Getting on track wouldn’t have happened without the guidance and encouragement from my sister. This girl has been my brain, my rock, through out the budgeting process. Instead of yelling at me or judging me last week, she realized I needed help. She’s always been a “saver” and offered to put me on a budget. While I know some strategies (for example, I had already transferred money to a 0% interest for 18 months card), I had trouble committing to a plan.
Just to give you an overview of my debts:
- $5000 on CC#1 (0% interest card for 18 months – $310/month payment)
- $3957 on CC#2
- $500 on CC#3
- $800 loan to the bank of Mom and Dad
My sister put together a super easy plan to follow. First I took $1000 that had recently gone into my savings from my tax return toward the $5000 credit card which would reduce my monthly payments on that card. I reduced the amount direct deposit that I had going into my small savings account and the percentage of my 401K contribution. That should give me $200-$300 more per month in cash flow to pay down my debt.
The most important element of the debt plan is to allow myself enough money to live off of so that I don’t have to default on my credit cards. She recommends $500 every two weeks, so a total of $1000/month.
Here is the initial budget that she came up with:
Pay Check 1 : $1348
Pay Period #1 Spend: $500
Pay Period #2 Spend: $500
Left Over: $348
Pay Check 2: $1358
Mom: $260 ($200 to pay off debt, $60 to cell phone)
I already felt elated having this plan. A weight had been lifted off my shoulders. Having control over your money is empowering and I’m already feeling a new found confidence knowing that I’m on a path to financial freedom.