It has been three years since I’ve paid off my $9,000 mound of credit card debt in October of 2015. I haven’t posted about anything related to money since then but I’m proud to say that I am still credit-card debt free! A lot has happened. I paid off the rest of my car loan (around $5,000) eight months later. I accumulated $5,500 in emergency savings by the end of 2016. I have paid down my student loans by over $20,000. Another $6,000 and I’ll be completely debt-free!
The way I manage my money has evolved now that I’m not in a situation where I’m living paycheck to paycheck to pay my bills. The Matt Budget helped me manage every dollar on a micro-level which was completely necessary at the time. Now that I’m (mostly) out of the red, I have more freedom and flexibility. My current system sets me up for “automated growth;” it’s the same system Luke uses for managing his money. I’m growing very, very slowly at the moment because I’m focused on eliminating the rest of my student loan debt. More on that later.
I had about eight or nine credit cards when I started this journey. I am now down to four cards as a result of banks closing them due to inactivity or because I made the decision to close those cards. What I will say for now is that I don’t think anybodyneeds more than one or two credit cards and that in certain circumstances, closing cards really won’t affect your score that much. I will make a separate post about credit scores and the factors that affect them at another time.
As far as credit card usage goes, I didn’t use any of them for a very long time. Now, I use only one card for very specific purchases. I do not carry this card with me on the regular. Some might say it’s a slippery slope (Luke does not approve) but so far, it’s working for me. I do not swipe that card unless I know I have the cash in my bank account to immediately pay it off.
Work in Progress
It would be dishonest of me to sit here and tell you that I never make any money mistakes anymore. I still have a spending problem that I am working on. In the system I use now, I have a set amount of money each paycheck that is specifically for “fun” spending and I run it into the ground before the next paycheck arrives. It’s about $272 every two weeks. I know that my unnecessary spending usually comes from the need to fill some kind of void. I’m still doing a lot of mental/personal work on this. I’ve also become very conscious of the amount of waste I create, which has been a big help in curbing the urge to spend money on material items. The majority of my fun spending goes to restaurants, skincare, and gifts.
When I run my fun spending into the ground, I don’t have the freedom to say “yes” to experiences when they come up. I also don’t have the ability to “splurge” on something special for myself when I come across it. It comes down to making short-term sacrifices to give myself more choices in the future.
I am currently focused on the elimination of my student loans which is just under $6,000. At the rate I’m paying them off – about $700 a month – they should be gone within the next nine months or less. Once that is taken care of, I’m eager to start building up my emergency fund a bit more and shifting my focus to investing.
I am so grateful for how far I have come, what I have conquered and accomplished, the challenges ahead, and the direction my life is moving in. Life is so different when you choose to believe that you have control instead of choosing to believe that you are helpless.
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