There is something we don’t talk about much as a society and that is debt. We all have it and in order to get a car, house or other things we sometimes need to have good credit. And in order to get that good credit we need to have or had some sort of debt in the past or going on right now.
It’s easy to get into debt. It’s money we don’t see every day and if we are not taught the lessons in life to stay in control of the money we have it’s easy to dig a hole you feel you can’t get out of. This part of the blog is going to be personal but it’s something I hope you all can relate, and if you can’t and have never felt like this good for you. If you are feeling like you are in a hole you can’t get out of please do not feel like you are alone.
I am no way a finance advisor and what I am talking about are way and methods I have read about and have used or are using at the moment. What works for me may not work for you as we are all in a different position when it comes to money. We don’t grow and get in a better position unless we talk about it.
So if you go to YouTube you will see a lot of videos people did talking about their debt confessions. Doing a video like that is hard as you are telling the world how far in a hole you are. Doing a post like that is not any better. As I am typing this I am around $56,000 in debt. Around 11k is my car loan which I am happy to say I am well ahead on that. I have been paying just about $10 extra and always about a month ahead. Currently they are saying I don’t owe anything until the end of February but you know I am going to keep on paying it so I can get it done and over with sooner.
There are numerous ways of getting out of debt and the way I am going to use is called the snowball effect. It’s where you pay the minimum payment on all of your cards and when you pay off one you add that amount to the next card or debt you want to pay off. I am happy to say that I have paid off two credit cards and an Affirm loan and that money I was paying for that is going to my next credit card I want to pay off. I did the math of where I am at with everything as of today and it should take me 3.3 years to get out of debt. Now I know I will be paying off my car loan way sooner so once that is gone and I can use that money to pay off more credits cards I am hoping it will be more like just a year and half to get out of debt.
Now that is not the only thing I am doing to try and help. I am starting saving challenges, sinking funds and cash envelopes. First let’s go over how I am doing cash envelopes. I am not a cash person at all! So what I have done is I started another bank account with my bank (Ally Bank). I have that account labeled as Digital Cash Envelopes and every paycheck I have the amount I have budgeted for my cash envelopes go right in there. Then if I want to make a purchase using money out of my envelopes I can use the debt card for that account. What I like is with Ally the basic checking account is getting .1% of interest. It’s not much but every bit adds up and if you don’t use all of your cash envelope money you might make a few cents back.
The next thing I am doing is sinking funds. From what I understand sinking funds is something where you are saving money up for on purchases or things you know may come up. I have one for my dog (he has a lot of medical bills and just basic care items), CostCo, Health/Meds, Car Maintenance, House Maintenance/Misc, Property Taxes to just name a few. Since I’ve started they have grown and changed and that’s okay, because in life things and needs that we have change. How I manage this is by using my saving account with Ally.
The saving account they have has a percentage rate of 3.3%. Since sinking funds are like mini saving accounts I might as well put my money in there. The nice thing about Ally is in the saving account you can have what they call buckets. So I have a bucket for each of my sinking funds to keep track of the money I have. This way I can keep a close eye on what I have to spend my money on and keep it in a spot where I know I might get a few extra cents in a month.
With just doing cash envelopes and sinking funds alone I am able to keep a good track of where my money is going and has helped me save even more money to pay down my debt. For the saving challenges I haven’t really started them yet as that is my 2023 goal. I will for sure be doing a 52 Week Saving Challenge where each week I put in an amount for the week we are in. Example: wk 1 = $1, wk 2 = $2, wk 3 = $3 and so on. With just by doing that I will have saved over $1,000 that I can use to help me pay down my debt.
I will be doing posts to keep you posted on my journey. Like I said I am just starting out but doing this confession post and some ideas/ways I’m starting to tackle my debt was a huge post for me to do. Are you in debt? How are you getting out of debt? Tell us in the comments I would love to know. We are stronger by supporting each other and learning from each other.
