Debt-Free Zone

Is My Debt Payoff Too Aggressive? + Debt Snowball Progress for August 2015

Slaying my credit card debt is one of my top goals. I plan to be well done before my 30th birthday. What a great gift, right?

I discussed this with a friend as we were kayaking, and he thought that was a great goal. Then he told me that he had discussed maxing out his Roth IRA contribution with his girlfriend and encouraged her to do the same this year. Apparently, his girlfriend’s parents offer a matching contribution.

“Must be nice,” I thought.

I wish my parents were in a position of wealth and power to offer those types of incentives for me and my brothers. It made me think about the legacy I want to leave and why it’s important to stop paying for past mistakes (credit card debt) as soon as possible, so I can start investing more money for the future.

During my mid-year checkup with my financial planner, he grew concerned at my aggressive debt payoff strategy. I’m paying $350 more than the minimum on those cards. He’d prefer that I shuffle over more money into the Roth IRA. Who knows how long the government will keep that option available?

I definitely here what he’s saying. Plus, I’m starting to feel the pinch. Medical bills are rolling in from my surgery 10 weeks ago, and it seems as if my car, Penny, is guzzling up a good amount of gas. My small pot of discretionary income seems to be shrinking mightily, so I’ve started taking out a weekly allowance in cash to live on. Living on cash again is an eye-opener!

But I remain steadfast in my resolve because it will only take four months to get rid of Credit Card No. 2. Then just another 6 months or so to get rid of the third and final card.

I’ve started to say money affirmations daily to keep my spirits up and stay in a mindset of abundance—not lack. Things are going to turn around. I’m upward bound! (Oh, that rhymed!)

Debt Snowball Progress for August 2015


Mid-Year Financial Check-Up | Progress on 2015 goals

Wow! I haven’t blogged since late January.

What happened? Love happened…well, a little bit. I started dating a handsome guy and reading everything about love and relationships. And I just got lazy. My cares about personal finance blogging took a backseat.

But I’m getting back on track with reading and writing about money. And I feel as if I’m on track in regards to my goals.

Let’s revisit the financial goals I set at the beginning of 2015:

  • Save $53 per pay period to have an additional $1378 in the emergency fund by the end of the year –> I have been automatically saving that money each pay period. I’ve had to use some of those savings for big purchases, but that’s what it’s there for.
  • Learn more about investing by reading at least one book or completing an online tutorial quarterly –> I haven’t kept this up, but I look forward to catching up.
  • Reset Roth IRA contributions to contribute at least $100 per month –> I reset my Roth IRA contributions, but to $50 a month. I decided to put more money toward debt repayment for now.
  • Pay off two of the three remaining credit cards in full using the Debt Dash or snowball method –> I will pay off the first of those three cards in June. I should repay the second card by the end of the year.
  • Pay at least one extra student loan payment within the year by making a small extra payment each month –> I decided to put more money toward repaying higher-interest consumer debt instead of toward low-interest student loans.

Seeing some progress is better than seeing none. At one point, I never thought I’d finish paying off credit card No. 1. It was a card I got for car repairs. The card allowed promotional purchases in which you wouldn’t incur any interest for six months. But when those six months were over, the 29.99% interest kicked in. Woo!

So finally seeing a balance of about $2,100 (near the $2,500 limit) in June 2014 go down to a couple hundred bucks (MY LAST PAYMENT) is a huge feat. I’m excited to roll that payment into the payment for Card No. 2 and paying it off before the interest kicks in March 2016. Also, I think I’ve saved enough so that I won’t have to use the card again. Progress, people! Progress!

LIVE RICHER Challenge: Week One (Changing Your Money Mindset)

Week One of the LIVE RICHER Challenges was all about changing your money mindset.

The tasks included setting goals and denoting your needs, wants and loves. Those were my favorite of the daily tasks that week. Tiffany “The Budgetnista” Aliche said needs = purpose. and loves = passion.

Need it? > Love it? > Like it? > Want it?

“If you don’t need it, or love it, then you should leave it,” she wrote. “Spending money on likes or wants, means you’ll have less money for purchases that truly improve the quality of your life.”

She makes it sound so simple, right?

She prompted up to mentally list our needs. Then write down two loves and commit to them for the next six months. My loves — the things I would do if had Oprah’s bank account — travel, exercising and volunteering. Many of the women used the same list.

Spending money on likes or wants, means you’ll have less money for purchases that truly improve the quality of your life.

As part of committing myself to travel, I’ll complete my goal of renewing my passport. I’ll continue to exercise and volunteer to keep me physically and spiritually healthy. Things have recently ractheted up in both departments.

LIVE RICHER Challenge: Day 1 and Day 2

The first week of January has been interesting. I’ve been making money moves.

On Friday the 2nd, I sat down and revisited the budget format from Michelle Singletary’s 21-Day Financial Fast. Budgeting is scary! OK, maybe not. I was trying to give every dollar a job and scared myself by almost getting down to $0, which wasn’t my intent. The zero-based budget is when income minus outgo equals zero. So in comes $3,000, and out goes $3,000 to saving, investing, paying bills, buying groceries, etc. I like having a little wiggle room, which is probably why I’m adverse to budgeting. I am going to run up my spending tab at the end of the month to see how I stack up to my budget. Should be interesting.

Live Rich(er), Die Trying

On Monday, I started in the 36-day LIVE RICHER Challenge started by Tiffany “The Budgetnista” Aliche. Each day the participants must complete a task. The daily tasks will focus on the money theme of the week. The weekly themes are:

  • Week 1: Money Mindset
  • Week 2: Budgeting & Saving
  • Week 3: Debt
  • Week 4: Credit
  • Week 5: Investing & Insurance
  • Final Day: LIVE RICHER

Day One was about setting three main financial goals and sharing them with the rest of the Live Richer community or an accountability partner. Good thing I had already thought of mine. It was so great seeing all of the goals from fellow black women. They aim to do everything including raising their credit score by a certain number of points, save for a trip to Brazil, save for emergencies, increase their income and get out of debt. We have so much in common.

Today’s prompt prompted us to read “Seven Cures for a Lean Purse” in The Richest Man in Babylon book by George Clason. Then The Budgetnista requested that we share our favorite “cure” with the community, and how we’d use this “cure” to grow wealth.

I read the seven cures parable over my lunch break and was mesmerized. This book was first published in 1926. All of these principles for managing your finances still ring true. Amazing!

Trent Hamm explained the parable in The Simple Dollar (I’m too lazy to put in in my own words): “The tale “Seven Cures for a Lean Purse” relates a story about Arkad, the titular richest man in Babylon. He is requested by the king to teach a class to anyone who wishes to attend on the methods he used to build his wealth. He divides this class across seven days, with each day focusing on a particular method for saving money.”

Here are the seven principles:

  1. Start thy purse to fattening: Save 10 percent of your income.
  2. Control thy expenditures:  Budget, budget, budget! “Budget thy expenses that thou mayest have coins to pay for thy necessities, to pay for thy enjoyments and to gratify thy worthwhile desires without spending more than nine-tenths of thy earnings.”
  3. Make thy gold multiply: Invest. “Put each coin to laboring that it may reproduce its kind even as the flocks of the field and help bring to thee income, a stream of wealth that shall flow constantly into thy purse.”
  4. Guard thy treasures from loss: Invest wisely. “Guard thy treasure from loss by investing only where thy principal is safe, where it may be reclaimed if desirable, and where thou will not fail to collect a fair rental. Consult with wise men. Secure the advice of those experienced in the profitable handling of gold. Let their wisdom protect thy treasure from unsafe investments.”
  5. Make of thy dwelling a profitable investment. Own your own home. “…I recommend that every man own the roof that sheltereth him and his.”
  6. Insure a future income. Get insurance. “He should plan certain investments or provision that may endure safely for many years, yet will be available when the time arrives which he has so wisely anticipated. … Provide for the needs of thy growing age and the protection of thy family.”
  7. Increase thy ability to earn. Make more money. “The more of wisdom we know, the more we may earn. …cultivate thy own powers, to study and become wiser, to become more skillful, to so act as to respect thyself.”

This story is chock full of gems.

Arkad on NOT over thinking it:

Deride not what I say because of its simplicity. Truth is always simple.

Arkad on knowing what’s important:

Which desirest thou the most? Is it the gratification of thy desires of each day, a jewel, a bit of finer, better raiment, more food; things quickly gone and forgotten? Or is it substantial belongings, gold, lands, herds, merchandise, income-bringing investments? The coins thou takest from thy purse bring the first. The coins thou leavest within it will bring the latter.

Arkad on debt:

He must pay his debts with all the promptness within his power, not purchasing that for which he is unable to pay.

Arkad on giving back:

He mush have compassion upon those who are injured and smitten by misfortune and aid them within reasonable limits. He must do deeds of thoughfulness to those dear to him.

Arkad on setting goals:

Preceding accomplishment must be desire. Thy desires must be strong and definite. General desires are weak longings. For a man to wish to be rich is of little purpose. For a man to desire five pieces of gold is a tangible desire which he can press to fulfillment.

Arkad on increasing earning potential and lifelong learning:

As a man perfecteth himself in his calling even so doth his ability to earn income.

Arkad on wants versus desires:

I say to you that just as weeds grow in a field wherever the farmer leaves space for their roots , even so freely do desires grow in men whenever there is a possibility of their being gratified. Thy desires are a multitude and those that thou mayest gratify are but few.


After work, I saw my financial advisor and discussed my current outlook and goals. He lauded me on the decisions I’d made thus far and the fact that I paid off four small debts in 2014 and had a clear plan to rid myself of more debt. For my age, he said, I’m doing fine. Some folks have $30,000 in credit card debt, he said. Having a mindset to get rid of it as soon as possible is commendable.

The meeting was a great way to end the day. The future looks bright as long as I stick to the plan.

New Year’s Resolutions: The Importance of Setting Financial Goals

It’s amazing what a difference a year makes. On New Year’s Eve last night, I was in the same place—my apartment. However, I was in a different mindset. Earlier in the day, one of my friends came by, and we completed our vision boards. This was such a fun exercise. It was my first foray in vision boards. I dedicated aVisionBoardPost Money section to fiscal fitness. It features a hand grabbing cash, a cute piggy bank and positive sayings to remind of me of goals for the year (and the rest of my life, for that matter) such as:

  • “Your money. In your control.”
  • “Take control of your retirement”
  • “Cut costs.”
  • “Add a little richness to your life without spending a fortune.”

For weeks, I had been trying to get perspective on my money goals for 2015. One day, I looked back at my Debt Dash Plan created in January 2014 during the 21-Day Financial Fast. Four small debts are paid in full. Awesome! I had unknowingly completed non-fiscal goals, including dating more (well, at all, but that’s for a different blog), cooking new recipes, reading more and so on. I wrote down all of those goals earlier in the year, but misplaced the paper and wasn’t tracking them. The practice of simply writing them down must have helped manifest them, though. This year, I want to track my progress.

So many of us are making New Year’s resolutions. According to a Fidelity survey, the top three financial resolutions for four years now are:

  • Saving more (55 percent). The median commitment is an additional $200 a month.
  • Paying off debt (20 percent)
  • Spending less (17 percent)

The Fidelity survey also found a correlation between expressing a financial goal and improving one’s financial life. About half (51-percent) of those who made a money resolution last year said they are now “better off financially,” compared to just 38 percent of those who didn’t set one. One out of two. Not bad.

About half (51-percent) of those who made a money resolution last year said they are now “better off financially,” compared to just 38 percent of those who didn’t set one.

Furthermore, for those who made a resolution last year, almost two-thirds (74 percent) succeeded in at least getting halfway to their goal. Even better, 29 percent were completely successful.

I completed two of the goals I set in June, and got halfway through the third one. Progress! It’s all about progress!

Here are my financial goals for 2015:

  • Save $53 per pay period to have an additional $1378 in the emergency fund by the end of the year (That’s how much I would have saved doing the 52-week money challenge, but I like saving consistent amounts instead of $52 one week; $51, the next, and so on.)
  • Learn more about investing by reading at least one book or completing an online tutorial quarterly
  • Reset Roth IRA contributions to contribute at least $100 per month
  • Pay off two of the three remaining credit cards in full using the Debt Dash or snowball method
  • Pay at least one extra student loan payment within the year by making a small extra payment each month

Unfortunately, the extra student loan payment will go toward interest not the balance, but I gotta do something. It’ll make me happier to know that I’m, at least, trying to speed up the repayment process.

In You Don’t Have to Be Rich: Comfort, Happiness and Financial Security On Your Own Terms, personal finance champion Jean Chatzky says just working toward your goals —not even completing them — boosts happiness.

“People who are steadily working toward their goals are much closer to the happiness levels of people who are already there then those they’ve left in the dust. … You don’t have to hit your marks to be happy. Just making the effort to a point at which you start to notice results makes a tremendous difference.”

“You don’t have to hit your marks to be happy. Just making the effort to a point at which you start to notice results makes a tremendous difference.”— Jean Chatzky

Chatzsky also says writing down goals helps you see them clearly, realize all the interim steps you need to take to accomplish them, see how much money you need to put toward them and think of the trade-offs.

“And—oh yes— it makes you happy,” she writes. “Goal setters are happier with their finances and less likely to worry about their money. Likewise, financially happy people are more knowledgeable about the amount they need to save in order to reach their goals, and are more likely to be on track to do so.”

Follow more of Chatzky’s tips below:

The Four Steps of Setting Goals

    1. See what you want. (Visualization is key. Be specific. Be clear. Once you have your vision, focus on how it makes you feel. To become a better forecaster of your own happiness, you have to think about how those things, people and outcomes will make you feel if and when you get them, ex. winning the lottery.)
    2. Write your goals down.
    3. Turn your goal into an action plan. (Break it down into manageable parts. Saving $5,000 in a year turns into saving $100 for 50 weeks.)
    4. Understand the time involved. (It won’t happen overnight.)

The Six Keys to Achieving Goals

“People who have at least started to achieve their goals are much more likely to feel useful, content, and confident.”

  1. Begin.
  2. Recognize the obstacles in your way. (i.e. emails from daily deals, hanging with certain people, driving by a certain store.)
  3. Build better habits. (“Many people make the mistake of looking at goals as a point in time some distance away. You’re better off if, instead, you can look goals as a series of lifelong changes you have to make to achieve those desires.”)
  4. Automate where you can.
  5. Set up reminders.
  6. Focus on tomorrow (not yesterday).

In Good Debt, Bad Debt: Knowing the Difference Can Save Your Financial Life, author  Jon Hanson writes that goal setters should consider the BDO method (Be, Do, Own) to understand why, not just how, you’re going to complete goals.

  • Who will you become?
  • What will you be doing to achieve these goals?
  • What do you see yourself owning?

That’s why it’s great to name your goals and savings funds, like folks do on their online Capital One 360 accounts. Give goals names and meanings. And, hopefully, you’ll be on your way to success.

Cheers to 2015!

Small Changes Make Big Difference

Last week, I completed the open enrollment process at work. It’s so important to really understand your work benefits. Because I had no idea that my company adds money each pay period into my HSA, I didn’t spend the five minutes necessary to fill out the single-sheet form with my HSA account info. So I missed out on $180 in my ignorant state. That’s nothing to sneeze at. That amount could have covered a couple of annual exams, at least. Oh, well. Lesson learned. I took the five minutes to fill out the form this time.

This weekend, I got a little head start on my quarterly financial review and reviewed my Financial S.M.A.R.T. goals.

  • Bad news: I still have a ton of debt, mostly from grad school loans.
  • Good news: I’m two-thirds of the way toward my emergency/Life Happens fund goal. The act of directly depositing part of my paycheck into savings in addition to putting away small windfalls has made a significant impact.
  • Discovery: Freedom from consumer debt is just 18 months away! Just 18 months! Totally doable!

I was initially afraid of the total balance of my credit cards. On my S.M.A.R.T. goals spreadsheet, I aimlessly wrote “Pay off consumer credit card debt by end of 2015.” The calculator helped me figure out that I could put just $72 more toward those balances each month, and freedom could be mine at the end of 2015. I’ll post a calendar on my fridge to keep me on track.

With all the talk of the government’s new student loan repayment plan, I decided to check out my federal loan repayment plan. I’m on the extended fixed plan. So I have up to 25 years to pay off my loan and my bill won’t change. The plan is to pay more than what’s required each month to chip away at the very, very large balance. It won’t take 25 years to pay it off. I refuse.

I basically use the exact same system to pay and keep track of bills as MoneyNing’s Travis Pizel. Certain bills are allocated to each payday. So I pay my bills on two days of the month. Those two mornings are exhilarating. Really.

A few months ago, I realized that I needed to pay my federal loan bill with the previous paycheck instead of the one I immediately get a few days before payment is due. I’d drown if I hadn’t made that small change. This plan gives me peace of mind until the next set of bills are up. I’m currently on track to make an extra payment this year, which I hope helps out with the interest accrued and eventually make a dent in the very, very large balance.