The month of June marks the start of my debt free journey. Because I plan on documenting my debt free journey and share my payoff reports I thought I should write up a humble beginnings post. One day I will look back at this post and go “Man I was in a lot of debt!”. Check out my debt free tips to a debt-free living. Alright, let us get into my $200K debt.
RELATED POST: June Debt Payoff Report
START OF MY DEBT FREE JOURNEY
Afer I graduated college, I was one of the lucky ones who walked away with my bachelor’s degree debt free. The freedom was short-lived because I made the decision to go to law school immediately after. I was moving directly into law school without any idea of finances. I believed that because I paid my bills on time and had money left over to do things that I was great with money.
By the time I completed law school, I had racked up $152K worth of debt. I had one credit card that was maxed out. Instead of putting the money I earned from my teacher’s assistant job during law school away for my bar prep and bar applications I spent it aimlessly on things such as clothing, eating out, and hair products. Therefore, when time to pay for my bar course and bar application I had to take out a bar loan. Probably, the wises decision I made about my bar loan is only taking out exactly what I would need.
After my bar exam, I found myself absolutely broke. I had $45 dollars to my name. When I landed my first attorney position after bar results, I took out another credit card to help pay for moving expenses, made an unwise decision to create credit accounts for Mattress Firm and Rooms to Go to purchase a mattress, bed set and couch for my apartment. All these things I could have saved up for and purchased later.
By the time I decided to take control of my debt I was at a grand total of $200,000
Figuring out how to pay off debt was new to me, I read a lot of books and did a lot of research trying to get a better understanding of finances and how debt works. To pay off my debt I am following Dave Ramsey’s Debt Snowball Method for paying off my debts.
You can check out my review of his Total Money Makeover at this post here.
The first step I took for paying off my debt was figuring out exactly how much debt I was in.
- iPhone – $620.33
- Best Buy – $580.47
- CareCredit – $780.22
- Mattress Firm – $1,105.22
- Rooms to Go – $1,420.22
- Discover – $2,823.61
- Capital One – $4,795.65
- Bar Loan – $8,602.90
- Car Loan – $32,004.50
- Student Loan – $152,728.01
Grand Total: $205,461.13
Once I had an idea of my debt, I created a list of my monthly bills. Check out a snapshot of my monthly bills to see exactly how much of my paycheck goes towards bills. I then went on a strict budget of $300 dollars and started the envelope method to keep me on track. To learn how I budget my money check out this how to create a budget post.
Also, I designated an automatic $25 dollars for my debt of target and also got a part-time job. Any extra money I made went straight to my debt.
- Part-Time Job: $140-$200
- Youtube: $130-$140 every other month
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Finally, I do not have an exact date for when I will completely be debt free. My debt payoff assistant app projects me to be debt free in August 2021 (excluding my bar loan and student loans). Obviously, I plan on being debt free before then with putting every extra payment I make towards debts. You can finally my debt journey by reading my debt progress reports here.