Going To War With The Debt Monster

There are a TON of resources available for anyone who wants to develop and implement a plan to work towards becoming debt-free.  We have taken advantage of precisely ZERO of those resources.  Stupid?  Maybe.  On a solid road to becoming debt-free without laboring over charts, checklists, graphs and books?  Absolutely.  So, here’s what we did.  (Dramatic pause, for effect, of course.)  We stocked our arsenal with four weapons and declared war with the debt  monster.

Cutting Costs

We started by listing ALL of our bills each month.  We listed who we paid and how much we paid them each month.  Getting an idea of how much money, total, is going out the door each month in bills was important so that we could understand how much we should have left over each month, after the bills are paid.  The big question became, is there anything we pay each month that we don’t LOVE having?  The question was not, can we sacrifice any of these things?  We decided early on that we did not want to be “uncomfortable” during our debt-free quest.  A personal decision, of course.  But, for us, it was important.  We were not interested in cutting every single cost we could in order to become debt-free quicker.  We were willing to compromise, to a certain extent.  But, giving up steak in exchange for ramen noodles to decrease the monthly grocery bill was not the kind of compromise we were interested in.  We identified a few things that we were absolutely willing to give up in order to cut some costs and free up some additional money each month to be put toward our debt-free mission.

We each had a cell phone and a tablet on our monthly cell phone bill, with 15 gigabytes of data shared between the four devices.  We use our phones plenty but were not using data on our tablets.  (Josh transitioned to using a mini-laptop and I only use my tablet at home, where we have WiFi.)  So, we terminated the service to our tablets, which saved us around $25 per month on the bill.  We still have the tablets and they are still fully functional offline and over WiFi, they just aren’t connected to our cell phone plan.  (We can use our phones as mobile hotspots, so, if, for some reason, we NEED to use a tablet outside of an area with WiFi, we can.  I don’t see that ever needing to happen, but, it’s at least possible.)  [$25 per month savings so far.]

We had satellite TV at approximately $55 per month.  We rarely watched it.  It was on a lot, for background noise and music, but, we used iTunes to watch movies and really didn’t watch anything else on the TV.  So, we decided to take Netflix for a test ride.  After 14 days of Netflix, we determined that Netflix would do just fine at providing us some sort of television programming, it was only $10 per month and, since we have a smart TV, we could get rid of some “hardware” cluttering up our house.  (Bonus: you can watch Netflix on your phone, tablet or laptop AND you can download movies from Netflix to watch whenever you don’t have cellphone service.  Winning solution for rainy days at camp!)  So, we called Dish Network and cancelled our satellite TV, which saved us around $45 per month.  We’ve been using Netflix for about 2 months now and have NO regrets.  We’ve found that we like it more than the satellite, actually.  You can watch what you want when you want.  Pause and rewind are pretty sweet functions that we did not have with satellite, too.  [$70 per month savings so far.]

We each had a subscription to Sirius XM satellite radio at approximately $200 per subscription, per year, for a total of $400 per year (or $33ish per month).  My XM subscription goes to a portable XM receiver that I have docking stations for in my car, in my office and in our living room.  My XM receiver is on probably 10 – 12 hours per day, at least.  Every single day.  Despite the fact that I work downtown in Pennsylvania’s capital city of Harrisburg, I have NO cell service nor any available public WiFi networks for the 8 ½ hours I’m at work each day.  So, even though I’d love to just be able to stream Pandora all day long, it’s a no go because I’d go through too much data.  Also, the Bluetooth connection in my car does not support music.  Phone calls will go through just fine, but, music will not.  So, I use my XM receiver in my car every minute I’m in the car.  Josh’s truck radio is XM enabled, so that’s where Josh’s XM receiver / subscription was.  Josh’s vehicle is much nicer about the whole Bluetooth thing, allowing him to listen to Pandora over the Bluetooth connection, making a built-in XM receiver and $200 yearly subscription unnecessary.  So, we did not renew Josh’s XM radio contract, which saved us around $33 per month.  [$103 per month savings so far.]

We have insurance through Progressive – 2 cars, a motorcycle and our house.  I’m very satisfied with what we pay for all of our insurances, but, I’ve made it a habit to call Progressive every now and then to see if they’ve added any new discounts that we might qualify for.  Sometimes the answer is no, but, sometimes the answer is yes.  I figured I’d give them a call and see.  Turns out, there was a new discount we qualified for (for simply being employed full time), which saved us $2 per month on our car insurance.  Not a lot, but, worth the few minute telephone call in my mind.  [$105 per month savings so far.]

We both have health insurance through our employers.  I cover Josh as his secondary insurance through my employer, for a fee, as my coverage is a little better than the coverage offered through his employer.  But, after reviewing our health insurances, we determined that we could adjust Josh’s primary coverage a little bit in order to save a bit of money without sacrificing any benefits, which saved us $35ish per month.  [$140 per month savings so far.]

Our take on cutting costs was making a few minor adjustments that have not impacted our “comfort” at all.  Overall, we were able to save $140 each month.  After we reviewed our monthly bills, trimmed the fat a bit without sacrificing daily comfort and got a handle on how much money we should have left after the bills are paid each month, it was time to get a handle on how much debt we actually have.

Confronting Debt and Making A Plan

This part was going to suck.  There were no two ways about it.  We made decent money and spent decent money for 6 years without really worrying about how much total debt we had.  We paid our bills just fine and knew there was always money left over after the bills were paid, but, we had NO idea what the total debt figure was.  We sat down, opened a blank Excel spreadsheet and got to work.  First, we listed all of debts.  We came up with 6 debts (not including our mortgage).  (And I will absolutely admit that I was terrified!)  We listed the current monthly payment we were making toward each debt (which was mostly the minimum payment).  Then we did some research to find out the interest rate on each account and how much we owed for each debt, right at that very moment.  Armed with that information, we identified the debt with most astronomical interest rate.  For us, this was our Lowe’s credit card that carries a 24.99% interest rate, and, conveniently, a significant balance due to home renovations.  Since this interest rate was much higher than all of our other rates, we decided to make this our first priority.  So, that account got a number 1 beside it.  Then we arranged the rest of the debts (which all had relatively close interest rates) in order from smallest debt to the largest amount we owed – numbers 2, 3, 4, 5 and 6.  We decided to pay the minimum monthly payment on debts 2, 3, 4, 5 and 6 and focus our attention on pesky number 1, which had a significant balance and was costing us a lot in interest.

Give A Little Extra

We focused on debt 1 and we paid it as much as we could, whenever we could.  First thing to mention, though – remember that $140 we saved by cutting costs?  We added that $140 to the amount we were already paying toward debt 1 every month.  Since we were already used to that $140 going out the door each month, it made no impact on our “comfort” to redirect it to debt 1 instead of whatever it was originally being paid toward.

Then, we paid debt 1 as much as we could, whenever we could.  We paid it with money we got as gifts, even if it was only $50.  We paid it with money we won at the casino, even if it was only $20.  We paid it with money we had at the end of our bi-weekly pay cycle, even if it was only $60.  We paid it with money we could have spent eating out or buying stuff.  And right before our eyes, it was shrinking.  It was hard to tell when we were making those $20, $50 or $60 extra payments a few times per month.  But, looking at how much we paid it each month AFTER redirecting the saved $140 AND all of those little payments throughout the month, it was shrinking!  The progress was encouraging and motivated us to pay the debt even more every month, challenging ourselves to “do better this month than last month.”  Work bonuses, income tax refunds and raises at work are all great opportunities to feed the debt monster a little more!  There’s not much sweeter than being able to say, “It’s FINALLY PAID OFF!”

The Debt Snowball

After debt 1 was paid, in full, we took the amount that we had been paying toward debt 1 each month and added it to the minimum payment of debt 2 that we had been paying all along – snowballing the payment toward debt 2 into a bigger, more meaningful payment, without impacting your “monthly outgoing” at all, since all the money has already been going out the door each month.  Making that bigger, more meaningful payment, giving a little more every opportunity possible and continuing to snowball the payments have accelerated our debt-free quest.

Our Progress So Far

We began our journey toward financial freedom in September 2016.  When we started in September 2016, our total debt was $73,676.99.  Since September, we charted our course with the steps above and stayed the course, even through Christmas!  As of this very moment, our total debt is $60,061.81.  That means we’ve paid $13,615.18 in four months toward our debts.  (That’s CRAZY!)  Based on our steps, above, we anticipate having all of our debts (with the exception of our mortgage) paid, in full, in the next 24 months.  Are you kidding me?!


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