No one ever likes to admit that they have debt. But guess what, we all have it! (If you have zero debt I am envious of you)
When I was younger I was really good with money. And I mean REALLY good. In the last five years, I have become less and less great with my money. I would book trips on my credit card without having the money in my bank account to actually pay for it. I also still had a few semesters of school to pay for, and I didn’t have any scholarships or even a student loan to help me out.
In October 2015, I realized I was in trouble. I reached out to my grandmother to see if she would co-sign on a student line of credit with me. My plan for the line of credit was to do the following;
- Pay off my credit card(s) – The interest rate on the student line of credit was WAY less than what I was paying for interest on my credit cards
- I also still had a few semesters of school to pay for so the remaining amount on my line of credit would go towards this.
Sounds logical right?
Well, I don’t know what happened. I honestly have no idea what happened. But fast forward one year and I not only had a maxed out student line of credit but my credit card was maxed out again! How did this happen?! The whole point of me getting the line of credit was to pay off my credit card. Not to pay it off just so I could max it out again!
November 2016, I once again came up with a plan. I was no longer in school, I was working full time and I essentially didn’t have any excuse to not pay off my debt. Christmas was coming up so my “debt repayment plan” was going to start in January.
I spent my Christmas break making myself a budget. I had to cut out so many things that I would typically do month to month, or things that I would put money towards so that I could simply get my debt to $0 in one year.
Not that you need to know, but as of January 1st, 2017 I was $18,000 in debt. To some that may not be a lot, to others it may be a lot. To me, it was embarrassing because at one point I was known as the girl who was always good with her money. I was supposed to move to New Zealand in January, but I very quickly canceled my flight as I decided I wanted to clear my debt and not get any further in debt.
My $18,000 worth of debt was made up of $8,000 credit card debt and $10,000 line of credit debt. As I mentioned above my credit card has a higher interest rate than my line of credit so the plan has been to pay off my credit card first, once that is paid off I will pay off my line of credit.
As we head into May I have just completed 4 months of my debt repayment plan and I have had to make quite a few sacrifices. The biggest ones being having to say no to a few trips. Anyone who knows me knows that that has hands down been the hardest part.
However, much like when you go to the gym and you start to see the progress you become more and more motivated and it becomes easier to say no to things that will take you off track because you are so proud of the progress you have already made. In January I owed EIGHT THOUSAND DOLLARS on my credit card. Once I make my monthly credit card payment in May I will only owe eight HUNDRED dollars on my credit card. Do you understand how big of an accomplishment that is for me? It has not been easy. So don’t for one second think that paying off $8,000 in five months has been easy because it hasn’t.
How’d I do it?:
- I still live at home rent free so that right there, to begin with, is a huge saving (thanks, mom, and dad)
- Before the start of the new year, I paid off the Tab of my cell phone. It would have been paid off by June but I instead paid it off while I had a little extra Christmas money. That cut my phone bill down by $35.00 a month
- I switched gyms. Switching gyms has saved me over $30.00 a month. In order to switch gyms, I had to pay $100.00 to get out of my contract however, the $100.00 was cheaper than two months worth of payments so that was a no-brainer.
- Canceled my Kayla Itsines membership. Savings of $32.00 a month. I actually first paid for this in January but it wasn’t until the end of March that I realized that I wasn’t fully committed to it so why pay $32.00 a month? Canceling the membership gave me extra money for my “spending cash.”
- For the time being, I stopped paying into my TFSA and RRSP.
- Although I don’t get my hair done on a monthly basis, in the past I would put a little bit of money away each month so that for the months that I did get my hair done I would already have money aside for it. I stopped doing that this year because I just wanted to put as much money towards debt as possible. Luckily I still had “hair money” put aside from last year, and I also received gift certificates for Christmas.
- During the winter I had an additional job. Any money that I made from that job automatically went into an envelope that I use as “extra money.”
- My extra money only gets touched if I run out of what I have put aside for my monthly spending (this includes things like prescriptions, car inspection, etc.)
- At one point I also had enough extra money that I was able to spend a weekend in Ottawa visiting friends.
- I say yes to any and all babysitting jobs.
- When I am really desperate for extra money I do wine tastings.
- I made wine a couple of times last year so I still (somehow) have some of that left. That really cuts down on costs.
My spending budget has changed month to month as I have either added or removed things to my list of payments. However, I think I now have it sorted out in a way that will be able to last for a few months.
What my money goes towards:
My current bills are:
- Gas – I put money aside every month for gas, that way it isn’t coming out of my “entertainment fund” as the weather is getting warmer I will have to put more money towards gas because I tend to drive more.
- Car Payment
- Car Insurance
- Phone Bill
- Line of Credit – While paying off my credit card I am still paying the minimum payment on my line of credit plus an additional $60+ each month. Once my credit card is paid off, what I normally would put as a payment on my credit card will then become my monthly line of credit payment.
- Credit Card – Currently this is what most of my paycheque is going towards.
- Gym Membership
Although I don’t currently have to pay rent every month, I still have monthly bills. I make sure that all of my bills are paid before I reward myself with my “leftover” entertainment money which is roughly $220.
My entertainment money then, for the most part, goes towards food. I very much enjoy going out to eat or going out for drinks. I try to write down where I spend my money and nine times out of ten it’s on food. Oops.
I created this Excel document a few years ago, and I still use it today. I update this every month with my monthly expenses and bills and I plug in the dates my bills are due. You can find your copy here. This includes everything I was budgeting for this time last year. As mentioned above, I have it much more simplified this year. Edit it and play with it to fit your budgeting needs.
I am very excited to get my credit card balance to zero! Followed by paying off my line of credit and then going back to travelling the world! (Not on my credit card though).