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Tackling Debt – For Good

I’ve been chatting a lot about budgeting, finances and debt over on Instagram the past few days.

Why it’s important to have a budget and the software that I use diligently to keep track of our family finances. This isn’t a software review, maybe I’ll do one of those later, but a post that will serve as a starting point for our debt payoff this year. I’ve been on the pay it all off then run it back up again roller coaster before. Back in 2020, I was tossing over $1,000 extra every month to debt. What I wasn’t doing though?

Saving money.

I mean I had your standard starter pack emergency fund of $1,000 but let me let you in on a little secret. Most home related emergencies/repairs are well above that. So there I was, killing my debt and bam, our water heater burst and we needed a new one asap. But, we didn’t readily have all of the cash to pay for it so I signed up for a 0% interest for 18 months deal which immediately added to the debt I was trying to pay down. Even though it was no interest, it was still a dedicated amount of money coming out of my check that was already spoken for. When I say readily, I mean money that is easy to tap into quickly, not things like investments that need to be sold off first.

The Goal

So I decided to shift the way I was approaching this and (I’m skipping over 2021 because it was a dumpster fire of emergencies and yea..that debt number grew) have a fresh new plan for 2022. The thing is, we could be in a much better financial situation. Not that we are struggling or anything but it could be better if I got rid of these monthly payments and put that money towards other things. You know, like emergency water heater types of things. Yay adulting.

The goal: Pay off all debt by the time I retire in 2027. All debt except for the house that is. The opportunity costs of paying off the house versus investing at that point will lean towards investing. More on that later.

The Debt Breakdown

The number? *Drumroll please*

$135,784 *gulp*

Let me pause here and say that if you have debt looming over you, ignoring it won’t make it go away. The first step is to get it all together and find your number. You can’t make a plan if you don’t have a roadmap and an end goal to work towards to.

Ok back to that number, it’s a mix of credit cards, my car loan (my husband’s car is almost paid off and he pays that directly from his paycheck), and my student loans. The bulk of it being the car and student loans. I’ve decided to create small goals within that so in my debt payoff website I use, I’m going to track the credit cards first, then the car, then the student loans. Or maybe the loans then the car we’ll see. There’s an option to exclude accounts from your payoff so I will turn those off until I get to them.

In any case, that helps me mentally as I take small bites out of this elephant. If you’re curious, the total amount doesn’t include the pool. That was a 401k loan that my husband took out and is paying back to himself from his paychecks.

Debt Priority #1

The first priority, and the goal of 2022, is the credit card debt. Paying that off (and not adding anything new) but…also adding to our savings so we can be better prepared for any emergencies that come up. How does this tie into our home project goals for the year?

Well, our calculator has the officially debt free date as November 2025. So, (Dave Ramsey die hards look away) I’m not going as super ham as I probably could but I’m also not going to be frivolous. So I will budget in the planned expenses for each project and be smart about my spending (full disclosure I also plan on leveraging brand sponsorships as well). That means that we may not get to our bathroom until 2023 or later until I have saved the cash to pay to get it done.

The Debt Payoff Method

Snowballing has worked well for me in the past but I’m going to use a custom method. There are some debts that are no interest but need to be paid off by a certain date so those will be taken into account accordingly. I’m still in the process of tweaking my snowball number but as of me typing this its $330. That will likely increase as I shift some stuff around in my budget in the next few days. With that said, I plan on hitting the debt free date before November 2025 because it’s based on a $330 snowball and no other injects of cash or additional income (which I plan on getting).

Specifically, the brand sponsorship money that I earn in 2022 will go towards my debt payoff. If I land 36 this year at my base rate…that will bring my payoff date up an entire year to August 2024 (after taxes and sending 30% to savings). So full disclosure when you see me hustling those deals this year, I am laser focused. If you break it down, 36 comes down to 3 a month which isn’t a lot. I’ll be sharing those details as the year progresses.

Time for Action

Now, that number doesn’t keep me up at night and for a few reasons. One, I have a plan and a plan is pretty freeing. the plan excites me, it’s like a game almost…how much debt can I pay off this month? Two, I know it’s feasible to get it paid off if I scale back on my spending. You see, I may not spend a lot of money on eating out but other areas (like clothes for the kids or those random Target shopping trips) have lots of flexibility in them. So, I will be seeing less of Target this year lol.

I think every month I will post a recap of my progress and share it here on the blog. I would love to be able to look back on it one day and have it serve as inspiration to someone else who is on the same journey.

No, this isn’t how most people would approach debt payoff and I could probably get to that debt free number a lot quicker but I’m not going into scarcity mode. For many reasons, but I will still live life throughout this process. I’m not going to start eating ramen every day but I won’t be balling out either. Balance is the key here for me.

Wish me luck!

Comments +

  1. Erin says:

    I’ll be rooting you on!! Congrats on taking this step!

  2. Jillian says:

    Love that you are so transparent here. I’m a Ramsey follower and finished my debt outside of the house in 2020. You got this! Do what works for you and keep us posted. This stuff is so fascinating to me 😊

  3. Jess says:

    Yesssss we’re in a very similar boat and sounds like our payoff plans are similar, too. I just wrapped up our plan and it’s such a high but I do get impatient waiting to pay off that next chunk! And I feel you on the emotional spending. Let’s just say we had the biggest Christmas we will probably ever ever have 😬

  4. Kate says:

    Love this! Can’t wait to see what partnerships you bring in.

  5. Monica says:

    This is so encouraging and has me thinking I’ll take the first step and at least write ~the number~ down. Thank you for always keeping it real, Yami!

  6. Gaby says:

    This is something that I very interested in learning and doing. It’s so difficult to pay off my debt and still save anything at all without living off of ramen and cereal. lol especially with 4 teenagers. I have to take immediate action though because soon those kids will be off to college and I’d love to be that mom that they can count on to get them started.

  7. Beth Marie says:

    I’m so excited to root you on, you got this Yami!

    P.S. This site is beautiful 😍

  8. […] I talked a little bit about my spending priorities (after talking about my savings/debt payoff priorities) and the major things that I would like to focus on this year are my cookware/dishes and my […]

  9. […] for the upcoming year and of course, because my birthday is on the 12th. After posting my whole debt breakdown, I’ve decided to do recap on my debt payoff progress each month. It’ll be a great […]

  10. […] you read my previous post on tackling debt, you know that I’m in the thick of paying off a few cards/loans that accrued over the years. […]

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