Hello friends! I (WCD) love planning and organizing things, but I haven’t really done it with my money in awhile. There was a time when I had serious money plans and I totally succeeded at them. It was a great feeling when I made my goals and was able to move on knowing I was prepared for the time ahead.
But since I haven’t been getting paid so much in recent years, I’ve been on the default money plan: trying not to think about it.
Now it’s time to face up. I’m gonna make a plan.
Step One: take stock of where you’re at.
Part of the reason for creating this blog, was to inspire ourselves to create these money goals and stick to them, holding each other accountable.
Breakdown: mine looks like this.
- student loans: most of debt
- credit card: least of debt
- emergency fund savings: 71% complete (they say to aim for 6 months of expenses) I’ve only saved how much in 2 years?
Step two: analyze priority
I’ve got a lot of student loans, but my credit card is the current problem. I use this for most of my purchases and pay it off later when I get paid. I have been focusing on padding my emergency fund since I cleared it out moving out here to LA, but I’ve neglected my credit accruals. Last year was an expensive year for me – I had to spend a lot that I really hadn’t intended to and it shows. Now even though my credit card is the lowest total amount of my debt, it’s the one I’m losing the most money on. It’s got the highest interest rate and the money I’m saving into my emergency fund is not gaining interest at the rate I’m hemorrhaging it from my credit card.
So now I know my priority is to pay off that credit card as fast as possible.
Step three: action
- Research any way to lower your interest rates. You can always call the loan owner and ask. It’s not fun but sometimes they do have suggestions that could help you.
- As much as I hate to say it, the focus for me now is not my emergency fund. I had a little bit of money setup to auto transfer into my savings each month. I’m now redirecting that towards my credit card instead.
- Stop using the credit card. This will be a hard one, and I’ll probably end up creating a separate post on that later. For now, I’ll do my best to use only real money.
- Any extra goes to pay it down. Tax refund? Straight to the card. It’s like it never was.
This is just a beginning, but the first step in the debt free journey is to take stock of where you’re at.