The following blog post is part of The Road to Financial Wellness blog tour. The Road to Financial Wellness is a three-month, grassroots campaign promoting financial empowerment on a national level and encourages people to pursue their dream lifestyle. Find out more about local events near you.
You ever wished you could go back in time and fix some of your mistakes? I know there a few things that I wish I could go back and change. Surprisingly there are a few mistakes that I wouldn’t go back and change. Honestly, some of them that helped me become a better person. As crazy as it may sound, my debt situation is doing that. In today’s post, I want to share with you how I got in this situation and how I’m fixing it.
In college, I didn’t fully understand loans and credit cards. I didn’t take out my first private loan until my sophomore year. I didn’t get a credit card until my junior year. My problem wasn’t the initial amounts of the credit card and student loans. My problem was not making many payments on them after I graduated.
I graduated from college in 2008, which was right at the beginning of the recession. My mindset was much different back then. I didn’t look for a full-time job until the summer after my graduation. For one, I was just happy to graduate. I had a couple of trips lined up, so I was ready to celebrate. I also had a part-time job where I was making decent money. I also figured that the $50,000 job would be easy to find. Boy, was I wrong.
The decent money that I was making at the part-time job wasn’t so decent anymore. I moved off campus and started to have a lot more bills. I wasn’t really prepared for that. Also, in November of that year, it was time for me to start paying back my student loans. I damn near panicked. I had no choice but to do what I had to do. I deferred what I could and ignored the rest. I made small payments when I the money to. I eventually found a full-time job working with a bank almost a year and a half after I graduated. I was making a little more money, but with bad money habits, I couldn’t tell. I continued to pay when I felt like it on the loans. Some months I’d make a small payment then others I’d flat out ignore them. I kept this cycle up until 2013. I got to a point in my life where I was ready to face my debt. Because of late fees, interest, and a dumb decision to take a year worth of classes, my debt had ballooned to over $72,000 at its peak. I realized that I didn’t want to live a life full of debt. So I started making some changes.
In late 2014 I started getting my debt in order. I began to bring all my debt current. For some of the debt that was a struggle right there. I had to get used to seeing more money come out of my account to towards debt. It took a couple of months, but I got used to it.
I also took the time to understand interest rates and late fees finally. I can’t believe how much money I was giving these companies just a few years ago in fees. I was paying fees because I didn’t take the time to care. That was a dumb mistake on my part.
I also created a plan. My plan was to start paying off my debt using the debt snowball. The debt snowball happens when you make the minimum payment on each debt. You then add any extra money to the smallest debt. Once that debt is paid you use the extra money that you now have available to start paying that debt. As you pay off more debts the payments will get bigger and bigger, thus creating a snowball.
As of this writing, my debt is $4000 smaller than it was at the beginning of 2015. I should be more, but with anything there have been speed bumps, but I feel like I’m in a groove now. I have a strong feeling that by this time next year those numbers will be 4-5 times that amount. As long as I stay focused, that will happen!
Continuing to get my expenses in order is crucial to me. Are you trying to get your money right? If you are in the ATL on June 29th, you should check out The Road to Financial Wellness Pit Stop #17. It will be a unique event to network and improve your relationship with money. For more information you can view the website here.