Join our participants as they reduce debt and increase savings with the help of Summit financial coaches.
Emily and Ginger's Journey:
Zero Balance
This week we are celebrating accomplishing our first major goal in Project Money: we finished paying off our credit card debt! It is an amazing feeling to see a zero dollar balance. Before we had kids we always paid our credit cards off right away but we accrued close to $6k in debt over the course of our unpaid maternity leaves with both children. Once you get in the hole it is very hard to get out again. Even though we were paying more than the minimum balance each month, we never seemed to be able to get ahead. We were also continuing to add new charges to our credit cards each month so that was a big factor as well.
For us, it had to start with changing our behaviors. We stopped putting new charges on our credit card. Next, by tightening up our budget we were able to re-prioritize hundreds of dollars each month to more aggressively pay down our debt. Finally, there were two extremely useful tools that really helped us pick up our momentum:
1) We transferred our credit card debt to a home equity line of credit. The interest rate was significantly lower than our credit cards, which meant literally hundreds of dollars more going toward principal rather than interest each month.
2) We started living by the cash flow calendar in Summit's budgeting app, Climbr. This feature lets you put income and bills on the calendar and it automatically projects what the balance in your accounts will be on any given day. Each payday we were able to see exactly how much money we would need for the week and how much we could afford to put toward our debt. By putting any extra money toward our debt first, we ensured it was our first priority and that the money couldn't be spent on other expenses later on.
For our next step we have decided to follow the debt snowball approach, meaning that we will take the amount of money that we were paying toward our credit cards each month and add that onto the regular payments we make on our next debt to tackle: our car payment. Using this method we are planning to finish paying off our car loan by the end of the year.
And of course, we've continued to get creative in DIYs. This weekend, Emily made a first batch of homemade yogurt! The whole process only involved a few simple steps and it ended up costing a bit less than store bought AND it reduces our plastic consumption. So, maybe we'll settle on sometimes store bought and sometimes homemade - it's all about making things manageable! A great week indeed. On to the next.