In the last 90 days I have paid off $12,876.83 in Debt! More than 3 times my total pay-off in 2012.
*Click the graphs to enlarge them.
In the past three months I have transformed my life from a consumerist mindset maintaining the status quo on a treadmill of debt to taking control of my finances and putting myself on the path to financial independence. I did this by making smart decisions and having a little luck. Most of the changes I made were relatively easy and I am now in the perfect position to rapidly pay down my student loans.
Since last August I had wanted to start paying down my debt more quickly. I despised my student loans and wanted them gone as soon as possible. Instead of actually trying to do something about it I just made excuses for why I couldn’t do it. It wasn’t until last December that I actually examined my lifestyle and determined to make the changes that needed to be made in order to begin to more quickly pay-off my massive loans.
Honestly, the changes were not too difficult and did not take much time to implement. It took a ten minute phone call to cancel my Comcast subscription and save $95 per month. It took two minutes clicking around online to cancel my Spotify account and save another $10 per month. It takes five minutes each morning to pack my lunch for the day and save hundreds each month. It took little effort to consciously change my diet and eat cheaper and healthier foods. I actually gain time by not waiting in line to pay $3 for a Starbucks coffee.
By actually paying attention to my finances I have been able to dramatically increase my monthly cash flow. I am selling some of my PTO this year for a net $85 before taxes each month. I modified my Roth 401(k) to a traditional 401(k) to reduce my tax obligation and net an additional $90 each month. I consolidated my federal student loans to reduce my monthly minimum payment which will net me another $120 in cash flow each month (coming post). Finally, I got a big promotion at work and a 13% raise, effective this month (coming post!).
I have also had some luck. I only had to pay half my rent on my apartment for the last three months. I had some savings that I was able to put towards my loans back in January. I received a much larger than expected tax return last month. All of these decisions and some luck compounded on each other and I am now well ahead of my debt pay down goal.
My Wells Fargo loans goal for the end of March was $61,515.76 as I type this they sit at $58,562.07. Check it out:
I am almost $3,000 ahead of my plan in only three months. Moving forward this spread is only going to accelerate. I am absolutely amazed by my progress. If you would have told me in December that I would be able to pay off almost $13k in debt by the end of March I would have laughed in your face. But I did it.
Tracking my progress and writing about it here has given me so much motivation to keep this going. Watching my net worth spike and my debt plummet sets a fire in my belly to continue making the right choices and to keep looking for ways to save even more money.
Just look at this beautiful graph:
I have accomplished much in the last three months and it’s great to take a moment and pat myself on the back but now begins the real trial. I now begin the long slog towards the finish line. The sprint is over and I am now getting into my marathon pace to keep this going. There are no more months where I get half off rent. I have almost entirely exhausted my options for improving my monthly cash flow. My savings are depleted and there are no more tax returns.
My task now is to keep up my new found frugality. I need to avoid any big, frivolous spending decisions. Most importantly I must keep my variable spending under control. This is no easy task; in fact it even ticked up a little more in March.
I am nowhere near the spending levels of last year, a wonderful thing, but I must not let that fact become an excuse for letting it increase now. I continue to work on this category. Mostly I am trying to get my bar spending down and the Mr. Money Mustache community has been mostly helpful in that regard. Shout out to them!
I can’t be too hard on myself though. I am doing an incredible job and am in a great position. In the last three months 83% of my total spending has gone towards my student loans!
I need to remember that my life isn’t only about paying off debt. In the last three months my debt has been my second highest priority (behind my job) and I think it is time for it to take a back seat to some other priorities. It’s time to put the debt pay down on auto pilot and return to some of my other hobby’s albeit while continuing my new, good habits.
I am going to allow myself to increase my discretionary spending a little bit more than where it has been the past few months. I am going to be spending more money on groceries, I may buy a few books I’ve wanted to read (and are on month’s long wait-lists at the library), and I just bought some tickets to a soccer match this summer. I’m not going crazy but I am allowing myself to live a little.
It’s important to keep things in perspective. I am doing really well, my career is progressing, my finances are getting into shape, I’m actually happier than where I was a few months ago. In summary: Life is Good. I need to remember to enjoy the present while working to improve my future. I will be making an effort to strike the perfect balance between the two.
Of course I will continue to track my progress here and keep you guys updated. I think you will notice a change in tone from the last few months as I transition into the steady pace of debt pay down and let it take the backseat. Rest assured, we aren’t done yet; this is just the beginning.
The Q1 Statements
Here is how the income statement shaped up for the first three months of 2013 compared to 2012.
I have also put together this adjusted income statement to clearly illustrate the difference in my fixed and variable expenses compared to my student loan expense. This illustrates my huge improvement over 2012 quite well.
Here is how the balance sheet shaped up at the end of March. I only have two federal loans now as I consolidated my previous eight loans. I will update you guys with a post on that this month.
Here are the consolidated balance sheets compared to Q1 2012.
Finally, here is the progress for the first quarter of 2012.
- Extra Payment: $11,705.00
- Total Pay Down: $12,610.68
- Total Pay Down Since Start: $12,610.68
- Total Outstanding Balance: $58,562.07
- Percent Complete: 17.72%
*These numbers are for my Wells Fargo Private Loans only.
I can’t highlight enough how impressed I am with my progress over the last three months. I hope I’m proving that even a guy with a pretty average income in a semi-high cost of living area can take on a huge debt load and actually do something about it while still enjoying life. This isn’t rocket science; all you need is a little courage, some common sense and a dash of luck. This post should make it clear that this stuff actually works.