If you are a regular reader on Family Financier (probably just my wife – thanks, babe!) then you might have noticed that a debt reduction progress bar has popped up on the front page and something needs to be said about why it’s there:
I’m in debt.
I said it. It’s out there. I’m going to keep saying it until it’s not true! Baring it all on the front page will force accountability, and any missteps will be met with a little bit of public shame on my end which is always good (right?). In the interest of privacy, I’ll keep track of things on a percentage basis so that we can see progress without actually throwing dollar amounts out there to the world!
The sad fact is that the average American has over $132,529 in debt of any kind (including mortgages) and even if you just look at some individual categories like credit cards ($16,061), auto loans ($28,535), and student loans ($49,042) you’ll see that debt is a problem that almost everyone is struggling with today. Removing the burden of debt from our balance sheets is one thing, but removing it from our hearts and minds is a blessing even more powerful!
In an effort to get more serious about actually making progress on my goals and reaching the all-important “Debt Free” milestone, I will be focusing all of my writing here on this blog as well as my personal financial attention to debt reduction until I’ve achieved it. This will involve the debt strategy as well as a focus on saving money and growing my online income in the name of expediting the process.
My Debt Reduction Plan and Report for August 2017
Getting out of debt isn’t rocket science. Even if you are just making the minimum payments, you’ll get out of debt eventually as long as you aren’t adding new sources of debt to the pile. Avoiding new debt is probably my biggest personal issue. If you make extra payments above the minimum, however then you will not only pay off your debt faster but also save a lot of money that would be otherwise lost to interest. I don’t know about you, but I would much rather be putting those interest payments in MY bank rather than into someone else’s!
With that being said, here are the two major parts of my plan:
I Will Not Take On Any NEW Sources of Debt
This would include opening new accounts/cards or even making purchases with existing cards and accounts. I’ve learned in the past that this behavior is just too risky for me and it is all too easy for rationalizations to come in and make spending seem like a good idea at the time. The reality is that I have no business spending money that I don’t have and if I don’t have the discipline to save for a purchase, then I probably don’t want or need it.
I’ve also realized that I have not yet earned the right to try and get perks from credit cards. If you carry a balance on a credit card, then the whole idea of getting points for “free” is moot because you’re paying more in interest than you are making from the bonuses. Once I’m debt free, I’ll reconsider.
I Will Be Using Dave Ramsey’s Debt Snowball Method
You can find out more information about this method over at Dave’s website, but the idea is fairly straightforward. You take record of all of your debts (credit cards, auto loans, etc.) and you list out the current balance, interest rates, and monthly payments (a spreadsheet like this one over at Life and My Finances is incredibly helpful). You can then tackle them in order of smallest balance first or highest interest rate first. Technically, tackling the higher rates will lead to the most savings, but Dave is a big fan of getting quick wins by starting with the lowest balances.
Now the trick to this method and what gives it the snowball name is that we are trying to start with our minimum payments and add to that payment to create a giant “snowball” of momentum. Any extra payments that you can add right now to your minimum will go towards the snowball. Once you pay off a debt, you’ll add that minimum payment, along with any other additional money you’ve committed, to the next lowest balance. In this way, your payment amount will grow and grow and speed up each subsequent debt payoff.
It’s a beautiful strategy.
Using this method can really help jumpstart your debt reduction plan!
First Debt Reduction Update
I am proud to say that I reduced my outstanding debt by about 2.36% during the month of August!
This reduction is without any substantial extra payments, but it does include one account that had been late and got a double-up payment to catch this month. This number will be slightly difficult to track because each account updates interest charges and payments a little bit differently but I will check the accounts on the same date each month so the debt reduction trend should be clear. I’ll also be discussing areas that I’ve had success or completely derailed!
My Online Income Report
As I mentioned recently in my blog reboot, I’ve been focusing a lot of time and energy on my freelance writing gigs to help earn as much income on the side as possible. Having multiple revenue streams has been a real eye-opener for me and my finances, and I realize how much potential is out there for earning extra money.
To jive with my debt reduction, I’ll be posting monthly income reports that highlight income from any of these sources:
- Freelance writing and other gigs
- Survey Income
- Blog income (Ad Revenue, Affiliates, etc)
- Anything else that pops up in the future!
It has been a priority of mine for a while to make sure that I am focusing on growing income from all of these streams and although I’ve had bumps along the road I’ve been making progress over time! I won’t be counting any kind of retirement account growth, dividends, etc. for the time being either. Just money that can towards my debt bottom line.
First Online Income Report
So, my first income report isn’t going to be terribly exciting but I’m going to do it anyway. All income listed is income that I actually received in the month of August (some payments are made the month after services are completed)
Freelance writing – $948.50
This money came from two steady writing gigs that I’ve had for the past several months. One of them is writing short articles across a broad range of topics for a monthly newsletter for which I get paid by the article, and it is more or less the same workload each month, and I know what to expect in advance. I talk about finding this gig on Upwork on my recent post about starting up freelance writing.
The other gig is for a niche website for which I get paid by the word, and I have a lot more flexibility. I typically write anywhere from 15,000-25,000 words per month for this site, and if I slack anywhere, it is with this gig. Sometimes flexibility is a bad thing if you have a lot on your plate and I have to push myself to produce here at the level I want to.
Survey Income – $27.00
This income came from Survey Savvy, and this is the first check I’ve withdrawn from that account in a while. If you want to sign up for the service (referral link), it’s an excellent way to earn a little extra income without a significant time commitment. Most of the surveys take 10 minutes or less and can be done while watching TV or sitting in a waiting room!
Blog Income – $0.00!
I don’t think I’ve made a single penny from this blog yet – technically. However, this blog was instrumental in helping me secure my first few freelancing gigs and remains an excellent way to hone writing and editing skills! Sure, if threw up some ads I would probably make a buck or two each month, but I’m not really interested in that right at this moment. I’ve dabbled in some affiliate marketing for products that I’m already using and although they have had several clicks I haven’t had any conversions yet!
As a shameless plug, I’ll link to a couple of recent posts that include referrals or affiliate links to products that I love:
- Is Project Fi Worth it? I Save 50% Over AT&T – Although I’ve been with Project Fi for several months, I just reviewed the service and talked about how much money I’ve saved. Stepping away from the big carrier (AT&T) has got to be one of my biggest money-saving moves of the past year!
- Getting Rid of Cable and Saving $985.80 a Year! – I recently revamped this article as some of the information had changed, services were updated, and a couple of the services actually added an affiliate program! If you are paying a ton of money to the Cable Company each month, you should seriously consider cutting the cord and going to a stream-based package. You can pay for as little or as much as you want and there are no contracts at all!
Well, there you have it! All told, I made $975.50 in online income during the month of August. With hard work and dedication, I know that I’ll be able to grow my online income into the future to help eliminate debt and plan for a financially free life!
So, what have you been up to during the month of August? What have you been doing to grow your online income or improve your debt reduction? Let me know in the comments!