Sunday, November 10, 2013

I'm back!!! On Debt & Financial Stability

My sincerest apologies for not being active for almost 2 whole months!! I won't lie to y'all...I've been going through shit. I do appreciate the calls, texts, emails, etc. I've been getting asking me why the hell I haven't been blogging. It's been on my mind but how I've been feeling lately I just didn't know where to start but now...I'm back ;)

So, getting down to of my recent endeavors involved managing my finances and I've began a quest to be debt free by 30! Now, let's talk about a nutshell I have:

  • ~$150K in student loan debt
  • ~$1.5K in credit card debt
  • ~$3K left on my car
  • Grand total: ~$155K
Yes, I know my student loan debt has probably scared you away from this post. Just thinking about it makes me depressed, I almost can't believe I actually wrote it down for everyone to see lol. It has sprung me into loooong thinking sessions about money. I realized I never thought I could overcome debt, I thought it was something I had to live with (as I think most people do). I've always kinda had the thought that I would work, pay my bills, have some money in savings and be fine. Before, I thought that paying my bills on time and having money in the bank was the way to life! Since I've been totally financially independent, I've been searching for a way out of this gerbil wheel. What if...I could live without bills?! I mean of course I'll have a monthly light, water, and gas bill but what if I didn't have a rent, credit cards, or most importantly student loans?!

I had to write this post, not to tell you all about my outrageous amount of student loan debt, or to make you feel bad for me (unless of course you feel bad enough to put $5 on it haha)...but really I want my readers to think about money differently too. Often I see money all over social media. People my age think paying bills, and buying a couple stocks has them set for life. I also notice a good amount of people blowing money...but that's another story. I wonder if people realize the time value of money or instead of trying to make it grow instantly actually just saving it? So I'll share with you all what I've learned so far and how I plan to tackle this enormous amount of debt in 6 years...(and no, I don't have a six-figure income alone).

Firstly, budget. For some reason the word budget has a negative connotation. People think it means to live cheaply or pinch pennies, or whatever. Not the case, by definition a budget is an allocated amount of money. You just have to have a plan for the money, so if partying is a part of your plan...allocate money for it. BAM! You've just budgeted. Now the trick to becoming financially stable is to stick to the budget. In the past, budgetting hasn't worked for me because I'd always go over my budgets. Me at 8pm: "Tonight I'm only going to spend $50." $80 later...Me by 11 pm: "Sure, you can keep the tab open." No bueno...I have to reform myself. My first step was getting's a personal budgetting tool that so far has been really helpful! I'd suggest it :)

Now onto the part you've been waiting I plan to get out this mess before I die? Hello Dave Ramsey! Now I'm not being paid to advertise him and I can't even say I'm well versed on ALL his principles at the moment but right now...I'm loving him! He has what he calls "7 Baby Steps" that I think make a lot of sense. It seems so intuitive, as I was reading them I thought "duh" several times. Why the hell haven't I been doing this anyway?! I guess sometimes it takes someone else to say it to you for you to understand maybe? Idk but since I've read them, I've been sold! I won't go into every step because I trust that you can (and will) click the link and read them but the debt snowball (Baby Step 2) is how I plan to get out this debt relatively quickly. The basic idea is as you pay something off you apply that former payment to new debt (in order from least to greatest). As you pay off larger debts the "snowball" rolls faster. For example: say you have three credit cards with balances of $400, $700 and $2000 with 0% interest rates to keep it simple. The minimum payments are $25, $30 and $45 respectively. Obviously you have to pay the minimum payments each month but you have $5 extra to spare. So you "attack" the $400 one first paying $30/ takes you 13 months to pay it off. Then you take that $30 you were putting on that debt and add it to the $30 (like a snowball) for you $700 card minimum payment. Now you're paying $60 on that $700 debt so you pay it off even quicker, once that's gone you add that $60 to the $45 you're paying on your largest debt and it goes away even faster. Makes sense eh? I eliminated interest rates to keep it simple, it can get more complicated with interest rates because if your $700 credit card had the largest interest rate you might want to pay that one off first, etc. The plan is set up so that you stay motivated by having goals that you continuously meet! Yay!

I like his plan because by the end of it you should actually be financially stable. Having money in the bank doesn't make you stable if you have bad habits. Actually, having debt doesn't necessarily make you unstable either as long as you have a plan to pay it. Realistically, I don't know if I can actually jump this hurdle in 6 years but I will definitely give it a go. So far I've been doing much better with my finances and I've made headway already! Wish me luck!!

I know I can't tell y'all I've been going through shit and NOT tell you what it is. I've already spoiled you all with sharing my intimate thoughts and feelings...little by little I'll tell what's been going on with me, each posts tells a story. For a second I was cloudy but now I'm back to being Crystal clear ;)

1 comment:

  1. Hi Crystal! My name is Heather and I was hoping you could answer my question about your blog! Please email me when you get a free moment at Lifesabanquet1(at)gmail(dot)com :-)