Gettin’ Outta Debt pt 8- My Turbocharged Debt Snowball

Hi everyone! I’m back  after a bit of a hiatus to re-post an old post from my “How I Got Out of Debt” series from 2009 and to celebrate (albeit 3 weeks late) 6 years of Debt Freedom. YAY!!!  I still sometimes can’t believe it.

Wipe our Debt

Wipe our Debt (Photo credit: Images_of_Money)

In the last post, I showed how to get out of debt years faster, without having to get a second job but using the  same money that you are already paying out. In this post I will show you how I was able to save even more money by turbocharging my debt repayment plan.

In a lot of ways I’m a very patient person, but in this case the Aries archetypal (which I have a fair amount of in my chart) impatience came out in full force.  Now I can’t show the actual payment amount since that varied as I mentioned before, because my paycheck was not the same each time. So, what I will be showing is the balance, the payoff date, and the savings vs following the status quo payment plan. Then at the end, I’ll show the savings from my turbocharged debt snowball vs the debt snowball I showed in part 7. Remember, the start date was July 2001 and I was in the process of building the emergency fund while starting the debt snowball. My payoff order shown is how the debts are listed in part 7 and the numbers are going to be slightly off because of the payoff dates but not by much.

I’m gonna warn you now that there will be a lot of repeating of certain phrases and it’s a long post.  But that’s how we learn right? By repetition.  🙂

Let’s begin.

I started with Visa:

  • Balance-$2,371.53 @ 12% APR. Paid this debt off on 1/23/02, total amount paid: $2,461.29.  If you recall from the previous post, under the status quo payment plan the financial industry was hoping that I would follow because the monthly payment is soooo low, I would have paid a total of $3,250. By turbo-debt snowballing  I did not have to pay them $788.71. Now I consider myself a generous person, but not that generous, especially to some banker who’s making more than what I’m making.  $789 dollars would have paid my homeowners insurance for this year (2012).

Next in line was Household Finance:

  • Balance-$1,000 @ 9.9% APR. Paid off this debt on 3/15/02, with the total amount paid of : $1,035.38. Under the status quo plan I would have paid: $1,333.  By turbo charging my debt snowball, I did not have to pay them $297.62.  That’s a bit more than what I paid for my Blackberry Playbook Tablet and a case for it which I’ll be doing a review on later.

The next debt I mowed down was the Car Loan:

  • Balance-$3,571.39 @ 7.9% APR.  Paid off this debt on 8/1/02, with the total amount paid of: $3,726.36.  Under the status quo financial industry plan I would have paid $3,920. By doing this I did not have to shell out an extra $193.64.  That’s almost all my utilities for a month at this time.

Next and done with glee, Capital One and definitely taken out of my wallet:

  • Balance-$984.43 @ 9.9% APR. Paid off this debt on 11/8/02, with the total amount paid of: $1,055.92. Under the status quo financial industry plan I would have paid $1,292. By turbo-debt snowballing I did not have to pay them $236.08.  That’s another month’s utilities or groceries etc.

Next, with the excitement level increasing, Bank of America:

  • Balance-$4,588 @ 9.52% APR.  Paid off this debt on 4/11/03, with the total amount paid of :$5,007.69.  Under the status quo financial industry plan I would have paid $5,253.  By turbo-debt snowballing I did not have to pay them $ 245. Don’t know about y’all but I can sure think of plenty of other things to do with $245 than to give it to some bank unless it’s a deposit into my savings account. 😉

Next on the chopping block, the Perkins Loan:

  • Balance-$2,027.15 @ 5% APR. Paid off this debt on 5/21/03 with the total amount paid of: $2,128.95. Under the status quo financial industry plan I would have paid $2,320. By turbo-debt snowballing I did not have to pay them $191.05.  Starting to add up isn’t it?

Next, Direct Student Loans and where it started to become fun:

  • Balance-$5,786.44 @ 4.22 % APR. Paid off this sucker on 8/29/03 with the total amount paid of: $6,064.23. Under the status quo financial industry plan I would have paid $7,352.80. By turbo-debt snowballing, I did not have to pay them $1,288.57. That’s $1,288.57 that I did not have to earn to put in someone else’s pocket!

Last but not least the mortgage, where I was laughing like Renfro with each payment:

  • Balance-$48,175 @ 6.25% APR. Paid off this monstrosity on 6/2/06 with the total amount  paid of $54,436.34.  Under the loan shark, oops I mean status quo financial industry plan I would have paid $74,763.86.  By really turbo-debt snowballing this one, I did not have to pay them $20,327.52.   This is just a bit below what my yearly take home pay was during my journey to debt freedom.

My total savings or what I like to refer to as money I did not have to come up with by following the loan shark’s (oops I did it again) status quo financial industry plan, $23,568.19!!  Now that ain’t chump change and if it is to you, you can drop me a line so I can send you my PayPal info for a gift in that amount. I promise you I’ll put it to good use. 🙂

Recall from part 7  by utilizing just the normal debt snowball, the savings was $16,235 which is not chump change either.  However by focusing and redirecting a huge portion of any extra funds I had to juice up the debt snowball, I saved another $7,333. Nothing to sneeze at there either. Not to mention the fact that you have to earn way more that $7,333  for the privilege of paying that. 

Well by now, I hope that I have clearly laid out the case for you see just how costly it is to you and how insanely profitable for the finance industry to remain in debt. That’s why I kept repeating “By debt snowballing, I did not have to pay…”  Sorry, but you can never remain above water by continually paying out interest. Where we tend to fail is that we are more concerned about what the payment per month is, instead of focusing on how much in total it is going to cost.  Another crucial point we forget is the fact that you are going to have to come up with that payment(S) each and every month for a very long time. Also the hours you have to work to make the money to just make the payments. I can say this because that was me before I got the message from that cosmic 2 by 4  upside my head for the umpteenth time.

Unless you are paying cash or the bill off in full at the end of the statement period, the total price paid is always going to more than the original price using credit. That’s compound interest working against you as loans today are not simple interest loans anymore. What that basically means to you is that they are getting their interest money upfront. That’s why you will make hundreds and in the case of a mortgage or large student loans (thousands) of dollars in payments but your payoff balance is damn near the same as when you first took out the loan. If you have to borrow, and only if you have to, the key is to pay that crap off as fast as you can. The faster you do it, the less it costs you and the more money you have for other things later. Better yet, you can decide on how your money is gonna work instead of your bills deciding what you work you have to do.

I was in already in debt when I bought my home in 2000 so it took me 6 long years with many life happens things happening that cost big dollars and set me back. You know, the 1 step forward, 5 steps back life happens kind of stuff. Finally on June 2, 2006, I was debt free. If your debts are larger and your income is not that big, it is naturally gonna take longer. Remember what I said at the beginning of the this series, that getting out of debt is a lot like locking your hair, going natural or even dieting. It take loads of hard work, patience, determination and thick skin. You gotta get to the point where you are sick and tired of being sick and tired of paying out all this money for stuff you don’t even remember what you spent it on and many times have nothing to show for it. However the result is so, so worth it. And it never goes out of style.

We all want nice stuff and to look good but when life happens in your household, those designers, car makers, fill in the blank aren’t going to give a rats behind about your situation. And please stop worrying about what BayBay & ’em are going to say or think. I’ve learned that folks are gonna talk about you no matter what you do. These same folks ain’t gonna have a dime to help you out when you really need it and they are still gonna talk about you. Most of the time they are worse off than you and want to keep you in that crab barrel along with them because you woke up to the fact that we’ve been played and have been for a very long time. On some level they realize it too, hence the put down remarks.

So there you have it. The debt snowball, get the heck out of debt, don’t have to pay nobody any money to do and a real person who’s done it, who’s showed ya how to do it, plan. I know everyone’s circumstances are different but if you have the income, it can be done and it may take years as I’ve shown.

Stay tuned for part 9 of this series where I will talk about the death pledge aka “The Mortgage”.

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Gettin’ Outta Debt pt 7- Light At The End of The Tunnel

This is a repost of a series I did when this blog was on Blogger back in 2009.

Ready to see a debt snowball in action? Using my real debt numbers I’m going to show how a debt snowball works and how you can pay off your debt using the money that you are already paying to service your debt.  Using this method, you’ll get  out of debt months/years earlier than you’d ever thought you could.

Recapping my debt balances and the pay off if I were to follow the conventional plan:


Visa: $2,371.53, $50 per mo, 12%, 65 months, $3,250.00
H.F: $1,000.00, $19 per mo, 9.9%, 70 months, $1,333.00
Car: $3,571.69, $245 per mo, 7.9%, 16 months, $3,920.00
Capital One: $984.43, $19 per mo, 9.9%, 68 months, $1,292.00
BoA: $4,588.00, $51 per mo, 9.52%, 103 months, $5,253.00
Perkins: $2,027.15, $40 per mo, 5.00%, 58 months, $2,320.00
Direct SL: $5,786.44, $52.52 per mo, 4.22%, 140 months, $7,352.80
Mortgage: $48,175.00, $413.06 per mo, 6.25%, 181 months, $74,763.86

Remember we are using the same $889.58 I was already paying out.

Since the car loan has the shortest payoff term but the largest payment out of all the non mortgage debt, there won’t be any interest savings or reduction in payoff time. When the car was paid off in 16 months, the very next month as if I still had to make that payment, I took that $245 added it with the $50 I was sending to Visa until pay off, approx 7 months later.  Visa’s payoff  looked approximately like this:

  • $1972 approx balance. Paying $295 per month instead of just 50 @ 12% interest, the total payoff time was reduced to 23 months, with a total amount paid of : $2,455. Note above the “normal” way of paying it,  a payoff time of 65 months @ $3,250. That’s a $795 savings just by redirecting the car payment once it was paid off to this debt instead of using it to increase my lifestyle or incurring more debt.  Let’s move on.

Now that I’ve paid off the car loan & Visa, the very next month I set my target on either Household Finance or Capital One since they have the same interest rate and balances. I decided to knock out of my wallet, Capital One.  I took  the car loan payment @ $245, the Visa payment @ $50 and added that to the Capital One payment of $19 for a total payment of $314. The TKO of Capital One looked approx like this:

  • $733 approx balance. Paying $314 per mo@ 9.9 % interest, the total payoff time is reduced to 26 months from 68 months with the total amount paid: $1,142. That’s a savings of $150. Though that does not seem like much but that $150 will make a big difference going towards the larger debts. Let’s move on to the next one in line to be taken out, Household Finance.

OK, as it goes the very next month after I’ve sent the last payment to Capital One, I’ll take that $314 and add it to Household Finance’s payment of $19 for a total of $333. The numbers for Household Finance look like this:

  • $725 approx balance. Now paying $333 per mo, 9.9 %, the total payoff time is reduced to 28 months from 70 months and the total amount paid: $1,173. Savings $160.

Moving right along to the next target, Bank of America. After paying off Household Finance, we are now sending BoA, that $333 + BoA’s $51 for a total payment of $384. Here’s where is starts to get juicy:

  • $4175 approx balance, now paying $384 per mo, the total payoff time is reduced to 39 months from 103 months and the total amount paid: $5,668. Savings, $2441!  I don’t know about y’all but I can think of a whole lot more fun things to do with $2441 than giving it to the bank.

Next victim is the Perkins loan. I’m now sending them $384 + their $40 payment for a total payment of $424. The numbers:

  • $761 approx balance, now paying $424 per mo, the total payoff time is reduced to 41 months from 58 months and the total amount paid: $2,284. Savings, $36. Not much there but every penny counts as you will see with largest debt.

Next target, the Direct Student Loan. I’m sending them $424 + their payment of $52.52 for a total of $476.52. Let the whacking begin:

  • $4436 approx balance, now paying $476.52, the total payoff time is reduced to 50 months from 140 months and the total amount paid: $6,609.78. Savings, $743.

Last but certainly not least, is the “death pledge” otherwise know as the mortgage. At this point, a ways down the road, I’ve paid of all other debt and will start sending the mortgage company $476.52 + the mortgage payment of $413.06 for a total monthly payment of $889.58. I know that it was a while ago but that number sounds familiar right? Hang in here with me.

  • $38,836 approx balance, now paying $ 889.58, the total payoff time is reduced to 96 months from 181 months and the total amount paid: $62,854. Savings, $11,910.

Just by redirecting the money that’s already being paid out and not letting it be absorbed into your spending or worse incurring new debt, I can get out of debt in this case in 8 years instead of 15 years!! I’ve also saved or should be more aptly put, did not have to pay out $16,235!! That’s more than 1 years take home pay for my family at this point in time.

Being the type person that I am, I was compelled to see if I could reduce the time to less than 8 years. Also my 40th birthday was around the corner and I wanted debt free status as a birthday present. If I didn’t mention it before, I had turned 34 a couple of months before I bought my house.  Come back and I’ll show you those numbers next.

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Getting Outta Debt pt 6- Airing Dirty Laundry…Debt

This is a republishing of a post that’s part of a series on “How I Got Outta Debt” written back in 2009 when this blog was on Blogger. I know I keep saying it but this is just as relevant today as it was yesterday. If you are in the position to do so I hope that it inspires you to take control of your finances and your life.


Laundry is hung to dry above an Italian street.

Laundry is hung to dry above an Italian street. (Photo credit: Wikipedia)

I’m back with the calculations on all my debt listed in part 5 of this series. I’m going to show my debts, the amount of time it would have taken me to pay off the debt based on the payment amount and the total amount I would have paid doing it the way most folks do/the way the creditors want you to.

What was/is their plan? To pay the minimum payment for the maximum amount of time. This results in you paying the maximum amount of money on the money you borrowed. Translation…it’s more money that you have to work for to make these payments…forever. (it will feel like that) Here is the lowdown and remember APR is the interest rate:


  • Visa: $2371.53, $50 per mo, 12%, 65 months, $3250.00
  • H.F: $1000.00, $19 per mo, 9.9%, 70 months, $1330.00
  • Car: $3571.69, $245 per mo, 7.9%, 16 months, $3920.00
  • Capital One: $984.43, $19 per mo, 9.9%, 68 months, $1292.00
  • BoA: $4588.00, $51 per mo, 9.52%, 159 months, $8109.00
  • Perkins: $2027.15, $40 per mo, 5.00%, 58 months, $2320.00
  • Direct SL: $5786.44, $52.52 per mo, 4.22%, 140 months, $7352.80
  • Mortgage: $48175.00, $413.06 per mo, 6.25%, 181 months, $74,763.86

The total amount paid when everything is paid off according to the normal way of doing things…$102,339.86!!!


That $102,339.86 figure does not even include what I already paid when I had my head up my butt! Remember I mentioned that I quit playing around and got serious with this July of 2001? Well of course based on the payoff time, I would have paid almost all of these off by now (November 2009).  However, I’d still be paying on the Direct SL (Student Loan), Bank of America and the mortgage. That’s $518 on top of utilities, food, gas and whatever else for everyday living. That might not seem like much but when your income has been slashed by 50+ %,  which it had been at the time I first wrote this post, that’s a heck of a lot of extra money to have to come up with.

Also when I was writing this post, I had heard on YouTube,  a news clip from MSNBC that credit card companies are trying to jack up rates ahead of legislation going into effect to stop these practices. Well, credit card companies have always had this power and all they’ve had to do was give you a 15 day notice which is one of the reasons why I chose to get rid of them first.

In the next posts, you’ll see the RDRP- Rapid Debt Repayment plan, better known as the debt snowball plan in action.  I used that same $889.58 to not only pay off all debt except for the mortgage but to pay off all debt including the mortgage. Yes folks, it is possible to pay off all of your debt and not take the rest of your life doing so.  And you’ll see how you save not only money but your sanity as well.  But you’re gonna have to check back in to this series to see how I did it.

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Gettin’ Outta Debt pt 5-My Debt Numbers

This is  republish of a blog post that’s part of a series “How I Got Out of Debt” when this blog was on Blogger back in Oct 2009. It is still relevant, if not more so given today’s economic environment.

I’m back from part 4 of this series so here’s the post showing where I started on my get the hell out of debt as fast as I can plan. You may recall from a that post in between the debt elimination, I was also saving up for an emergency fund of 1 years worth of expenses. Once that level was achieved, everything extra went towards debt payoff.

Around July 2001 is when I got super duper serious and ready to do just about whatever it took to get the heck out of debt. Now my numbers are slightly off since credit minimum payments are not the same and back then, the minimums were really low percentage wise of the balance owed. Keep in mind the creditors are not trying do you any favors because their mission is to keep you perpetually in debt, thereby making lots of money off you in interest. Though they still do that but it’s my understanding that they have raised the minimum payments which allows you to pay off your debt a microbit quicker. You will see later just how costly it is to remain in debt using myself as an example. Here are the numbers:

Visa – $2371.53, APR 12% approx, $50 per mo.
Household Finance – $1000, APR 9.9%, $19 per mo.
Car Loan – $3571.69, APR 7.9%, $245 per mo.
Capital One – $984.43, APR 9.9%, $19 per mo.
Bank of America – $4588, APR 9.52%, $51 per mo.
Perkins Student Loan – $2027.15, APR 5%, $40 per mo.
Direct Student Loan – $5786.44, APR 4.22%, $52.52 mo.
Mortgage – $48,175, APR 6.25%, $413.06 per mo.

Adding up all the payments, I was paying $889.58 per month just for debt service. $889.58 before I have put any food in my cabinets so I can eat, gas in the car so I can get to work to make the money to pay these bills, insurance for the car I need to drive to get to work to make the money to pay these bills, utilities like water to drink so that I can live to drive to work to make money to pay these bills, etc!! It’s a vicious cycle! 😦

OK, I know y’all are probably wondering how I had such a small mortgage balance. I live in an area of town where the price range for housing goes from $10,000 to $150,000 at the time I bought this house in 2000, which was right about the time prices started really ticking upward. I’ve mentioned before that my home is small, a shoe box by today’s standards but I made a deliberate decision to purchase small and to live in an area of the country where housing prices were reasonable. Of course that means incomes are lower here as well. Also my Direct Student Loan rate started out at 8.25% APR. Later there was a rate reduction some time in 2002 I think, to the 4.22% I have listed.

Alrighty, the order that I have everything listed is the way I paid everything off pretty much after the Direct Student Loan rate reduction. Before, I had it listed right behind Bank of America. Now I bet you are also probably wondering why I have the car loan in front of Capital One which is no longer in my wallet.  My reasoning for putting the car loan in front of Capital One even though it has a lower interest rate was because at the time business at the job was going really well. I got paid a base salary and a commission for additional business sold whether that be new business or products. I handled all the paperwork etc for all these transactions whether I sold them or someone else did.
I figured even though the balance is much higher but if I could hurry up and pay it off, I would be applying $245, any extra monies, plus the $20 I was already paying Capital One instead of the other way around.

In addition, the mortgage did not start out at 6.25% APR or $48,175 for that matter. Noooo, I had been dumb and stupid in the years before buying my house. A lot was due to things that were on my credit record from my 1st marriage, but the period after that was all my fault. As a result my credit score was not to good so yeah, I was one of those “sub-prime” borrowers starting out with a 10% APR on a $32,500 1st/12.5% APR $10,000 2nd mortgage with a pre-payment penalty. After about 1 1/2 years of hard work and paying down some of the debt listed above, I was able to refinance in June 2002 to the rate you see above and it was to a 15 year mortgage with only a $6 increase in my payment amount. YAY! The payment was $407 to the previous mortgage holder with the increase in the mortgage balance due to that *#%@ prepayment penalty and outrageous fees. However with the interest rate basically cut in half, a whole lot more of my payment would be going towards principal. I looked at it as another “stupid tax” and hella motivation for me to continue bulldozing this albatross. Nothing motivates me more when I figure out the game. At first I get mad, then get I figure out a way to even.

Next, I’m gonna show you using the numbers presented above and a debt calculator I found online, how much in total I would be paying/paid not using any kind of accelerated plan. Meaning once something was paid off that money was not redirected to debt payoff. This is gonna blow your mind so stay tuned for part 6 of this series.

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How I Got Outta Debt: Resources I Used To Become Debt Free pt 2

This is part 2 of a series that I wrote August 10, 2009 when this blog was on I feel that it is as more relevant now as it was when I wrote it then. It is my hope that it is of inspiration and motivation that yes, an ordinary person can do this.OK, I’m back to continue talking about the resources I used to become debt-free. I mentioned 3 books in the last post and I’m going to talk about what I liked about each and what I used from each on my journey. Now this is not going to go along in a linear fashion as my brain does not work in that way.

I used “Debt Proof Living” by Mary Hunt and “Your Money, Your Life” by Joe Dominguez and Vicky Robins together, but I’m gonna start with “Debt Proof Living” first. “Debt Proof Living” is a really good basic how to on the way money works and how to get your money to behave as Dave Ramsey would say.NASHVILLE, TN - MARCH 06:  (EXCLUSIVE COVERAGE...

One of the things I really like and will talk about today is what Mary Hunt refers to as “Freedom Accounts”. Back in the day this was the good ole “envelope system“. My Mom & Moma (my mother’s mother) used the envelope system religiously and taught me the value of it. I had been using a version of the Freedom Accounts when I would take a certain amount out each month and set it aside for my renters insurance for the apartment I was in before I bought the house because that’s the only way the insurance company offered it. It was either a 6 month or 1 year policy…no monthly payment option. These “accounts” are also great for those “unexpected expenses” like car repairs, car tags, licenses fees etc. Anything that is not actually paid on a monthly basis.

I place “unexpected expenses ” in quotations for a reason. Whether we want to see it or not, these things are part of your monthly living expenses and if not recognized as such, can wreak havoc when they come due sending you running to the credit cards. Nothing wrong with credit cards if you use them in the right way by paying off the entire bill before it’s due but terrible if you don’t.

This is where many people trip themselves up because they do not have an accurate number on what it takes to maintain their lifestyle each month. When I say accurate, I mean including all known liabilities. If you drive a car in most states, if not all, you must have at least liability insurance, license plates/stickers which must be renewed yearly where I live, driver’s licenses every 4 years, tires that wear out, oil changes needed, and the list goes on and on. Y’all  know what I’m talking about! 🙂 By getting all of this down on paper, you’ll begin to see that it really takes $2500 per month for you to live on.  But you’re only accounting for $2000, thinking you have $500 to “play with”. Then you go and blow it on whatever has caught your attention.  End of the month Day 30 rolls around with your car tag or homeowners insurance due. Now you wonder where in the heck am I going to get the money to pay this? Add in the refrigerator breaking down along with the car.  See how this can get one in trouble?

Doing this also allows me to have overdraft protection on my account without having to pay the bank for the privilege, saving me money as well. What I did was to look at the due date for the “fixed” cost items like the license plate tag for instance, estimate a little bit higher than what I paid last year and divide that up into 26 payments because I got paid on a bi-weekly basis. I would deduct that amount from my checkbook balance as if was going to write check for the bill and mail it off. When the time came to pay it, I would add the total of the deductions back into my balance and write a check for whatever that amount was and start the process over at the next pay period. This is mucho easier if you use financial software such as Quicken. I did this the old-fashioned way before I got a computer, let alone financial software. For things like car repairs which don’t have a “due date”,  I started out with an amount like $50 a month and put it in the “account” religiously. Time and time again, whenever something came up and y’all know with cars, SOMETHING is going to need fixing/replacing etc at some point in your ownership of the car, more often than not I usually ended up with enough money in the account to take care of the problem. You can use a separate savings account but I only did it for the large things like car repairs, homeowners insurance and property taxes which in my case while I was still paying a mortgage, were not escrow-ed for the first 2 years.

Before getting serious about taking charge of my money instead of it taking charge of me, I was one of those folks I talked about earlier. Many a car repair, you name it, ended up on a credit card which in the long run cost me more money because I was not able to pay off the balance charged when it was due. Yep, “stupid tax” borrowing from Dave Ramsey again…I done paid a plenty.

Stay tuned for part 3.

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