Chaka is currently in the thick of paying off over $47,000 in debt. So far she's paid well over $24,000 off and is planning a full pay off by May 2018. The birth of her first child and realizing that she could be saving $1,000 a month if she wasn't making debt payments was her turning point. She's sharing her progress with us!
"Buying that item is never as critical as you think. Today's treasure will go in tomorrow's Salvation Army donation."
What was your "enough is enough" moment?
I have a personal budget spreadsheet that list my monthly bills, savings and salary (work and side hustles). In 2016, I did a lot of work on my multi-family property, gave birth to my first child and started a new job making $30k more than my previous job.
When I tallied all the money I used to pay bad debt (including mortgage, car note, student loans and credit cards) I couldn't believe it. Though now I had an added expense to pay my nanny, it hit me! You could be saving over $1000 per month if you cleared this debt. This is the most you've ever made but this is the least you've been able to save.
Don't get me wrong, I've paid off bad debt before but this time I realized how I was eating up my potential for wealth paying $200 interest every month on my $14k credit card balance.
Something has to change!!!! And fast!
How much debt are you paying off in total?
So far I have paid off a little over $17k in the last 3 and a half months and on schedule to pay off another $7200 by the end of April. My initial goal is to pay off as much as I can by May 2017, leave only my cards with interest free APRs, and start saving again. I am sacrificing savings until May 2017 this year to eliminate the high interest charges.
How do you keep yourself motivated?
I get paid twice per month, and I do slip sometimes as my son may need something or I may have visitor or simply to take a break and enjoy life a little. But I make sure I can pay off that amount that very month.
My motivation is seeing my potential to save $1000 per month when I look at my budget spreadsheet as well as celebrating during my trip to Italy I am planning for July this year.
I realized I have to celebrate (within reason) along the way as long as I plan it out because it's easy to fall back in the same cycle.
How do you manage the days where you just wanted to go out and spend money?
I dedicate only one weekend per month to go out. I set a budget for that weekend and I stick to it even if it means taking out the cash and not using my credit cards. I have also started to purge my closet and sell things online on second hand sites. If I make a sale I use some of that money towards my monthly "me" time activities.
What would be your money advice to your 21 year old self?
- Always save.
- Buying that item is never as critical as you think. Today's treasure will go in tomorrow's Salvation Army donation :)
- Invest, invest, invest
- Be bold! Start today!
What steps are you taking to ensure your debt freedom is permanent? What steps are you taking to ensure you meet your ultimate savings goals?
First, once I eliminate the interest baring credit card debt, I am putting the interest free debt on auto pilot, setting up payments and forgetting it!
Secondly, I will send $500 per pay check to an online savings account and send a monthly amount to build a college fund and savings account for my son. I want to make sure when Christian is 17, I can buy him his first car in cash and help him as much with paying for college or starting a business.
I have a number in my mind that my savings account needs in order for me to fully venture into my entrepreneurial businesses with a time stamp! I want to explore the world with Christian and having flexibility with my businesses is extremely important to me.
What advice would you give anyone reading this looking for encouragement?
- Be true to yourself. If you can't do it alone get an accountability partner or join a group. Be honest and you will work the plan.
- You will mess up! You will break down and see those Valentino shoes that happen to be on sale! But don't be discouraged, adjust your plan and keep going. It's important to be diligent but don't suffocate yourself so much where you explode.
- Lastly, build in moments to celebrate, plan it out and do whatever it takes to stick to that celebratory budget.
Well done Chaka! You've made great progress. Looking forward to sharing your updates as you inch closer to becoming debt free!