First, let me tell you a little bit about the back story. I decided to be candid in the explanation.
I grew up a very smart kid, typically near the top of my class, graduated class valedictorian, and got a big fat scholarship to a prestigious college that, combined with working during off semesters, gave me enough money to graduate college with a profit. (The excessive use of commas here was intentional.)
I then went on to graduate school where I received a nationally renowned scholarship. That combined with some teaching assistantship work should have allowed me to live comfortably and pay my way through graduate school quite easily.
But I was financially unfit, negligent, and stupid in the worst ways.
I was not much into buying expensive clothes. I certainly didn't spend much on cars, or other luxury items. What I did do was eat out....A LOT....go out to bars with friends.....A LOT.....and go on weekend vacations to fun party places.....A LOT.
After all was said and done, I graduated with a Ph.D., and nearly $14,000 in debt. Having no access to money at this point, I accrued even more debt to pay for my transition from schooling to the workplace (including first and last month's rent on my new place, transportation costs, furniture purchases, etc.) Being the intelligent Ph.D. graduate I was, I naturally made the following intelligent decision when faced with these debts:
I took out a car loan to buy a new car.
I deserved it! (Right?) After all these years of hard work, it just made sense for me to be rewarded. Of course, this left me in the following financial situation by November of 2011:
Student Line of Credit - $10,500
Bank Line of Credit - $1,500
Bank Visa 1 - $1,500
Bank Visa 2 - $770
Car Loan - $19,425
Misc. Other Debt - $3,500
Savings - $0
403(b) - $500
Worst of all, I thought this was normal (more on that later)!!! Well, regardless of what I thought, this was certainly unintelligent. At this point I made steps to pay down the debts. Though mathematically it makes more sense to pay off the highest interest rate debts first, I went with Dave Ramsey's plan to start with the debts that I owe the least on and clear them out to have small wins. By the end of July of 2012, my finances looked more like this:
Student Line of Credit - $10,500
Bank Line of Credit - $0
Bank Visa 1 - $0
Bank Visa 2 - $0
Car Loan - $16,608
Misc. Other Debt - $3,300
Savings - $1,005
403(b) - $4,500
I completely paid off my small debts, paid my car loan regularly, and even put $5,500 in savings and retirement, over a period of about 9 months. Not too shabby. But at this rate, it would take me forever to reach my ultimate goal: Get OUT OF DEBT for LIFE, and start saving for my future!
So today, on August 21, 2012, I decide I've had enough (in fact I decided this several days ago). My journey and goal is to get through this debt as fast as possible.
My particular plan is to follow Dave Ramsey's baby steps. Baby Step 1 - Put $1,000 in an emergency fund (check). Baby Step 2 - Pay off Debts in order of smallest to largest. Let the small wins at the beginning let you build momentum for attacking debt, and pay minimum payments on the rest while attacking them one by one. When one is knocked out, use the previous payments to attack the next smallest debt. Etc.
So....where do I stand today? Stay tuned.