In January, I took a challenge. Something I’d never done before. I vowed to pay $480 toward my credit card each month until it was paid off. And now, almost six months later, I’m finally able to say…
I DID IT!!!
Here’s my final ReadyForZero snapshot showing my zero balance:
It seems like a long time since I started “Ben’s Challenge,” back when I had a balance of $3,199 on my credit card.
You might wonder, way back in January, when I posted this blog post, did I think that I’d be able to pay off my credit card? The answer is… yes, I did believe I could do it. But I wasn’t sure I would do it. After all, life has so many unexpected circumstances, it’s hard to be certain of anything. In fact, I don’t think I was completely sure until I was actually done and I saw those three zeroes staring me in the face. That’s what I like to call…
My Debt Free Moment
So how does that moment feel when you realize you are debt free? As I’m sure you can imagine, it feels pretty darn good. I had thought it might be a letdown since I’d been expecting to pay the card off for months. But as it turned out, the moment was actually very exciting. Of course, it helped that I received the news like this:
As soon as I saw that ReadyForZero e-mail, I had a big smile on my face and there was a kind of electricity coursing through my veins – similar to how it feels when you finish a final exam or when your favorite sports team wins a world championship. Perhaps it was just adrenaline, but I don’t think so… I think it was more than that.
At that moment I knew that I no longer owed money to anyone – not to a bank, not to an individual, not to any financial institution, not to anyone. And that actually released some stress I didn’t even know I had. It was like I’d been carrying around a little ball of worry in the back of my mind that was subconsciously weighing on me, and as soon as the debt was gone, it shriveled up and disappeared.
After all, I’ve had credit card debt for over a year, and for a significant part of that time the balance kept getting bigger, not smaller. During that whole time, any financial decision – even something as ordinary as buying a sandwich or going to see a movie – has been accompanied by a little pang of subconscious guilt. Often, I would barely even notice it. But it was there. And as soon as the debt was officially gone, I began to realize that it had weighed on my mind.
Whether or not that guilt was necessary to accomplish my goal, I’m not sure. I’d be interested to hear your thoughts in the comments. But either way, I’m glad that it’s gone. Of course, I want to continue to be wise about my spending, and I don’t plan to change my spending habits just because I reached my goal, but when I do decide to spend money I don’t want to have that feeling of guilt anymore. Instead, I want to simply enjoy whatever it is that I’ve bought.
It is a truly wonderful feeling to be debt free. More than anything I’m grateful that I had support from friends and family – and of course all the ReadyForZero blog readers!
My Rules for Becoming Debt Free
In the spirit of our blog, which is here to help you get out of debt, these are the 4 most crucial lessons that I learned during this experience:
1. Make your goal realistic but not easy
When I chose the amount that I was planning to pay toward my debt each month, I had to think carefully. Aim too high and I would set myself up for more stress than necessary, which could lead to me choosing not to complete the challenge at all. Aim too low, on the other hand, and I would risk paying more interest charges than necessary and/or the possibility that I’d lose motivation because the challenge was not… well, not challenging enough.
So when you set out to pay off your own debt, be sure to find a balance between challenging yourself and stressing yourself out.
2. Surround yourself with supportive people
And when I say “surround yourself,” I mean that figuratively as much as literally. I’ve been lucky to have great support here on the blog from you, the reader, and from all the other personal finance bloggers who have commented on my challenge updates since January. You really can’t know how much it meant to know that people “had my back” and that there were people rooting for me to succeed. When you are trying to get out of debt, I would highly recommend finding people with a positive attitude to share your goal with.
I know many people are afraid to confide in others about their debt problems. I can understand that. But trust me when I say that if you find the right person (or better yet, people) to talk to about what you’re trying to do, it will make a world of difference. Because, remember, it’s all too easy to quit a challenge that only you know about. It’s much harder to quit a challenge that your friends and/or family know about. And that’s a good thing!
3. Identify behavior changes that will make you happier
For most people, getting out of debt requires some behavior changes. Maybe you have to curtail trips to the mall, maybe you have to cut off your cable television service, or maybe you have to stop flying to Las Vegas and playing high limit poker every weekend – who knows! (For me it was eating out less) But whatever it is, you should take the opportunity to make behavior changes that align with what you want in your life. If you can do more of what you want to do while spending less money, that’s powerful.
But how to do it? Well, for example, instead of paying for your cable TV every month, maybe you can read some books you’ve wanted to dive into for awhile. Or instead of eating at restaurants, you can borrow a cookbook from the library and finally learn how to cook your own gourmet dinners. If you use this as an opportunity to fulfill several goals at once, you’ll be in a positive frame of mind that will help you stick with it.
4. Use technology to take control of your finances
These days there are so many tools at your disposal on the Internet that it’s almost a crime if you don’t take advantage of them. Obviously, I’m biased because I think using ReadyForZero is the best way to get out of debt, period. (Where else can you get a plan that’s automatically optimized for your situation and helps you save money on interest charges, not to mention gives you timely motivation along the way – all for free?)
There are also some other great complementary tools that can all work in tandem to get you out of debt faster. These are three products that helped me be successful in my challenge:
My Debt Free Budgeting Wrap Up
One of the main components of my challenge was to get serious about budgeting for basically the first time in my life. It’s not that I was careless with money before. I have always tried to be frugal, but I just wasn’t tracking it – and that was allowing some unnecessary spending to slip through the cracks.
Since the challenge started, though, I’ve been honing in on the areas where I can cut back a little, and I’ve been finding some success. Though of course you should note that I’m still not perfect! That’s the beauty of this – hopefully you’ve learned from the things I’ve done right and the things I’ve done wrong. Anyway, here is my latest (and final) budget update, for the month of June:
As you can see, I came in under budget for the third month in a row! This is real progress, and it’s something I’m planning on continuing even after the challenge is over. Since this is my last challenge update, I wanted to look at my spending over the last few months… in graph form.
First, here is my spending (per month) since February:
During that time, in part because of lower spending, I was able to put $480 per month toward my credit card debt. Which made my credit card debt go like this:
One of the things I did to help me reign in my spending was to try reducing the number of times I ate at restaurants for lunch and dinner during the month. Let’s see how I fared when it came to this goal:
Well, I suppose it could have been better, but I think that’s close enough to call it a “mission accomplished,” don’t you?
What To Do After Becoming Debt Free?
Of course, now that I reached my goal, I’m left with the question of “What should I do now?” After thinking it over, I’ve decided to… start saving! (I know, you’re shocked, right?) Since I already have a $480 monthly payment carved out of my budget, it makes perfect sense to simply carry over that number into a brand new savings plan.
So beginning with this month, I’m going to try saving $480 each month and allocating it to my savings account so that I can build up a nice large emergency fund. If I’m successful, here’s what my savings account should look like:
Who knows, maybe I’ll even end the year with a $3,199 emergency fund instead of a $3,199 credit card balance! Wouldn’t that be quite the accomplishment for 2012?
So, once more, a big “thank you” for following along with my journey! I wish you the best of luck in whatever goals you decide to pursue (financial or otherwise), and I know I speak for everyone at ReadyForZero when I say: we’re here to help.