Each month I will highlight my debt payoff progress and show you exactly how much I paid off for each loan. Some months I will pay large extra payments when I can. Other months my goal is to at least pay off all accrued interest, in addition to the full monthly minimum payment. My income is variable, I work four and am off for two twice each year. I don’t get paid when I’m not working. This will affect how much I can pay extra in a particular month.
[AFFILIATE DISCLOSURE: This blog post contains links to a site or product where I may earn a small commission from anyone who chooses to sign up. It does not affect the price you’d pay. I paid for my subscription to the product, and I’ve personally used it since January 2017.]
I discovered a cool web app this year, called undebt.it , to input my debts and create fun payoff charts. I find the undebt.it website very helpful in maintaining motivation and visually processing the numbers. The website is free for all the basic tools; I choose to pay a $12 annual fee for a few extras that I’m finding helpful. Check out the screenshots for my actual numbers from July.
Minimum Monthly Payments: $201.33
- Credit Card: $0 ($142 applied to snowball)
- Student Loan: $201.33
- Student Loan Interest Accrued/Paid (July): $80.17
July 1, 2017 – Total debt: $17,495.30
- Credit Card: $0
- Student Loan: $17,495.30
July 31, 2017 – Total debt: $16,969.69
- Credit Card: $0
- Student Loan: $16,969.69
Total Debt Payoff for July 2017: $603.10 (Includes interest payments)
I used three strategies this month to pay extra on my debt.
- Paid off my student loan interest weekly plus extra each time to equal a rounded up total. $18.65 became $20, for instance.
- Found little extras lying around in the budget. I decided this month to reach a total payment of $1101.10 because I found that number fun! After careful scrutiny, I decided which categories to snag some extra out of and made the payment. But then, unhappy with how the ending total looked I added $4.20 more to make the final amount for May $17,865.43! I find it motivating to choose what new debt total I want to see after I make a payment.
- Used a custom snowball strategy in a web app called undebt.it. The Premium+ Content tools contain an extra method, in addition to the standard debt snowball, to pay the debt down even faster. It also includes an amortisation chart that reflects this different strategy. Check it out if you’re looking for help staying motivated with your debt payoff plan.
In July I faced the possibility of having large medical bills and a large car repair bill. The total possible damage equaled over $3000. Yikes! I held off making any debt payments outside of the minimum $201.33 and $25 extra weekly to cover interest plus a little to principle. Once the insurance company decided how much my medical bills cost me, and my car repair bill also turned out reasonable, I paid $300 extra. This included my $142 snowball amount. Thankfully, this year my company offered an HSA (Health Savings Account), and I had the foresight to fully fund it to cover any medical costs for 2017 with pre-tax dollars. My bills, so far anyways, will come from the HSA and not from my regular budget. Yes!!
I also participated in No Spend July with members of the #debtfreecommunity on Instagram. I did pretty well, considering in July I ended my contract, flew home, took the bus to Minneapolis and spent two weeks visiting and dog sitting. Lots of little opportunities to spend, but I kept it all within the budget.
In July I realized that I would not have anywhere near sufficient funds for retirement at my current age and contribution levels unless something changed, drastically. Most people at least have even Social Security contributions taken from their paychecks. Working at sea, my employer and I are exempt from these contributions because the ship operates in international waters. So the standard advice to pay off all non-mortgage debt before contributing to retirement didn’t sit well with me. At age 42, the retirement calculators predicted I would need to save 35% of my current annual income to have enough when I reach 67. If I waited a couple more years and ramped up contributions at age 45, I would need to contribute 50% of my annual income.
Related Article: Should I Save for Retirement While Paying Off Debt?
You’re welcome to follow me on this journey while I continue to track my progress here each month.
- February Net Worth: -$375.49
- March Net Worth: -$4,028.71
- April Net Worth: -$2,441.44
- May Net Worth: +$486.54 (First time in my adult life with a positive net worth!!)
- June Net Worth: +$4537.33
- July Net Worth: +$5313.18
For clarification, my total debt here looks higher than I reported above. I use credit cards exclusively rather than cash in my daily spending, but I pay them off as soon as the charges go from pending to cleared. This higher total reflects that I’ve entered the transaction in YNAB software as a credit card charge, but then two days later I paid it off with a transfer from checking to the card.
That’s it for July! I’m looking forward to finding ways to add to my Payoff in August. I’m currently house/dog sitting, so we will see how much that brings. I plan to use my regular budget to ramp up retirement contributions, but all extra funds above that will go towards debt payoff. Check back again next month for my latest Debt Payoff Progress Report.
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