There are two parts to getting out of debt: cut costs and increase income. The past few months I’ve ramped up both and here’s the low down:
I live with my parents rent-free and now work remotely so I save gas on commuting. I made a deal with my parents where I plan, shop for, and cook healthy meals for them in exchange for them paying for groceries. With my very minimal expenses, I continually find myself with $90 of miscellaneous money left over from my paycheck. I’ve typically left it as a buffer for various purchases and allowed my budget to always go overboard. However, I’m putting a halt to that and adding it to my monthly debt. That extra bi-weekly $90 adds up to $3800 by the time I plan to move out, which would make a nice debt dent. I save plenty (more on that below) and I have a healthy but frugal allowance. I could be a lot more strict about staying within my allowance and I’m looking forward to the challenge. When it comes down to it, I pay 56% of my paycheck towards debt – holy shit!
I’ve been babysitting, selling clothes on eBay, developing Katie Pelton Resumes, and I’ve recently started dog sitting again. So far in 2013, I’ve made over $1500 in extra income and 100% of that has gone towards debt. It feels great to finally have a bi-weekly income of over $1000!
Additionally, I want to announce some big news! When I first moved home, I projected to pay off my credit card by August and my first student loan by Halloween. I already announced that I have already paid off my credit card back in March and now I want to announce that my first student loan should be paid off by the end of May! It feels great to continually beat my goals and get rid of this debt as fast as possible!
I wrote recently about my difficulty saving because it’s so easy to transfer money back into my checking account when I want to spend it. Until my bad habits stop, I formed a relatively extreme plan to develop a healthy savings.
I opened a savings account at a separate bank where funds are directly deposited from my paycheck so I don’t even see that money. My goal is to save $200/paycheck with a high-interest savings account. After comparing many bank options and interest rates, I chose an online savings account through Barclays who offer a %1 interest rate, vs. the average .03%-.10%. This savings fund will add a healthy emergency fund and a buffer for larger purchases.
So that’s where I’m at these days. I continue to be incredibly motivated to knock out this debt but sadly it’s still going to take a long, long time.