I am a late 20’s millennial who enjoys the finer things in life, like craft beer and keeping my 17 year old Subaru Outback running. I was very happy trudging my way through life slowly paying down my debts and avoiding an assessment of just how drastically I had sunk my way into the pit of misery. Well, I got a decent job at the beginning of the year, (My last job I was literally losing money working there given my expenses and debt interest), and decided to take a look at just how bad my finances were.
Spoiler alert, they were bad. I had accumulated 30k in student loans over the course of a long and arduous undergraduate degree, 13,000 in credit card debt over 4 credit cards with APR’s all above 20%, and even owed my mom and family over 2,000 dollars that they paid to help me out with various things.
Now, I didn’t seek out any help, I wouldn’t be a stubborn debt ridden guy stuck working on an oil rig in rural Texas if I actually was mature enough to talk to people about things. I instead did some scant internet research and decided that going FURTHER into debt was the solution to my problems!
I did several things.
- I created an excel spreadsheet with all my debt listed on it. The starting debt, the interest rate on that debt, and a way to update it monthly. This really allowed me to see how bad my situation was, with the 20%+ APR’s on my credit cards I was paying them an absurd amount to do basically nothing.
- I took out a personal loan. My credit score is actually pretty good for how shit my financials are. I think I had about 4,000 dollars in my checking account at the time, but a credit score of 677 according to equifax. I was about to get a 13,000 dollar loan at an 11% APR, which halved my interest payments and reduced the amount I was paying monthly for my credit cards. I did this with a company called Upstart, that takes pity on college educated duds like myself.
- I took out 0% interest rate balance transfer credit cards, now this is a bit of a controversial move, but I wanted to give myself a financial buffer just in case I lost my job or had to pay for something unexpected. Unfortunately I was only able to get a 500 dollar limit on the first one I opened (Chase Slate), which I wouldn’t have opened if I knew it was going to be that low. I called them to increase the credit but they declined to do it. I then got a 3000 dollar limit with Discover and a 14 month 0% balance transfer rate. So I moved 2975 dollars of credit card debt onto those two cards, which will allow me to keep that money in the mean time, and slowly pay them off over the next year interest free.
- I used the personal loan to pay off most of the remaining credit card debt, I know I should just pay it all off, but I left a couple hundred on the books so that I could get the satisfaction of snowballing it into oblivion rather than feeling like I just entered a cheat code.
- As for my student loans I entered into a low payment plan that is based on my income, which gives me a very low monthly payment compared to the standard rates. I just have to update it every year, and if I manage to hang onto it for about 20 years it might just go poof, but who knows with that stuff.
- I called my mom and told her I would sending her a monthly payment of about 50 bucks to begin addressing the money she lent me. She was happy, she hadn’t really expected to be paid back, but I want to do it for myself.
At this point I have increased my checking account balance to about 9,500 dollars, repaid most of my credit card debt, the remaining debt is on 0% interest cards, and converted the remaining balance into a lower interest single loan payment. I am sure that my credit score took a nice ding with all this, but considering it will all be consolidated to a short time period and lead to a greater credit limit to debt ratio, this might end up helping in the long run.
Anyways, that’s what I did, I think the most fun I had was making the excel spreadsheet. I can enter all my payments and it updates my current debt. I can also input my paychecks and any additional credit card charges to see where my money is going. I am confident this will lead to a better more financially sound person by the end of this process. I hope to return with good things to say in a year or so, we will see!