off, and by the end of May we were sitting at a little over $21,000. If we can keep up this pace, we should be able to knock out the first $26,000 in about a year or so. We do know that there will be setbacks, however, so I’m still estimating 18 months.
My company offers a small tenure bonus of $300 when you hit three years of service with the company. I hit this in May and so I received an extra $300 for that month. Normally, this would have gone to paying down extra debt, but since my car tags were due on June 02, my bonus went to this purpose.
The good news is, I normally would have paid for my car tags using money I would’ve been throwing at debt, so this was still a win for us. I was able to pay down more than $1,000 in debt on a single credit card last month! May was a 5-pay month for me (I am paid weekly), so I was able to make an additional payment to my debt even without the bonus money. Woohoo! Check out our gains. (Our losses? I’m confusing myself here.)
May Debt Ledger
One of the things I love to see when I go through our debt numbers every month is diminishing number of dollars that are going to interest. In the month of April alone, we racked up $366 in interest among our various loans and cards. This is the true cost of debt—the interest you pay every month.
We were being charged $366 just for having spent money we didn’t have already, and that money hit every single month. Yikes! In May, we’d chipped away at our debt enough that we were charged $336. I’m looking forward to watching that number go down every month until we’re paid off.
I also get pretty excited when I watch us go down a digit (and I’ll be even more excited when we lose a whole digit). So when I saw our second joint card go below $3,000, I got pretty stoked. I should be seeing that number go well below $2,000 in the month of June. Kyle also broke the $4,000 mark in May, and he’s right at the cusp of breaking the $5,000 mark on his personal loan.
Barring any unforeseen circumstances, I can also expect to see our total debt drop below $20,000 in June. Our kids are at their dad’s house for the summer, and so we anticipate saving money on groceries over the next two months. I haven’t decided yet how I’m going to spend that savings, but if it’s significant I’ll be dropping it either into savings or onto debt. I’m excited to see how it shakes out.
Here’s how I’ve been tracking to those goals:
Tracking to 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
Right now I’m $2,000 over where I should be for the first 2.5 months in, which means we’re doing really well in this category. This is accounting for the interest we’ve paid. The monthly reports are helping to keep me accountable. I hate the idea of saying I failed in any given month to hit my goals.
Write 24 Quality Pieces of Content for My Blog
This blog post is my thirteenth piece, which puts me at just over half way through my goal for this year, three months in. If after six months I’ve hit my goal of 24 pieces of content, I’ll move this goal post a little bit to keep myself writing so I don’t get lazy.
I do still have content ideas, so I’m not struggling like I have with past endeavors. Still on target with this goal.
I fell down a bit on this one in April when I realized I didn’t do a single thing toward this goal. I made it a point not to let that happen to me again and set myself a simple goal to review other finance blogs and see how they were monetizing. I found some great content online about the ways finance blogs typically will monetize their work. Some methods work better with some blogs than others do.
I already had a bit of heads up in this area because I’ve been interested in blogging for a long time now. I even had a blog before that I failed to upkeep properly. So I’m aware of some of the more popular blog monetization methods, like sponsored posts, ad revenue, digital products, and affiliate marketing. But I also know there are other methods that are less well known but potentially also more profitable.
Physical products are perhaps something I hadn’t considered as a possibility, but I think that merchandise would be great for people who build communities around their brand and make their brand something fun, which works as both marketing and a source of income. I’m unfortunately not great at building communities, but it’s perhaps something I can learn in the future.
My favorite idea by far is the creation of digital products, since this is something I currently do for my job in human resources. Personally, I find investing in stocks to be terribly confusing, so I think that if it’s something I can learn, I can help break them down for other people, as well as develop fun tools that can go along with the training courses, such as forms and trackers for investments. Yeah, I’m that nerdy.
Personal financial consulting is another one popular in the personal finance community, but as I’ve discussed before, I have absolutely no interest in doing any kind of consulting work since the income earned from this is very active and limited to the number of hours you can work in a day.
I’m continuing to review other options, but I already have a list of more than a dozen different monetization methods, and I know some of them are successful and things I can and want to do.
Until Next Time
Stay tuned for June’s updates. I’ll continue to share in areas where we’re doing well and areas where we’re struggling, and I’ll keep moving on my other goals as well.
Keep crushing your own goals, and I’ll keep crushing mine.
View the April 2020 report.
View the June 2020 report.