Thursday, April 10, 2014

How To Pay Off $19,000 of Student Loan Debt in Less Than 18 Months

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I have been waiting over a year and half for this day. Actually, maybe since I pulled my own student loan in November 2007. After paying off my student loan in 2009, I knew our next pile of student debt would be large. I wasn't yet married, so I wasn't super concerned at the time about my future husband's debt. There wasn't much I could do about it at the time, as I hadn't even landed a well-paying job (and wouldn't for several more years).

When we got married in October 2010, I jokingly said I couldn't wait to marry into $16,000 worth of debt. A couple of years later I would discover I was mistaken. My husband's debt totaled over $24,000! This slight miscalculation startled us once we realized we had more on our plate than we knew about. We paid down $5,000 immediately with the help of a family gift, and then faced $19,000 head on. We had six months until we had to begin paying, so we paid $500 in interest so it wouldn't be tacked on, and promptly avoided any further thought to the debt.

Fast forward six months, and there we were, paying ONLY the minimum. If anyone reading this has debt, which we all inevitably seem to have, then you'll know paying the minimum doesn't really do too much to your principle. Most of the "payment" goes towards your interest on the loan, and you'll be right on track to paying that loan off in ten or so years. I definitely just assumed we would be doing this, as we weren't making much money to even pay for other things outside of food and shelter.

After watching Adam Baker's Sell Your Crap, Pay Off Your Debt, and Do What You Love video, I cried and then told my husband we are going to be debt-free. SOON. And here we are, a year and a half later. Student debt-free. So, how did we do it? BUDGETING. Lots and lots of budgeting. And lots of talking. Communication was a huge reason that we no longer have to EVER make a payment to MyFedLoan ever again. I've written several posts on this already, and I've listed them below for you if you'd like to read the full journey.

Why I Had to Trade in The Stratus for Kia Rio
Progress on Our Student Loans & How We'll be Debt-Free in 2014
Knocking Out Our Student Loans One at a Time
The Chair That Almost Blew Our Budget For The Month
Keeping Our Eyes on the [Financial] Prize
Finance 101: 7 Reasons Why I Love Mint.com
Sell your crap. Pay off your debt. Do what you love.

If you have ANY questions about paying off debt on a small budget, please let me know. I love to hear from my readers, and I'd like to help! If you have any questions on budgeting, ask away. 

Here's some quick tidbits of info on the topic, based on our experience of paying off $19,000 in less than a year and a half.

1. Talk openly and honestly about your debt. Always keep an open line of communication about money with your spouse or significant other. Hidden purchases cause unnecessary drama. As a rule, we check in with each other for anything that's not in the budget or purchases that are $30 and up. Yes, I said $30! (As I typed this sentence, my husband asked me if we would have a budget to upgrade our phones later this year. I love him!!!)

2. Consider one checking account. We truly live on a shoestring budget and we found that having two separate accounts was a bit of an overkill for us. With minimum balances and virtually no transparency, we discussed combining our accounts. After we combined our money, it only took another six months for me to start tracking our spending using Mint.com and that's when we realized we needed to make a change.

3. Don't avoid having fun every once in a while. When paying down debt, keep some fun money and budget for a few luxuries. By no means did we completely lock down ALL purchases or eat rice and beans for months. We still went out to eat, visited the movie theater, and treated ourselves every once in a while.

4. Start on your smallest debts first. I listened to Dave Ramsey before we paid down our debt, but his advice always played in the back of mind: pay off your smallest debts first and use the snowball effect in your favor. This will keep you motivated and on track. After we paid off each student loan, we celebrated in some way.

5. Celebrate your success with family and friends. I regularly kept our family and friends up to date on all of our progress. I didn't do this to brag, but more so to be held accountable for my promises to myself and to keep me motivated and excited about paying down this debt. You never know who you may inspire.

6. Pay what you can, when you can. There's no rule as to how much you have to pay. I set a goal to be student debt-free before my 27th birthday, and I've accomplished that goal with 8 days to spare! Even just setting a goal for each loan would be good.

7. If you can afford to pay more, do it! Our minimum was $180ish, and I challenged ourselves to pay $300 the month we began to really focus on our debt. The next month, I paid $500 on the loans, and I didn't really feel a pinch. I was now watching our money like a hawk and we were getting the hang of it. Then we bumped it to $1,000, just for shits and giggles. After a few months, we were up to $1,200 a month! Without even really missing that money!

8. Learn to accept one ridiculous budget, and just go with it. We have a budget labeled "Convenience Store". After I really started to pay attention to our money, I noticed that there were SEVERAL transactions for only a few dollars at a time every other day at convenience stores. My husband was making trips to grab a drink or chips and didn't realize he was racking up charges as much as he was. He's tried to cut back, but whatever! It's in the budget, so I know to expect it each month. Old habits die hard.

9. Know your priorities and pay down your debt accordingly. I'm not saying to put ALL of your "extra" money towards the debt. You need to save for retirement, pay for your child's daycare, and put food on the table. I know! Just take a good hard look at your budget and figure out where you can shuffle. I used to wander the aisles of Target aimlessly looking to purchase something when I was bored. I was raised to shop, and that was a tough habit to break, but paying down debt is well worth it.

10. Once you've accomplished your goals, prepare for your next one! I'm already dead-set on our next goal. We're saving for a down payment on a house. STARTING TODAY! We just paid off all of our student debt ($19,000!), so now we can begin to focus on another goal. And guess what? It's only going to take me about 5.8 months, because the money is already budgeted. I'm taking the $2,400 that I was paying during the last four weeks of our loan payoff and socking that away to the tune of $600/week for a down payment. Once something is budgeted for, you know to expect it each month.

And, as always, please send me an email if you're looking for inspiration, have any questions, or want to share your own accomplishments for paying off debt! I'd love to hear your story or help you get out of debt, too. Happy budgeting!

Additional resources:
I'm Fine Thanks (Documentary)
Mint.com | Review
Man Vs. Debt | Adam Baker
r/frugal

Monday, April 7, 2014

Our Other "New" Car & Why We Bought It

Only a few weeks into living in the Houston, Texas area, my husband was rear ended. I won't go into the details, but basically, it wasn't his fault, and were now stuck with a totaled 2000 Honda Civic. He was completely fine, no major injuries or even minor, so we're lucky for that! I can't even describe the amount of sadness my husband felt after his wreck; he LOVED that car. It had over 220k miles on it, and it was 14 years old. He had only had it for about 4 years or so, but it would have probably lasted us a while longer.

After two weeks of waiting and driving around a rental car, we finally received our check from the insurance ($4,000), which we then used as a down payment for the next one. We also used our tax refund ($2,000), so we had a total of $6,000 to put down on a car. As soon as we arrived home from the accident, he began looking for another car on Craigslist. I have definitely sold things on Craigslist before, but when it comes to buying a car, I get a little nervous and would rather have a warranty and guarantee of a dealership.

I know there's pros and cons to both sides—dealerships can offer more of a warranty; Craigslist offers better pricing. After much discussion (and I'm talking like two weeks of discussions...), we settled on going with a dealership. That was only half of the battle. Next, we figured out what kind of car he wanted.

He had been looking at some pricey Volkswagon GTIs, and I was nervous about taking on more debt. However, we've been slashing our debt like crazy with big payments (and lots of budgeting), so I wasn't so worried. My rationale: The way we pay down debt (upwards of $1,200+ a month), a car that cost an extra few grand would only equal a few more months of payments. We ended up settling on a 2010 VW GTI that is really nice with low miles for a little over $16k. With the $6k we put down, we only owe roughly $10k, which we plan on paying off in about two years or less, as money allows. Without further ado, here's all the pics.




Thursday, March 27, 2014

Rhea Lana's Spring 2014 Sale in Richmond-Rosenberg



I'm all about recycling, reducing, and reusing all sorts of things. Although I don't have a child (yet), I do appreciate great deals and understand the importance of budgeting within a family, no matter how large or small. My husband's aunt has been organizing and running Rhea Lana's in the Richmond/Rosenberg area, a twice-yearly children's consignment sale, and this week she'll be opening the doors to hundreds of families for some amazing deals.

While helping with prepping items for the sale over the last couple of weeks, I experienced some crazy baby fever just by looking at all of the super cute outfits and amazing prices on high-quality items. From playpens marked at only $75 to adorable outfits for only $3, the savings add up big time and tons of families are benefiting. Not only can you get great deals on these items, but you can also make upwards of 70% if you consign, too. 

I'm budget-conscious and consider myself financially-savvy, so when I started to learn more about the sale, I knew I wanted to spread the word about this awesome event. Below are the details about this event, and while it's here in the Richmond/Rosenberg, TX area, there are Rhea Lana's consignment sale events across the US! Check out the full sale event list here.


2014 Spring Event Schedule
Saturday, March 29 to Thursday, April 3
5150 Avenue H Rosenberg, Texas

Public Sale
Saturday, March 29th 10a-7p 
Sunday, March 30th 12p-6p
Monday, March 31st 10a-7p
Tuesday, April 1st 10a-3p

Half-Price Sale
Wednesday, April 2nd 10a-7p
Thursday, April 3rd 10a-5p

Helpful Links

A note from Karen, shared on the Rhea Lana's Facebook page recently:

Who is Rhea Lana’s of Richmond/Rosenberg?

I’m Karen Chierighino, owner of Rhea Lana’s of Richmond/Rosenberg. Some ask if I travel all around holding events like these, but actually I live right here in the Pecan Grove community! I was raised in Alvin, Texas and graduated from Wharton County Junior College with an Associates Degree in Medical Lab Technology. I’m a busy mom to four adult children and two at home (14 and 15) and enjoy being active in my church and community. When I’m not in the thick of Rhea Lana season, I like to help with my husband's professional real estate inspection business.

I strongly feel my call was to serve and when I learned I could serve moms through Rhea Lana’s Children’s Consignment event I thought it was a match made in heaven! Over the last three years I have become passionate about showing moms how they can MAKE money and SAVE money with Rhea Lana’s! 

I have many favorite things about Rhea Lana’s, but a couple of them would be how 70% of every dollar spent goes right back into the pocket of a mom in the Richmond/Rosenberg community! And hearing how our events are able to bless grandparents raising grandchildren, single mothers, or foster parents. As a mother of six, I understand the importance of being able to dress your child in quality clothing at affordable prices!

- Karen

From left: Candace, Karen, Corey, Ryan, Ricky, Conald, Amanda, and Kaley

Tuesday, March 25, 2014

Why I Had to Trade in The Stratus for Kia Rio

This post is long overdue (by over four months!!!). While I've been settling in to my new job, I have finally been able to wrap my head around my new life and all of the exciting developments. A little over four months ago, I was driving through a parking lot in my 2001 Dodge Stratus, my first car, and the only car I had known for 11 long years. As my car creaked and groaned, people darted out of the way and looked terrified by the noises that were coming from my direction.

Monday, March 17, 2014

Renting a Room and Keeping it Minimalist

When we first moved in with my husband's cousin at the beginning of the year, we didn't really know how long we would be here. Would it be just a quick pit stop while we looked for our sixth apartment in 8 years? Where would we even begin to look? After a couple of weeks, it seemed that everything was working out just fine. With his permission, we began slowly moving our items into the house that we now shared.

Thursday, March 13, 2014

Minimalist Living Room Decor and Makeover

When we moved in with my husband's cousin a couple of months ago, I was completely grateful for the living arrangement that we had. We're currently renting out a room, and he has a house full of furniture and decor that had a bachelor pad feel to it. And hey, that's what he was! So once we finally "settled in", I was careful to toss around the idea of redecorating and moving items to give the place a fresh new look.


Monday, March 10, 2014

New Roomie: This House Just Become More Like Home

I had been counting down the days and waiting for weeks for our newest roommate, my husband's cousin. While we prepared for his arrival, I wanted to make his homecoming something he wouldn't forget. I'm all about a challenge, and I knew I had to budget to make his home something really nice while working with what we already have. I've been making over the house we're currently renting with my husband's cousin (our new roomie's bro), and steadily have been making it a little more cozy.

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