February 21, 2007

My Heroes

Now that I've gotten a better grasp on how interest is working on my loans and have come to the cold hard reality I owe *gulp* more, I find mucho hope & motivation in the following article:

Huge debts, paid off fast A $150,000 mortgage erased in five years. About $49,000 in credit cards, almost gone in just a year. These debt-payoff champions share their secrets.

Greg Cards of Newark, Del., was saddled with $154,000 in debt after his divorce.

Cards is on track to own his home free and clear later this year.

Wanda Wilkinson of Santa Fe, N.M., had $49,000 in credit card bills, a daughter in college and a husband facing a potential layoff.

Wilkinson eliminated half of her debt in a year.

How did they do it?

Among other things:
  • They made debt payoff a priority, although most continued to save for retirement as well.
  • They kept their basic living expenses as low as possible.
  • They looked for creative ways to speed up their debt repayment, and some took extra work.

(Cards, for example, volunteered for overtime and took a second job. Wilkinson, a lawyer, moonlighted as a package loader on a FedEx loading dock.)

Your situation might be different from theirs in the details. But if you're facing a big debt hole, you might find their stories offer inspiration and ideas you can use.

He's done this on a base salary of $60,000 by volunteering for overtime, picking up a second job and trimming expenses wherever possible. To keep his living costs down, Cards:

  • Opts for basic TV service -- no premium channels.
  • Chooses a dial-up Internet connection ($9.95 a month) over high-speed service.
  • Buys food in bulk to last for months.
  • Takes his lunch to work.
  • Makes a budget for the holidays, birthdays, etc., and sticks to it.
  • Applies "extra" paychecks to debt (a biweekly pay schedule had provided a third check two months a year).
  • Applies any bonuses toward his debt.
  • Sets the thermostat in winter to 63 degrees.
  • Sets the air conditioner to 79.
  • Buys compact fluorescent light bulbs to reduce electric bills.
  • Takes out $25 in "walking around" cash each week. When it's gone, he doesn't spend more.
  • Keeps the credit cards at home.
  • Shops with a list and buys only what's on the list, and avoids looking at anything else, including sale items.
  • Keeps his car tuned up to avoid bigger expenses.
  • Doesn't keep up with the Joneses. He says he doesn't care what they drive, where they vacation or what they wear.
  • Avoids buying coffee or food "on the go" but instead eats at home whenever possible.
  • Stays away from vending machines at work.
  • Doesn't play the lottery.
  • Buys broken bags of mulch and fertilizer at deep discounts.
  • When shopping for appliances, buys last year's model.
  • Budgets vacations and looks for coupons wherever possible.
[source]

I'm happy to see that I'm already doing some of the things Card is doing. What really gives me hope is most of these people are making it happen on a regular old salary.

11:31 AM in Motivation
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last update: 07/20/08

Paying off smallest credit card debt with it's minimum payment balance + $500 snowball.