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The purpose of this blog is help people improve their Mind, Body, Soul (relationships) and their Money.

Friday, June 13, 2014

Debt Free Interview #6 - Derek from Life and My Finances

This week's Debt-free interview comes from Derek at Life and My Finances

1.        How did you get into debt?
Mainly, I got into debt with student loans. When I graduated from college,
I had over $18,000 in student loan debt.

2.        How deeply in debt were you at the worst point? What did it feel
Luckily, I owned my car free and clear and did not take on any other debt
after graduating from college, so the most I was ever in debt was $18,000.

3.        When did you decide to get out of debt and why?
I decided to get out of debt when my first student loan payment came due
and I realized that I did not have the money to pay for it (and it was
only $75!). From that point on I created a budget and put every extra
penny toward the debt.

4.        How long did it take you to get completely debt free?
Over the course of 14 months (and there was a car in the story there that
I had to scrap...which obviously didn't help), I was able to pay off the
entire $18,000. It wasn't easy, and it didn't seem to quick at the time,
but man it was nice to get rid of those payments! :)

5.        What advice would you give to someone trying to become debt free?
First, build up a decent emergency fund (of $1,000 or $2,000) so that you
aren't tempted to use your credit card when your car breaks down or when
your kids need a whole new set of clothes.

Second, reduce the temptation of taking on more debt by paying with cash
and cutting up your credit cards. Sure, you won't earn reward points, but
you will most likely make up the difference by all the deals you could get
by paying with cash!

Third, make a budget and do your best to stick to it. Sure, it's not all
that fun, but you will never really know where your money is going until
you make a budget and start tracking it. When I made my first budget, I
realized that I was paying too much for my cell phone, my car insurance,
and my home owners insurance! Just by putting a budget together, I saved
myself nearly $1,000 a year!

Finally, do your best to stay consistent with your payments and to reward
yourself with small things along the way (ie. Did you just pay off a small
$1,500 student loan? Take your spouse out for a $50 dinner.).

Don't give up!

Derek Sall

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