I received the following email from a reader who wished to remain anonymous. This reader has made some excellent progress with paying off debt and I am so glad I was given permission to share this story. I think it is awesome!!
“About two years ago, I made a commitment to myself to get myself out of debt. I began with my credit cards, because they had the highest interest rate. I was successful in getting my credit card company to lower my interest rate– they gave me some odd months at 2%. About $3000 later, after making big payments on my credit cards and only slightly larger than minimun payments on my other bills, I was out of credit card debt. I’m proud to say I haven’t carried a balance since.
Then I moved on to my other debt. I went to an expensive private college for undergrad and took out a lot of loans for grad school, so I had about $40k in student loans, plus a $10k car loan. One year ago, I turned my attention to paying off my debt with the highest interest rate, a student loan at 5%. After a series of $800 monthly payments, I paid that sucker off. It was a GREAT feeling to look at my account online and see my obligation described as “fulfilled.” I’m down to about $5000 on the next loan, at 3.175% interest. All that will be left after that (I calculate it will take me six more months to pay it off), I’ll have about $4000 owing on my car (2.9% interest rate) and a few thousand on a zero percent interest student loan. No sense in paying that off, as I can put the money away and earn interest.
In May 2006, I had $30249 in debt. Now, 11 months later, I’m down to $16842. In the span of a year, I’ve paid off 56% of my debt.
At the same time, I’ve been saving money. I opened a high yield savings account with ING Direct and have money direct deposited into the account each pay period. I also put “found” money into the account, such as mileage reimbursement from my job. I went from having literally $400 in a savings account earning less than 1% per year to now having nearly $8000 earning over 4% interest. Each month (okay, more like each week), I look with glee at how much money I’ve earned in interest and smile knowing my money is finally working for me!
The most amazing part of all of this is how contagious it is. I think that’s why your site is so successful. I feel so good paying down my debt, I can’t wait until the end of each month to make my various payments. I track my net worth on paper because it’s a joy to calculate how much debt I’ve paid down and how much money I’ve saved each month. It’s an addiction! I’m addicted not to shopping, not to spending on things I don’t need, but to the rush of pride that comes with knowing I’m digging myself out of a hole to the tune of $1500 each month while building a nest egg that keeps growing.
If there’s one thing I’d offer to you as you work your way out of debt, and to your readers, it’s to keep your eye on the prize and try to make it fun. Once the momentum starts, it keeps building and soon it’s out of control– in a good way.”
Thank you for sharing your story…you are an inspiration!