May 12 2010

Part 4: A two-month debt reduction update from Courtney

See part 1, part 2, part 3, part 4, part 5, part 6 and part 7.

You first met my friend Courtney in early March. Just two months have passed, and she is doing a fantastic job! First, the numbers. The March figures are in plain text and the new figures are in bold:

  1. Kohl’s credit card: $395.20 Now: $0
  2. Discover card: $537.15 Now: $0
  3. Capital One: $725.45 Now: $0
  4. Menard’s: $2,100 Now: $1,967
  5. Visa: $2,530 Now: $2,458
  6. Signature loan: $2,729 Now: $2,616
  7. Discover #2: $5,400 Now: $5,205
  8. Dodge: $3,295 Now: $2,563
  9. Toyota: $11,503 Now: $11,127
  10. Sallie Mae: $27,379 Now: $27,010

Total debt in March: $56,595

Total debt in May: $52,949

Total paid so far: $3,646.

That’s fantastic! In just two months, $3,646! Three credit cards totally gone. Three less payments she has to make each month.

And what’s more? Courtney also has a $1,000 starter emergency fund on top of all that! Yay!

The store credit cards have horrible interest rates. Her Menard’s card is sitting at 24.99%. That’s just robbery. At a $37/month minimum payment, it isn’t enough to ever pay off the balance, according to this calculator. Fortunately, that card is next on her list to tackle and will be gone soon.

So how’d she move $4,600+ in the positive direction in just two months?

Courtney cut fixed expenses. She lowered her cell phone plan by $23/month, reduced the cable/internet bill by $20/month, cut Netflix at $9/month, and negotiated lower car insurance rates for a whopping $163/month in savings. Their electric and water usage is also down.

She worked on flexible monthly expenses, such as gas, grocery and entertainment. Didn’t hit her target numbers in all categories, but it’s hard to do that consistently every month, especially when you’re working with low numbers to begin with.

They sold things. A treadmill, chair covers, a pop machine, a car, and a yard sale for miscellany. Total: $1,333 right there. I thought it would be cool if she sold $500 worth of stuff, and she just blew that challenge out of the water.

They’re earning income from second jobs. Both Courtney and her husband have side jobs, which they’re able to put that money straight toward their debt snowball. They also got an insurance refund and a tax refund, which went to their debt reduction.

Setbacks? Yeah, there were some. About $1,800 in unplanned/unexpected expenses that really couldn’t wait. And ya know what? They didn’t go into debt for it!

Now that their starter emergency fund is complete, they can put that $200/month they were putting in savings toward their debt.

Other things that went right:

– Courtney has a local frugal friend, and they swap coupons, share deals and money-saving strategies. Really helpful!

– She is really encouraged because she has paid off cards that have had balances for five years!

Things she would have done differently:

– Courtney: “Well, my biggest regret is selling my Corolla. My husband did use it, but we didn’t NEED 3 vehicles even though it was paid off. Now, if I’d read Dave Ramsey/etc back in October, we never would have purchased (on loan) my Camry. I cannot change that we now own it and it doesn’t make sense for us to sell it given we’d be losing money and I’d still have nothing to drive. So it’s not so much that it should have been done differently–I just miss my first ever car and am thinking we probably aren’t saving that much money in insurance since my husband’s truck (he was driving the Corolla for running errands/etc.) is kind of a gas hog.”

And this is really key:

“In the beginning I was a little too strict and fanatical about sticking to the budget exactly and that caused a bit of strain on our marriage. I was being inflexible and wanted to prescribe to the Dave Ramsey plan 100%–my husband felt that it was mostly good, but we should really be able to enjoy our lives and not be stressed about money all the time so long as we were making good progress. So, we both compromised–we are now in a very good place and completely on the same page, which is how it should be!

How will Courtney and her husband keep their momentum going?

– They have a few more high-ticket items they are planning to sell.

– They are keeping busy with their second jobs, and Courtney also found a mystery shopping gig that will add a little more to their debt snowball.

– Courtney: “I think we will definitely have to figure out a way to stay positive once we’ve paid off the credit cards because my car loan and student loans will take quite a bit longer than the credit card debt.”

[ Kacie jumping in here: Actually, I think the car loan won’t take as long as you think. You’re putting at least $1,100/month toward debt reduction and as you tick off debts, that amount is just going to keep growing. Plus, you’re still making a $271 monthly payment for the car which helps the balance go down.

By the time you’re ready to focus on paying off the Toyota, you will have paid off the Dodge ($386/month), signature loan ($87),  and several other high-interest credit cards with fairly high monthly payments. If you roll all that into your debt snowball, that’s probably at least $665 extra per month you can throw at it. That’s huge! ]

-Courtney: “I am trying definitely to keep looking forward–it’s easy to look back and say, “Oh man if I only knew this a year ago we wouldn’t be in so much of a mess”. But, I try to stay positive and thankful that I learned it in my 20s and not my 50s! I have no doubt that we would have stayed in debt our entire lives otherwise!”

Kacie again: I am so encouraged by Courtney’s progress. They’re doing a great job, don’t you think? Why don’t you pop over and leave her a verbal pat on the back. I’m looking forward to her next update!



4 Responses to “Part 4: A two-month debt reduction update from Courtney”

  1. That’s fantastic, Courtney! Keep up the great work!!!
    .-= Becky@FamilyandFinances´s last blog ..Ten Fingers and Ten Toes, Unless You’re a Chicken =-.

  2. YAY Courtney! What an awesome journey you are on. Keep up the good work.

  3. Good job!!! That’s awesome!!
    .-= Stacy´s last blog ..One Bear Lost =-.

  4. Thanks so much! :-)

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Hey! I'm Kacie, wife to Shane and mother to Jonathan (7), Vivienne (5) and Amelia (2) . I write about my family's finance: how we save money, improve our spending, and plan for the future.

I hope I can inspire and encourage you to improve your situation. See disclosure.

I'm adopting a much slower-paced posting schedule, and treating this as a hobby blog now.

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