I’ve always liked this video from mint.com. it simplistically and dramatically illustrates the road to being fiscally responsible. If you keep within mind that your debt is a monster who must be tamed then budgeting and saving can actually be fun. You might even get to the point where it doesn’t suck as much. 
I started out with more than most on student loans. In fact, I've NEVER met anyone with more student loans than me outside med students. When I graduated from a private university, I owed $120,000! Thank goodness I'd never had credit problems and I live pretty cheaply. Given the amount of debt I've had, I'm actually quite proud that I've been able to live my life pretty fully even paying more than $1000 every month to student loans.
I've had to make it work, and I have. But last year, things got a little crazy and I lost touch with my financial situation. That's why I started Budgets Suck in the first place! I try not to think about what might have been had I not had to pay these student loans. An extra grand a month could've gone a loooong way, not to mention the life dreams and careers I could've pursued had I not had to worry about money. But that's negative thinking and regardless of truth, will get you nowhere. So instead I think of how the debt is decaying and soon will be no more.
I am still on schedule to have my loans paid off by the age of 35! That's five years from now and I am stoked. To be exact, here's my current loan stats.
| Loan | current balance | interest | monthly payment | months to pay off |
|---|---|---|---|---|
| Sallie Mae | 11217 | 4.13% | 240 | 52 |
| Citi | 7349 | 3.75 | 162 | 49 |
| Citi | 9429 | 3.25 | 205 | 49 |
| Citi | 8799 | 2.75 | 190 | 50 |
| Citi | 11131 | 2.75 | 240 | 59 |
It's really important to go back and revisit these amounts at least once a year. I just recently reexamined my Sallie Mae loan and I was only paying $132/mo which meant it was going to take 107 months to pay off! By just upping the amount paid every month by $108, I'll not be done on time in 52 months. I used an online calculator to figure these things out. Remember to use whatever tools make your life easier. BTW, my 35th birthday is 55 months from now. So that's gonna be a helluva party!
Five years is a while from now and I hope I'll be settled down with someone by then. Either way, I already know that extra cash is either going to a monthly mortgage for a place of our own or (if we can afford it) straight into savings. I've lived off little for this long, no sense changing it up if I can be more secure in the future!
It's a long haul, ladies and gentlemen. It's much easier if you start young. If you're in your teens and reading this blog, you're already ahead of everyone else. Please feel free to email me with any questions or post up here. I'm more than happy to help. I wish I had someone to teach me about money when I was young, all I can do now is pass on what I've learned through life.
Just did a new financial statement and projected forward for my Net Worth and the results are quite promising! If my calculations are correct, even though I currently have a net worth of -$20,000, if I continue at the same pace I am, I should have a net worth of $100,000 in 5 years. I know that seems unlikely, so let’s break it down.
120,000 / 5 = $24,000 per year. 24000/12 = $2,000 per month. I will have to save/gain $2,000 per month from now until September of 2016. That sounds very difficult I know, but in the financial statement I have put together, by that time, I would’ve bought another rental property, creating passive income, as well as gotten a new job and started a business. In my new job, I’m making $80,000/yr instead of $55,000 and my business is generating $1000/mo extra income. This is a super happy view of the future I know, but quite within the realm of possibility. So it gives me some goals to work towards. Furthermore, at my current rate of net worth increase, i should actually be at $100,000 by January of 2014, a cool 3 years from now.
You can see the tiny graph in the lower left of the actual values thus far. Assuming growth, on average, stays the same, this trend line will hold true and bu January 2014, my net worth will be $100,000. I still see it as a rather fantastically positive outlook, but the more I crunch the numbers, the more I start to believe. And if I, the cynic of all financial cynics, can believe I can reach this goal, then I will!
Main thing, just keep with the system! Keep saving! Don’t blow it on some company or investment. Use proper judgement and risk only what you are allowed to lose. It’s just like gambling in Vegas. Never bet the rent money.
Here’s a great calculator for getting out of credit card debt! It allows you to list multiple cards and find out how long it will take to get debt free if you just make the minimum payments, if you pay a set amount each month to your cards, or how much you must pay each month to get out of debt in a certain amount of time.
And if that weren’t good enough, it allows you to print out a payment schedule to your different cards, calculating the best allotment based on interest rate! If you have a lot of credit card debt, check this out: CNN Money – Get out of Credit Card Debt