I’ve recently made a big change in my life: I’ve decided to become debt-free.
Luckily I’m rather frugal by nature, so I didn’t have multiple huge credit card balances like a lot of people do. But when I started my financial journey, I had almost $10,000 in student loans (from my biology degree that I’m not even using!), $5000 left on a car loan, one credit card with a ~$1500 balance, and a mortgage with ~$70,000 left to pay. Not a lot of debt compared to some people, but believe me, I could feel the weight on my shoulders!
I was tired of being in debt. I was tired of sending a car payment every month, and a student loan payment every month, and a credit card payment (or several) every month. It’s frustrating to watch all that money go sailing off in the mail as soon as I had earned it. Financial freedom sounds so good…just imagine having MOST of every paycheck available to use, instead of earmarked for other people for a bunch of debt! I could use the extra money to save for retirement, or save up for a better house, or heck, just spend some and have fun instead of watching it go down the interest drain. Sounds great, right?
The turning point came when I had a mild mid-life crisis. Ok, make that early-mid-life, I’m not *quite* middle aged just yet. 🙂 I decided to bite the bullet and follow my dreams, which requires saving up for a new house. (Note: The “following my dreams” story is a big one, and will get it’s own post later!) Saving up for a 10% down payment takes a lot of money, so I need those debts gone ASAP. The debt-free mission was born.
Step 1 was to alter Outflow: halt all unnecessary spending immediately. The first thing I cancelled was my gym membership…that really hurt because I love going to the gym, but that was $42 a month that could go to bills instead. I stopped eating out at restaurants, and stopped buying lunch at work. I completely stopped all clothes shopping with the exception of socks and underwear, and I stopped buying books, music, and videogames too, even cancelling my World of Warcraft membership. This part HURT, but it’s necessary.
Step 2 was to alter Inflow: generate some additional income. I didn’t want a second job if I could possibly avoid it, so I started thinking about what I could do at home for extra money. I have no experience with children, so babysitting was out, and I’m too shy to make my own business mowing lawns or cleaning homes. But I love to sew and draw and generally create, which are things I can do at home in private. so I decided to set up a little online shop on Etsy to sell some handmade items. It’s a lot of work, but I’m currently averaging $150-200 a month doing hobbies that I love to do anyway! (Note: My Etsy shop, PeachPod, is the inspiration for my blog title and will be the focus of a later post as well.)
Step 3 was to PAY PAY PAY! The credit card was the first to go. Then I started attacking the most annoying one, the student loans. As of today, 4/17/2014, I have $1200 left to go on my loans. I’ve been paying $600 a month on them, so that’s two months until I am free from them forever! That will be a great day. 🙂 After the student loans are gone, I’ll tackle the car loan. When it’s gone, the only thing left will be the mortgage.
It’s been a tough road, but so far it’s been worth it. I love watching those balances and interest go down, and my expendable income go up. Luckily I haven’t lost my stamina for saving, in fact, the longer I do it, the more drive I have to push through to the very end. And there’s definitely some satisfaction in saving every nickel and dime; it’s almost like a competition I have with myself to spend as little as humanly possible. And then beat that amount next month.
So that’s where I’m at. There’s still a few thousand dollars to go, but the finish line is in sight. I can’t wait to pay that last payment and be free from the burden of unnecessary debt!