Debt Diva: One Blogger's True Story of Facing Reality and Paying Down Debt

I started my journey to debt reduction many times over the years. Then, I would buy something I wanted, vowing to pay down debt the following paycheck. It just never happened. I also forgot to save money; I had a savings account, but I used it after I spent the cash in my checking account. About 3½ years ago, my father died, leaving me as guardian of my Alzheimer’s afflicted mom, and in charge of her finances. While they lived a pretty frugal life over the years, they had developed some costly habits in his final years, including many trips to the casino to deal with his pain from bone cancer and the need for distraction from my mother’s debilitating disease. As I tried to get their finances in order, I realized my own finances were not in order. I carried a lot of debt.

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Two years ago, I was $65,000 in debt; $13,200 of it was credit card debt. About a year ago, I started paying it off. I put extra towards every credit card, my auto loan and my mortgage, hoping to get them all paid down and eventually paid off. It did not seem like I was making any progress, so I started doing research and found I was approaching everything wrong. I started following personal finance blogs and trying to figure out what I needed to do. I continued my above minimum payments to every account, but put extra into the highest interest card.

Through the blogs I followed, I was given the opportunity to work with a personal finance coach for a few months to help me set and achieve my goals. The goals I set for myself: pay off all consumer debt including my mortgage, and prepare for retirement by creating an emergency savings account of $30,000 to $40,000. I am a public sector employee, so I have my public retirement fund, and I have been contributing to a deferred compensation fund since the early 1980s. I also pay into Social Security, so that will be an option in the future as well.

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I focused on paying debt using the avalanche method, meaning I paid off the highest interest cards first. In order to expedite the process, I transferred my two highest interest card balances to a low interest credit card at my credit union and then started using aggressive payroll deductions to pay off that card.

My total debt is now $41,400, and only $3,400 of that is credit card debt. My last credit card will be paid off in the spring of 2012; I am on track to be debt free by early 2014. I have learned to focus, to reduce spending and to budget.

In my next post I will discuss overcoming my fear of facing my debt.

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