Archive for the ‘debt’ Category

A person’s lifetime is filled with memorable dates: birthdays, first dates, anniversaries, etc. I am happy to announce that March 4, 2010 is added to my list of significant dates in my life.

Today is the day I become Debt Free!


This post may be slightly dramatic recapping my quest towards debt-freedom… but some day I will grow accustomed to having a positive balance in my financial life and slowly I’ll forget the significance of today. So before moving on, I kind of want to be sentimental and inadequately describe the fantastic feeling of freedom I have at this moment. I owe nothing! Not even a tiny balance on a credit card! When I look at my money, it is all mine.  My next paycheck won’t have to be divided to debt, but will be 100% mine to spend, save, give!

Why, do you ask, am I so sentimental and weird about debt? I don’t talk about it often, but for years my parents lived a middle-to-high class lifestyle—a facade that was built by thousands of dollars in credit card debt. I was devastated to find out the truth, mostly because of my parents’ shame and guilt on merely wanting to give their kids a great life. Our lives changed dramatically after that and we became almost slaves to lenders, altering our lives out of desperation. Through that experience, something in me sparked and I took on the rest of my college education and vowed to start my adult life differently by paying off my debt as soon as possible.

So three years and $13,800 later, I am finally debt free! Here’s the final recap of my payments:

Thank you to anyone who has encouraged me during this last year! To anyone who is in debt… you CAN do it! It takes a lot of hard work and perseverance, but I promise the end result is worth it. I’m done! I’m done! I’m done!!!!

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I just got a comment from a reader and thought I would turn my answers into a post in case anyone else has the same questions. Thanks to all the readers out there! It still amazes me all who have joined me on this journey. Also, I started a formspring page if anyone else has any other questions for me.

Question #1:

Do you keep your funds in bank accounts, high-interest accounts, or just in envelopes at home?

I hardly ever use cash because I lose track of the receipts. Usually I just use my debit card. I will occasionally put large purchases on my credit card, but that is only to gain points and I always pay it off the next few days.

As for where I keep my funds, I’m a bit of a bank account slut and tend to have an account open for each of my savings goals. Dividing up my goals within accounts gets tricky for me. Here’s how they’re divided:

Bank #1: Bank of America
-Regular checking account
-Car Repair Fund savings account
-Credit Card

Bank #2: Credit Union (because it has great rates)
-Gift Fund – regular checking
-Emergency Fund – money market account
-Wedding/Future Fund – money market account

Other Institutions:
-401(k) – invested
-Roth IRA – invested

Question #2:

I am trying to get out of debt in this year, and I need to get some ideas. Do you think that is OK to build an emergency fund while paying debt or paying debt first and then build your emergency fund?

First off, it is definitely okay to build an emergency fund while paying debt. In fact, I recommend having a small E-Fund before you start paying debt so that if emergencies happen, you’ll have some money to cover it instead of credit cards (aka: instead of going further into debt).

After you gain a small savings (recommend at least $500-1,000), then I would decide which you are going to focus your efforts on: paying debt or building your savings. Ideally, you would be doing both at the same time with more aggression towards one… and that really depends on your situation. If you have a really high interest rate on your debt, I’d pay that first. However, if you have a mortgage and kids, then you may want to beef up your savings before tackling your debt.

I chose to focus my efforts on my debt, but that is because the majority of it is to my parents, so I wanted to get that paid off ASAP. However, that didn’t stop me from saving extra money during the process. I’m about to pay off my debt (!) and have about $4,500 in liquid assets. I wouldn’t recommend this to everyone, but since I am single, newly out of college, and have minimal living expenses, this plan worked best for me.

I also advise you to create a budget and spend the first three months tweaking it and trying different savings/debt goals and see what works best for you. Don’t be too aggressive or else you may give up altogether, but make sure that your goals are achievable and can be reached with a little bit of hard work and perseverance.

If any other PF bloggers want to chime in or link back a similar post to share their experiences, please feel free to leave a comment! If you have any other questions (PF related or not) please ask below or on the formspring page.

Thanks again for reading! I can’t promise that I have the best advice or experience, but I’ll definitely share if anyone has questions! :)

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Debt Update: I’m so close!

This month I’m paying $1,200 towards my debt—the most I’ve ever paid excluding my tax refund from last year. The money is a combination of $200 from babysitting and $1,000 out of my monthly budget. It’s a crazy plan to make February as frugal as possible. It may be a tight month, but it’s also the shortest and I’m just ready to get this over with!

ONE more payment until I am DEBT-FREEEEEEEEE!!!!!!

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Remember the days when I’d pay a measly $500 towards debt? Those days are no more. I didn’t update this towards the end of December, but I had an extra $300 through income and monetary gifts so I added a total of $1000 last month to finish the year strong. I cannot believe it! I don’t think I ever would have thought it possible this time last year to be this close!

This month I sent $800. I could maybe send more money that I earn, but right now I think I’ll need that for some living expenses this month. My hope is to get this paid off in March with tax refund money.

I cannot believe I’ve paid $12,100! That’s a freak-load of money and I’m so excited to soon add these dollars towards my savings.

Two more payments until I’m debt free!!!!

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A “Me” Fund

Last week I posed a question regarding what readers think my saving priorities should be in 2010. Well, I’m still mulling over those brilliant answers and figuring out what will be best for my situation… but Chelsea Bea from Pencil Skirt & Pearls had a great suggestion. She wrote:

I think that once you’re done paying off your debt, you should start a little fund called the “me” fund. Every month I think you should put in $25 – $50 in it. In six months or so, I think you should buy yourself something really nice to reward yourself for paying off all your debt. I’m think a new purse, a classic pair of shoes, a piece of jewelry, something to remind you, for years to come, of how hard you worked at paying off your debt. Obviously, this isn’t the most practical thing to do, but I think that people, if they’re in the right circumstances, should do it more often. Life is short, and I think doing things like this help to rejuvenate the soul.

I love the idea! She’s totally right: life is short and I think that I deserve a little something pretty once I’m debt free. I have an idea of what this purchase will be… but I am curious to see what the rest of you would choose. So please vote below and comment if you have any specifics. :)

If you were getting out of debt…

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Debt Update: $2800 left!

Personal finance has made me a little weird.

Here’s what I mean:

Each weekday morning I try to wake up early. I read some blogs, write posts for the day, stalk check up on facebook friends, and meander before I have to get ready. Well, today was no different. As I was sitting on my bed balancing a hot cup of coffee and my netbook, I turned to my online bank account and squealed, nearly dropping my coffee mug on my pretty covers. I was so happy! The reason? My bank account was $1000 less than it was yesterday!!!! It was sooo exciting! (See what I mean? Weird.) But for me that could only mean one thing: my debt and saving checks had gone through. :) :) :)

You’ll see where I saved in tomorrow’s Spending Report (gotta keep those interesting), but here’s the debt paid for this month:

$2,800 left? Psssh. That’s nothing. And who knows? I may be debt free sooner than I think…. ;)

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Readers! PF Bloggers! I’m pretty terrible at making a decision by myself and I’d love your help and opinions. You all helped me decide whether to buy shoes and how to allocate raises, and even extra roommate rent. As I begin to make my 2010 goals, I’m faced with a few option for the Savings/Debt money I have each month. I will do my best to explain the status of it all.

Top Priority in 2010:

My #1 top priority for the year will be to pay off my debt, which should be done April 2010.

January to April 2010:

  • $700 to Debt
  • $25 to Car Repair Fund (I’ll probably continue this throughout the year)
  • $100 to Roth IRA
  • =$825 per month

Next Priorities:

After I pay off my debt, the focus changes a little bit. Here are the three things I’m debating about right now: Emergency Fund, Wedding Fund, or Max out the Roth IRA. Right now with $825 flexibility each month, I don’t have enough money to fund all three goals in addition to my debt.

Here’s the status of each:

  1. Emergency Fund at $6,000
    I’d have to add $3,600 to reach this goal since the account already has $2,400. That would mean approximately 5 months of $700 savings. If I start in May, then I could be done with that in September, or $450 each month until December.
  2. Roth IRA at $5,000
    I will continue with $100 per month January to April. If I want to max out the Roth next year, I’d have $400 and would have to contribute $575 each month for the rest of the year to reach my max.
  3. Future [Wedding] Fund at $5,000
    I want to have at least $5,000 to pay all (or most) of my wedding whenever the time comes. Read more about this account here. I already have $1,000 in this account and would need to save $4,000 in order to reach my goal in 2010. To be honest, I don’t expect to get engaged in 2010 but it certainly could happen if J moves here in the next few months. This may seem like a silly or premature goal, but it’s really important to me. Hmm perhaps I could reevaluate this once J and I live in the same town? I’m hoping that happens in 2010 also.

Other Factors to consider:
–Tax Refund: I got $1400 this year and that money could be used for some of these.

–Extra income: I could designate all extra income to go towards a specific goal in addition to what my top priorities are.

What do you guys think?
The Roth IRA is what is getting to me. I know I should max it out, but if I didn’t have that there, then I could easily save the entire amounts for the Emergency Fund and the Future Fund.

I know that in the scheme of things this is really not a big deal and I can always reevaluate things in the future, but I’d like to get my 2010 financial goals ironed out before the year so I can plan accordingly.

Pay debt, then…. Roth IRA, Emergency Fund, or Future Fund?

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Debt Update!

Today my $700 check went to my debt! Yay! To date I’ve paid $10,300 and only have $3,500 left to go!

I’m not sure whether you all remember, but this debt goes to my parents. They took out a loan for my college, and I’m paying them back for most of it. Read our story here. My dad sent me an email last month when I upped my payment by $100 with my raise. Here’s what he wrote:


Dear [MPP],

I got your payment of $600 for the college loan today. I’m guessing that you have proportionately raised your monthly payment of debt relative to your increased income. This reflects a very strong discipline. You have demonstrated great wisdom and discipline in your consistent and aggressive payments!! I immediately deposit these checks and turn around and send a payment to our balance in addition to our monthly payment.

Anyway, again, Mom and I are very very proud of your discipline and consistency.

Love always,

PS, eager to see you soon!! Yehaww

Aw, I love my parents. Hopefully with the extra $100 he’ll be equally as proud. ;) Here’s what the chart looks like now:


Only FIVE more months until I’m debt free!

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There are so many inspiring bloggers that have done some incredible things to get out of debt. Carrie recently talked about her experience living the bare minimum to pay her’s off. FB at Fabulously Broke worked her way out of $60,000 debt on a $65,000 salary. SS4BC each month pays 38% of her paycheck. Krystal paid $17,000 debt in 10 months. Debt Ninja pays over $1300 towards his debt. Now granted each of them have different salaries and different living expenses, but I surely I can afford to get a little more intense with mine.

What would it look like if I pay just $100 more each month?

Currently I pay $600 a month, which is still a lot of money for me. But $700 towards debt? That would be hard work! And pretty freaking awesome! If I start in November, then it will be an even six payments of $700 and I would be one month closer to becoming debt-free. *dreamy sigh* I think I could definitely handle $700 in January, but with November and December’s holiday expenses, that may make things a bit tight. It’s not a huge sacrifice to add more to savings because if I need the money, it’s still within reach. But paying off more debt is a bit riskier because once the check is sent, it’s gone forever!


I’m going to do it. I’m going to pay $700 towards my debt starting next month.

April 2010… here I come!!!

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One check at a time…

Yesterday my check went through for my October debt payment of $600. This time last year I had $10,375 left to pay and now it’s down to $4,200! It’s amazing what can happen in one year. :)


Seven payments left until I am debt-free!

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