Thursday, February 26, 2009

$55,000 in debt!

When I started my financial turnaround in February of 2008, I personally was over $55,000 in debt, not counting the Mortgage. Some of the debt I had was left over from my divorce of 8 years ago.

But somehow, over time, I rationalized using credit cards, getting a car loan, borrowing money, and paying for college tuition with a student loan.

Before I knew it, I owed the following:

5 Different Credit Cards: $6,950.
Auto Loan: $13,000
IRS: $17,350
Parent Plus Loan: $13,450
Personal Loan: $4500

For a total of $55,250! A huge number that I compiled with stupid spending, dumb borrowing, lack of planning and lack of savings!

By totaling the amount of unsecured debt i carried, I began my journey to financial freedom.

As with Dave Ramsey's plan, I actually started a budget, or as I prefer, a spending plan! I started looking at my spending habits, traced all of my expenses, and gave every dollar a place to ebb and flow!

The next step was to do the most emotional thing I could think of at the time....CUT UP MY CREDIT CARDS! I was so attached to my Nordstrom credit card because I opened that account over twenty years ago! How crazy is that! Being attached to a credit card that cost me 20 something percent in interest to buy expensive clothes! DUH!

So, I brought out the shredder, put all five credit cards on the table and told my new wife that we were on the road to financial freedom. With that, all five credit cards became many plastic shreds!

Next step was my emergency fund, Baby Step #1 from Dave Ramsey. I immediately opened an ING Orange Savings account. ING offered a $25 gift when you opened an online account with them. I had budgeted $200 also to put into savings that first month. After a month of working some overtime and selling some stuff, I was able to get my $1000 EF funded.

Next post, I start Baby Step # 2-The Debt Snowball and the many Snow Flakes!

No comments:

Post a Comment