Debt milestone: less than $10,000 left

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I hit another milestone today: my total debt is under $10,000! I’m heading toward a seven-year low mark and I’m just doing full-on battle with the beast.

Since studying abroad in college, I’ve carried credit card debt. It ballooned when my income increased, a typical example of lifestyle inflation. Two years after graduating from college, I bought a brand new car and my student loans came due, all within the same summer.

See that big spike in the chart below?  Yeah, I’ve been recovering from that since 2005.

debt chart

 

The high point was $40,000 and, as of a payment I made today, I’m now officially below $10,000. I paid my car off a few years ago and my credit card will be paid off in a month or so. Then, the student loans.

How have I done this, you may ask? Well, you can see that it’s been a bit of a roller coaster. I made good progress into 2008, but then relied on my credit cards when I started my consulting company. The spikes in 2009 were pretty inexcusable, in that I can’t even remember what that money/credit was spent on.

I’ve used the snowball method of paying off my debt: I’ve paid off either my smallest debt (the car) or the highest interest debt (the credit card) at various points and, when one debt was paid off, I put that extra monthly money into the next debt. I’ve also had the underlying belief that debt = wage-slavery. As long as I have debt, I have to work that much extra to just make the minimum payments.

I highly recommend the book Your Money or Your Life by Vicki Robin and Joe Dominguez. That book turned me into an informed debt-fighter.

Realizing that I was mostly working to pay monthly minimums on my debt led me to move to a less expensive apartment, saving $200+/month. It gave me the courage to negotiate higher starting salaries at two jobs. It also led me to set realistic – and enjoyable – budgets for my discretionary spending. I haven’t lacked in fun since fighting debt, which I believe is key to setting a budget with which you can live.

So my next goal is to pay off the rest of my credit card debt, which I hope to do in January. I’ve had a long love-hate relationship with credit, so this should be interesting!

Do you track your finances or does the thought of it scare you? 

Do you have goals around your debt or spending for 2013?

 

Photo credit: Trading Academy

7 Comments for “Debt milestone: less than $10,000 left”

Keri Brown

says:

Congratulations!!! That’s a huge milestone! I hope you feel very proud!

I had the awesome experience of being completely debt-free this summer, but, as happened with you, when I opened my small business I relied on a credit card again for a while. I forced myself to keep it under $1k though, and I’m determined to pay it off by the anniversary of opening Keri’s Kures.

I really appreciate you recommending a secular book that you feel addresses this issue well. My savior (haha) from debt was actually a Christian debt instructor named Dave Ramsey. I’ve tried to share his teachings with friends, but most of them can’t get past his Christian perspective to see the wisdom that lies beneath. I’ll definitely be checking out Your Money Your Life and sharing it with them!