Ding. Dong. The witch is dead.

Yo yo yo! Quite possibly the most exciting announcement EVER . You’re probably going to want to take a seat before you read this. Are you sitting down yet? Okay good.

Today, mi amigos, I would like you all to know, I just popped a cap in Sallie Mae’s a$$ and laid her to rest. FOR GOOD!!!! That’s right PF’ers I am debt free! I feel so many things right now, but mostly I’m just turned on. What can I say? Being debt free is sexy. Ahhh, it feels so good to say, I think I might just say it again… I’M DEBT FREE!!!! Okay, now that I’m done gloating, let’s take a little walk down memory lane…

I graduated college Spring 2007 with $28,462.96 of student loan debt. I did the typical post-grad choice and deferred my payments for the six months allotted. I then consolidated my student loans with Sallie Mae, which in hindsight was the biggest financial mistake of my life. In February 2008, I had to make my first student loan payment. A whopping $178. I did this one time. After the first month, I decided I didn’t want to be in debt for the next 20 years, so I stepped my game up. I began doubling my monthly payments and figured I’d be out of debt some time in 2017. I thought I was pretty smart.

I continued making these double payments for exactly one year. In March 2009, it was time to get even more serious. I began throwing between $1,000 and $1,500 towards my loan every single month. Although I was committed to paying off my loan quickly, I still lacked the intensity needed to really get the ball rolling.

In April 2010, that changed. I became determined to be debt free by my wedding day. This is when I made a $10,000 decision and reduced my loan from $14K to $4K. After some more number crunching, excel spreadsheeting, and mathematical calculating I realized it was time to say goodbye to Sallie Mae for good. Over the weekend I submitted my final payment, and in case I haven’t already told you, today marks my first day of debt freedom!!! Kind of.

Apparently I made a mistake in predicting the accrued interest over the few days it would take my payment to process. Come to find out, my calculation was off by eleven cents…

So over the 2.5 years it took me to pay back my loan, I ended up forking over $3,832 in interest. This brings my total repayment to $32,295. While that number might be painful, it’s a whole heck of a lot better than the $52,000 total I would have paid had I taken the full 20 years to pay it back. Boo to the Ya for saving money.

I can tell you right now, I am already benefiting from the psychological effects of debt freedom. I feel incredible and am so excited to be able to spend my money without a voice in the back of my head saying “You shoulda used that money towards your debt.” Sallie Mae is one woman I never want in my life again. Ever.

As if you couldn’t tell, I am  really excited about this. Let me just get it out of my system one last time. HELL YEA!!! I’m Mother Effin, Debt to the Free. It’s time to go play “Ain’t gonna tie me down” over and over again, cause as of today, I am no longer Sallie Mae’s biotch.

Any suggestions for what I need to call my blog now? Perhaps, Punch Making Really Dumb Financial Decisions In The Face?

A $10,000 decision

I made a bold move last night and decided to transfer $10K from my savings account to my checking account. After much thought, I have decided it’s time… Time to kick Sallie Mae to the curb. That’s right. I’m going to be aggressively paying down my debt so I will be debt free by the time I get married.

I currently have just under $24,000 in my savings accounts. They are broken up in to three subsections. A $10K emergency fund, a $10K extra savings, and a $4K wedding fund. I had been hoarding cash and saving as much as I possibly could because I was scared of the unknown.

I knew I had more money in savings than I needed, but seeing my bank account grow every month really gave me a peace of mind. While there is definitely security in having a large sum of cash easily accessible, there is also security in being debt free. Beginning my marriage with no financial obligations to anyone (but me and the wifey) will be an incredible feeling. Furthermore, I have a responsibility in this relationship to not be a burden. Girl Ninja is debt free, and I truly believe I owe that to her as well. She doesn’t care if I pay the loan off or hold on to the cash, but I think two  years from now, she will be appreciate, and understand, that this was the right decision.

By making this lump sum payment, my student loan balance should fall just below the $5,000 mark. Do you realize what this means? It means the interest I’ll be paying towards this loan is going to drop from $84/month to $29/month.  That makes for a $55/month savings. Booya for savings!

I’m not going to lie and pretend like it wont suck to depart with such a big chunk of change  (I mean, I worked really really hard for that money), but in the end I know it’s the right decision. And if for some reason the crap hits the fan, I’ll still have my $10,000 emergency fund as a first line of defense.

It’s going to feel SOOOOO good to be done with Sallie Mae in just a few short months. I can’t wait!!!!

Monthly Expenses: November 2009

If I could only use one word to describe November, it would be, bleh. Mediocre at best, at least it felt that way after last months RADICALNESS. I guess I shouldn’t be complaining ’cause I still brought home more than I spent, and when that happens, life is good. Here’s where the money went…

My Income:

Salary: My take home pay from the day job. I should have only brought home about $2,700 last month, but I got paid out for the last of the overtime I worked in October. It’s gonna be depressing to watch my income drop. Oh well, in February I get a $12,000 raise! YAY!!!

Gift: Mom Ninja’s hooking it up with some money to throw at my student loan. Everyone should say nice things about Mom Ninja down in my comment box, haterz not allowed 🙂

My Expenses:

Auto: Looking at my Auto expenses make me want to throw up. My car registration was due, so that was $220 gone. Another $180 came from one of the stupidest things I’ve ever done (car mirror vs fence = fence wins).

Dining/Groceries: Fudge! I broke my grocery/dinging budget for the first time in a REALLY long time. I have a goal to be under $250 total for food each month. Unfortunately I broke that by $26.74. I went out to eat quite a bit last month because I had been on a business trip abroad for six weeks and wanted to go out with my friends 🙂

Interest expense: Good ol’ Sallie Mae. Brought the old hag down another $1,600 last month which ain’t to shabby if ya ask me. Especially considering my minimum obligation is only $230.

Travel/Reimbursement: These were all costs/reimbursements related to my business trip to the Marshal Islands. Nothing to exciting here.

The other categories were too unimportant or self explanatory so that is why I didn’t cover them. The overall total at the bottom is the cash I had leftover after all my expenses. I ended up having $1,670, which I put in to my savings account. I’m foaming at the mouth, waiting for that raise to come so I can have even more options with my cash flow.

Is it bad that I’m not excited with over a $1,000 do-whatever-the-crap-I-want-category? Don’t answer that. Are these monthly expense reports even entertaining for you to read? I’m imagining in my head right now, all of my readers hating these updates. If that’s the case, I’ll stop 🙂 Let me know. THREE MORE DAYS TO CHRISTMAS!

* Are you wondering why I post the previous month’s expenses a couple weeks late? I use quicken to track my spending and I have to wait until the end of the billing cycle before I can download these transactions. I know I could manually add each expense as it comes, but I am entirely too lazy for that. Thanks for checking in and if you got any comments, tips, or advice I’d be more than happy to hear it. *

It’s not what you make, it’s what you spend (seriously)

Screen shot 2009-12-02 at Dec 2, 2009, 8.24.22 PMThe proof is in the pudding suckers… whatever that means. I did some hardcore number crunching over the weekend and realized something: I’m totally stoked on my financial progress over the last 12 months. Sometimes I get so focused on what lies ahead, I forget to take a little walk down memory lane and reflect on where it all started. Let’s take that “walk” now, shall we?

Since I posted about my net worth yesterday, it’s only fitting to start there. I currently have a NW of $27,389. Wanna know what my NW was one year ago? I was rockin’ a solid -$10,000 NW. That means in twelve months I have totally turned my financial situation around, to the tune of almost $40k. There are a few factors that have played crucial roles in this awesome change. 1) A big help in this increase is due to the rise in the stock market over the last year. 2) I got an $11,000 raise. I was making $39K this time last year and now I’m sitting pretty at $50k. In February I will be getting another raise to $62K so I can’t wait for that day to come. 3) Supplemental income. I’m obsessed with making money. I have found tutoring/odd-jobs to be quite lucrative. I think I’ve made about $6,000 this year in side work.

If you’ve been reading PDITF for a while, you know I am quite bi-polar when it comes to my student loan. I started the year paying double payments to Sallie Mae each month (about $330). In April, after advice from my readers, I decided to up the payments to $1,000/month. A few months later I got real crazy and decided to throw between $1,500 to $2,000 at it each month. Then, about a month ago, I decided to go back to just double payments. Although my payment strategy has been all over the place, I’ve made some pretty solid progress. In fact, I have reduced my student loan debt by $11,500 over the last year. I have another plan in my head as far as my student loans go, but I think I’ll save that for a future blog entry 🙂

I totally obliterated my 2009 savings goals. If you cruise to the “My Budget” page you will see on 12/31/08 I had these goals for the ’09 calendar year…

Checking: $1,500
Savings: $11,000
Roth IRA: $8,000
401K: $10,000
Total: $30,500

These are what my accounts currently look like…

Checking: $3,060
Savings:$19,525
Roth IRA: $11,877
401K: $10,772
Total: $45,234

As you can see I exceeded my goals by $15,000. Do you know how awesome it feels to set goals, and not only meet them, but completely destroy them! It makes me one happy ninja.

Over the last year, I have improved my financial situation faaaaar more than I would have ever anticipated. The secret to this change is quite simple, and I’d be happy to share it with you: Spend less than you make. Period. End of story. This financial principle is not open to interpretation or debate. If you live on less than you bring home each month, you will have nothing left to do with your money but pay down debt, save, invest, and give it away. There are absolutely no excuses to live outside of your means (aside from medical emergencies). I am living proof that spending less than you make REALLY WORKS! I’m so glad I don’t have to live the paycheck to paycheck lifestyle. At  24 y.o. I’m totally stoked to see where I am ten years from now. Anyone else have any success stories from living within their means? I would love to hear them to motivate me even more.

“Good debt” is for dumb people

Screen shot 2009-11-18 at Nov 18, 2009, 7.45.23 PM

I was facebook chatting yesterday with one of my loyal readers. She was discussing her car loan, when I mentioned my student loan. She said “At least your student loan is ‘good debt’.” She put good debt in quotes because she knows (and I know) there ain’t no such thing as good debt (did you know ain’t IS a word?).

Typically student loans and mortgages are considered good debt. Why? The thought is, with student loans you obtain a degree, and with a degree you get a higher paying job. For mortgage, you take on a loan, buy a house, and sell the house for a profit. Nice idea right?

Have you read my blog’s title? Is it Punch Bad Debt In The Face? I don’t think so suckers. There is no such thing as good debt. Debt is debt…period. A degree doesn’t guarantee higher income, no more than your home guarantees increasing in value. So don’t fall for the trap and think you should keep Sallie Mae around for the 20 year visit she is planning to take.

It’s time to change the classification of debt. There is bad debt (which we all know as credit cards, payday loans, etc) and not-as-sucky-but-still-pretty-crappy debt (student loans, mortgage). Whoever decided to call some debt “good” was a genius. Heck, I wonder how much money that label has made the banks. Probably at least ten dollars 🙂

Don’t get me wrong. I’m not opposed to utilizing debt to get an education or buy a home. In fact, I’m 99.9% sure I will take out a mortgage. But don’t trick yourself in to thinking that your mortgage is good. It should still be seen as a money hungry beast that won’t go away until you MAKE IT go away. Were you like me and once thought  “good debt” existed? If I could go back in time, I probably would have gone to a public college, saved a ton of money, and graduated debt free. Oh to be young, naive, and easily influenced.

p.s. Anyone that thinks student loans are “good debt” is more than welcome to have mine 🙂