"The very purpose of our life is happiness, which is sustained by hope. We have no guarantee about the future, but we exist in the hope of something better. Hope means keeping going, thinking, ‘I can do this.’ It brings inner strength, self-confidence, the ability to do what you do honestly, truthfully and transparently."
- Dalai Lama
Friday, April 18, 2014
Wednesday, April 16, 2014
Another One Bites the Dust!!!!
I'm proud to say that I have now paid off 4 of my private loans in the total amount of ***$26,354.72*** (!).
That's right! I've paid off yet another loan. How sexy is that? ;)
I paid off a loan that fell under the Private Loan 3 umbrella, in the amount of $10,749.01. This particular debt monster had a 3.71% interest rate and a $117.34 monthly payment. This loan was from undergrad and it has been *OVER* 10 years since I took it out. It was about time that debt monster went away! I took out money from my savings to pay for this.
Here's an updated breakdown of what I owe now that this loan has been paid off:
I have to admit, every time I push that button in my account to confirm I want to pay off another loan, I get a rush of adrenaline. I think I'm getting a little addicted to paying off my debt. :)
This is definitely hard work, and I have moments where I feel completely overwhelmed by the burden of this debt, but it's so so nice to start seeing some progress. If I hadn't paid down some of my private loans, and I was continuing to pay the monthly amounts I was previously paying (about $647/ month), my monthly payments would be up to $1,740.65 by now!!!!!! That makes $1362.95/ month seem a lot better. It's all relative, I guess. :)
How is your debt payoff plan coming along?
That's right! I've paid off yet another loan. How sexy is that? ;)
I paid off a loan that fell under the Private Loan 3 umbrella, in the amount of $10,749.01. This particular debt monster had a 3.71% interest rate and a $117.34 monthly payment. This loan was from undergrad and it has been *OVER* 10 years since I took it out. It was about time that debt monster went away! I took out money from my savings to pay for this.
Here's an updated breakdown of what I owe now that this loan has been paid off:
| Student Loans | Amount Owed | Amount Paid Off | Interest Rate | Monthly Payment | Payoff Date |
| Federal Loans | $124,335.20 | 6.00% | $1,093.65 | ||
| Private Loan 1 | $11,344.15 | 5.00% | $0.00 | 3/7/2014 | |
| Private Loan 2 | $9,962.07 | 3.01% | $81.18 | ||
| Private Loan 3 | $11,599.86 | 3.21% | $84.77 | ||
| $10,749.01 | 3.71% | $0.00 | 4/16/2014 | ||
| $8,908.30 | 3.71% | $56.74 | |||
| $8,583.96 | 3.71% | $46.61 | |||
| $2,137.82 | 3.72% | $0.00 | 2/28/2014 | ||
| $2,123.74 | 3.72% | $0.00 | 2/28/2014 | ||
| Total | $163,389.39 | $26,354.72 | $1,362.95 |
I have to admit, every time I push that button in my account to confirm I want to pay off another loan, I get a rush of adrenaline. I think I'm getting a little addicted to paying off my debt. :)
This is definitely hard work, and I have moments where I feel completely overwhelmed by the burden of this debt, but it's so so nice to start seeing some progress. If I hadn't paid down some of my private loans, and I was continuing to pay the monthly amounts I was previously paying (about $647/ month), my monthly payments would be up to $1,740.65 by now!!!!!! That makes $1362.95/ month seem a lot better. It's all relative, I guess. :)
How is your debt payoff plan coming along?
Wednesday, April 9, 2014
Why You Need a Budget!
So, I wanted to share something I've found really useful. It's aptly called You Need a Budget (YNAB).
We all know that trying to pay off a huge debt requires planning and budgeting. If you don't have a good way of tracking your spending habits, how can you improve them? I discovered YNAB recently and I wanted to share it with you.
With YNAB, you can live off last month's income instead of relying on future income, and you can start saving money in the bank to pay off your credit cards in full each month. You can even balance going over budget in one category with spending less that month in another category, and you will have given every dollar of income that comes in a job. That's right, you will be making your money work and you will know exactly where each dollar is supposed to go!
Budgeting for me has always meant typing up a new budget every month and writing out general recurring expenses, but I would leave out a big gap for irregular or unplanned expenses. I would generally just take a look at how much I had left in my account and limit my spending only when absolutely necessary.
Now that I've discovered YNAB, I realize that what I was doing previously was not budgeting. It was my own little overdraft prevention program. ;) If you're serious about getting a handle on your finance, you know that overdraft prevention is not enough. Let's leave that to the amateurs. You need a solid plan that will help you cut unnecessary expenses, give you a cushion from last month's income to cover your monthly expenses, and use extra money to pay off your debt.
Another great thing about YNAB: you can tailor it to your income and expenses and it's very simple to use.
We all know that trying to pay off a huge debt requires planning and budgeting. If you don't have a good way of tracking your spending habits, how can you improve them? I discovered YNAB recently and I wanted to share it with you.
With YNAB, you can live off last month's income instead of relying on future income, and you can start saving money in the bank to pay off your credit cards in full each month. You can even balance going over budget in one category with spending less that month in another category, and you will have given every dollar of income that comes in a job. That's right, you will be making your money work and you will know exactly where each dollar is supposed to go!
Budgeting for me has always meant typing up a new budget every month and writing out general recurring expenses, but I would leave out a big gap for irregular or unplanned expenses. I would generally just take a look at how much I had left in my account and limit my spending only when absolutely necessary.
Now that I've discovered YNAB, I realize that what I was doing previously was not budgeting. It was my own little overdraft prevention program. ;) If you're serious about getting a handle on your finance, you know that overdraft prevention is not enough. Let's leave that to the amateurs. You need a solid plan that will help you cut unnecessary expenses, give you a cushion from last month's income to cover your monthly expenses, and use extra money to pay off your debt.
Another great thing about YNAB: you can tailor it to your income and expenses and it's very simple to use.
- The YNAB System
Note: I highly recommend that if you are new to YNAB that you watch the tutorials. It will take a little bit of time, but it will be worth it because then you will actually know what you're doing ;)
The thing I love about the YNAB system is the intentionality of it. You don't have to feel guilty spending $600 on a vacation one month, if you've been putting aside $50/ month for 12 months for it. And since you did it before taking the vacation, you won't be putting it on a credit card without the ability to pay it off in full as it comes due. So instead of paying $50/ month on the backend with interest, you'll have saved the money ahead of time and be ready to pay for it all at once without causing any major hiccups in your finances.
The other thing that's nice about YNAB is that you can use last month's balance for the next month's expenses. It helps you rely less on future income if you use your money this way.
The other thing that's nice about YNAB is that you can use last month's balance for the next month's expenses. It helps you rely less on future income if you use your money this way.
- Cost: $60 regularly, but if you use my referral link, you will get it for 10% off ($54.00). I will also get $6 if you purchase it through this link, so it's a win-win :). If you're a student, it's FREE!
I personally think it's worth the cost. As the site reports, YNAB users have been able to save $200/ month on average just by using the software. And it's a one time cost. You pay for it once and then you have it for life. Everyone's situation is different, especially when you're trying to pay down debt, but to me, paying $54 to learn to track my money better and potentially save at least $200/ month was certainly worth it. The thing I love is that I see where every dollar is going and it's easier to track and make adjustments when you know where your money is going.
Once you learn how to use the system, it will let you designate a category for any money leftover after your monthly expenses and savings goals for that month are met, such as Student Loan Payoff (one of mine).
- Which leads me to Observer's Paradox.
While I use Mint to track my expenses and see my accounts all in one place, it hasn't been my favorite budgeting tool. I think that's because I can't plan with it. It's backward looking - you only see expenses once they've happened, whether you planned for them or not. If you go over budget, there really is no consequence as far as Mint is concerned. What I like most about YNAB is it allows you to plan for the future. For example, if you go over budget, you will need to reduce your other spending categories to make up for that. If you have a one time big expense coming up, you can plan for it by putting aside an amount every month to pay for it when it comes due. I consider it a pre-purchase savings plan, which is better than a post-purchase credit card payment plan with tons of interest.
Other features I like:
Other features I like:
- Helps you plan for paying off your credit card debt
- Helps you see where the 'leaks' are in your budget
- Allows flexibility for irregular income/ expenses
If you're not ready to put down the money for it or you want to try it first, they also offer a free 32 day trial.
What budgeting tools do you use?
Monday, April 7, 2014
April (Negative) Net Worth Update: -$133,502.35
Here's my net worth update for April 2014:
While I have more cash on hand, that cash will be used to pay off my credit cards and to go towards debt payment this month. I cashed out one of my investments so I could repay another one of my loans this month. It was a risky investment and I didn't feel comfortable with the prospect of potentially losing my capital, so I cashed out and walked away.
| Assets | April | March | Difference | % Change |
| Cash | $18,677.30 | $6,974.60 | $11,702.70 | 167.79% |
| Investments | $25,114.68 | $30,107.48 | -$4,992.80 | -16.58% |
| Total Assets | $43,791.98 | $37,082.08 | $6,709.90 | 18.09% |
| Liabilities | ||||
| Student Loans | $174,219.82 | $173,658.17 | $561.65 | 0.32% |
| Credit Cards | $3,074.51 | $1,544.94 | $1,529.57 | 99.01% |
| Total Liabilities | $177,294.33 | $175,203.11 | $2,091.22 | 1.19% |
| Total Net Worth | -$133,502.35 | -$138,121.03 | $4,618.68 | 3.34% |
While I have more cash on hand, that cash will be used to pay off my credit cards and to go towards debt payment this month. I cashed out one of my investments so I could repay another one of my loans this month. It was a risky investment and I didn't feel comfortable with the prospect of potentially losing my capital, so I cashed out and walked away.
The accrued interest on my student loans has resulted in an increase in my student loan debt, despite diligently making payments and already having paid down three of my private loans (about $15k total). Le Sigh! C'est la vie. It just serves as a reminder why I need to pay that debt down ASAP!
I went out to a nice restaurant for dinner with my man last night, but we decided that will be the last time for the month! For the rest of this month I'm going to try to limit discretionary spending and save as much cash as possible. With my freelance income starting to flow in nicely, I want to get my net worth up to about -$115,000 within the next few months. Some may laugh at that number, since I'll still be in the red, but to me steady progress is better than nothing!
Wish me luck!
How did you do in March?
Wednesday, April 2, 2014
What To Do With Your Tax Refund
If you are getting a tax refund this year, consider using it to invest in something with a guaranteed rate of return. I'm talking about putting that money towards your debt!
If you receive a large amount of money this tax season, whatever money you put towards your debt is guaranteed to give you a return equivalent to your interest rate. See here and here.
In order of priority, here are some ideas:
I personally added my tax refund to my savings account, and I will use that money in April to help pay off another student loan. Thanks Uncle Sam!
If you receive a large amount of money this tax season, whatever money you put towards your debt is guaranteed to give you a return equivalent to your interest rate. See here and here.
In order of priority, here are some ideas:
- Apply the refund to your debt with the highest interest rate, which usually tends to be credit card debt
- If you have money leftover, then use the remainder to apply to other debt based on whichever has the highest interest rate, as that will give you the highest rate of return.
- If you still have money left over after you've paid off any outstanding debts - congrats! You should either invest that money or add it to your emergency savings.
- Once your emergency savings is up to a level that you feel comfortable, you can then put that money towards your savings goals, such as an upcoming vacation.
I personally added my tax refund to my savings account, and I will use that money in April to help pay off another student loan. Thanks Uncle Sam!
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