2012 was my year of travel. I wanted to enjoy life and take spontaneous trips. Thank goodness for friends who were supportive of that goal and were willing to join me on that journey. Vegas pretty much was our second home in 2012 and we visited California for the first time. It’s pretty clear from the photos below that my 2012 resolution was a success.
This year, my goal is to save money and pay off some of that debt that is forever haunting me. You know what that means? No more trips with my spontaneous vacation crew. Okay, maybe I’ll sneak in ONE trip this year. We’re only young once. That’s my life motto.
In order to fulfill this probably-not-so-realistic goal (let’s be real – paying off $50K of debt is going to take more than one year, unless I miraculously win the lottery) I’m setting a paycheck by paycheck budget. I want to know where my money is going every two weeks. With $30K alone being all student loans, it’s probably best to start with whatever has a higher interest rate. The advice given to me was to pay off credit cards first. Good thing that beautiful tax refund check is on its way. Credit card debts will be out the door in no time. Not so fast. I don’t want to blow my entire tax refund check on pay off my loans. That’s far too painful for me. Instead, I will put 50% into savings and 50% towards paying off my debt. That will drop my credit card balance tremendously. Luckily I only have two credit cards with a balance: Banana Republic and a Wells Fargo bank credit card.
Set a schedule: Seeing as I'm on a salary, I know exactly how much I'm getting every two weeks. Using Excel, I marked the dates and check amount for the entire year. From there I have subtracted how much goes to my four student loans, two credit cards, car loan and savings.
An example of my budget schedule:
Personally I like the dates across and the total at the bottom. That’s the way my brain works and I’m a visual person so I color coordinated each month to make sure I don’t miss ANY payments. Those late fees can totally mess up my budget.
Set a monthly budget: In my case, I set a bi-weekly budget. I tell myself I only have a certain amount of money to spend for two weeks. I’m used to living off a small amount of money and on a budget because I worked retail prior to getting my full-time job. I didn’t want to change that habit. I wanted to put that extra money I was now making towards my loans and not change my lifestyle.
Pay more than the minimum payment: If I only pay the minimum of $25 a month then it’s going to take FOREVER to pay off that debt. I pay TWICE a month (every pay check) FOUR times the minimum amount on credit cards. On loans, I pay the minimum mainly because they’re already high monthly payments. (Dang loans!)
Emergency savings account: It’s important to be constantly putting money into a savings account. You never know what life will throw at you. You may have accident, lose your job, drop your phone, or maybe lose an insane amount of money while gambling in Vegas but you need to have a back up plan and be ready for it. Sometimes I put as little as $20 per paycheck or as much as $100. At the end of the year I want to either put whatever I have in my savings towards one of my loans or buy a Mac book.
By the end of the year I could pay off:
- 100% of one of my loans
- 100% of both credit cards
Other student loans and my car loans – still have a long way to go. Maybe I’ll start buying lotto tickets, go on a game show or Ellen for some help. Joking. You need to pay off your debts the RIGHT way.
Let’s the year of savings and paying off that $50K debt start now. Wish me luck!