I’m Debt Freeeeeeeeeeee

In June I claimed that I would be debt free by 2012. It’s November 2011 and I’m now debt free. Every single penny of debt has been paid off. Last November I was $50k in debt. I had $43k student loans, $4k on my credit cards and $3k in tax payments to make.

It’s been a busy year of progress. It took a lot of sacrifice and I had to keep my eye on the prize, but I finally got there. Luckily, along the way, it seems that things have been working in my favor. It’s clear that my salary over the last year ($51k to $58.5k to $54k) wasn’t enough to help me make all this progress. My family helped along the way. My parents continued to pay the minimum $485 monthly payment on my student loans. My grandparents also had money in a mutual fund that they had gifted to me each year which ended up being worth $3.7k. Over the past year I also increased my outside income. It seems that when you’re making the right choices things just fall into place. As I’ve heard before, “money attracts money.”

My financial journey doesn’t end here. I still have a long way to go. I’m going to need a new car. I will be getting married in the next three years. And I’m looking forward to purchasing a home at some point. I still have a loooong ways to go, but being debt free will now allow me to focus on these other goals and I’m looking forward to sharing my journey with you.

Debt Free By 2012

I will be debt free by 2012. There, I’ve done it. I’ve issued my ultimate goal for the year. I really don’t think at this point that I could come up with a more ambitious goal or financial plan in the short-term. By December 31, 2011 I will have all $22,735 of my remaining debt paid off. That’s nearly $23k in about 7 months.

Right now, my parents are currently contributing $485 to my student loan each month. We’ve been paying it down at a decent pace as I’ve been stacking money on top of their payment so that now more of every minimum payment is going to principal. In the beginning, about $240 of that $485 was going to pay down the principal. Now, nearly $330 is going toward the principal from each payment. Still, to achieve my goal of being debt free I’m going to need to pay an average of $2,850 on my loan each month on top of what my parents are paying. I can’t make that payment every month. However, I will be receiving a $5k bonus at work sometime this year, and all of that will be going to the student loan. This means that I need to be paying about $2,000 each month on my loan. This monthly payment is still a stretch, but it’s much more manageable. On average I’ve been paying about $1,500 per month on the loan.

There isn’t really much else to say at this point. I’ve issued the challenge to myself and  now it’s time to step up and make it happen. I think such a narrow goal will help me focus on making big progress as opposed to having too many goals (paying debt, saving for car, saving for house, etc) and not feel like I’m making any progress. As the year goes on, it will be important tho I make sure that I don’t get discouraged if I’m not on track to making the goal. If I fail to reach my goal and end up paying off the debt in March 2012, I’ve still succeeded, right?