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Today I have a special guest post from Johnzelle. Johnzelle stumbled upon my blog as I was just starting up and has been extremely supportive ever since. He is a great motivator and currently writes about mental health and lifestyle on his blog Perfectly Imperfect. I appreciate him taking the time to add his perspective to this financial journey we are all on!
Hi everyone. I’m Johnzelle and I write a blog called Perfectly Imperfect, which focuses on mental health and lifestyle. Given that my lifestyle is characterized by minimalism, planning, and logic, I quickly became a fan of Ryan’s Arrest Your Debt blog. Thanks, Ryan for inviting me to write this guest post!
From interacting with my peers, I have gathered that many millennials don’t give much thought to how they spend their money or how that will impact their future. Perhaps a recent tweet will show you what I mean:
How I’ve gotten my finances on track
Three months ago, I checked out Dave Ramsey’s website; more specifically, a concept called “the debt snowball.” Cliffnotes explanation: You list out your debt from smallest to largest and tackle the smallest stuff first while making minimum payments on the rest. I was excited to try this concept and I developed my own version to become debt-free.
Here are some things that I’ve accomplished over the past three months:
- Paid off my invisible braces, which I owed over $1,300 on.
- Paid over $5,800 on my car loan! I only owe about $4,000 more and hope to pay it off by New Year’s or soon thereafter.
- I’ve also been saving $100/week to start my own business in the spring (Dave Ramsey’s plan doesn’t advise saving up for anything until you’re debt free).
How did I do all of this?
I work about 20 hours a week driving for Lyft and Uber, which is in addition to my full-time job. When I get paid from my side hustles on Wednesdays, I put $100 aside for my future business and the rest goes onto the principal of my car loan. Principal-only payments can really cut down how much you end up paying for your car. When possible, I also take a few hundred out of my main paycheck to pay towards the debt.
Once the car is paid off, I plan to tackle the beast that is my $140,000+ of student loan debt. It has grown about $7,000 in the two years since I got my Master’s degree and consolidated the loans. The plan is to pay down that loan just like I have been doing with my car: with side hustles and with tight budgeting. I also pray that my new business will be a success so that I can phase out the ride-share driving. But that’s neither here-nor-there.
How has taking control of my finances impacted my stress?
I’ve been diagnosed with both generalized anxiety and panic disorder, so I know about stress. Being anxious by nature has made me a person who thrives in controllable environments. Debt often feels like something that is out of our control. In the case of my student loan, the debt is literally growing faster than my minimum payments are paying them down. That’s stressful!
This is where I differ from my coworkers and many other millennials that I’ve interacted with. They all have student loan debt. Many of them even boast about how they don’t make the payments and how they dodge the calls from the collections agencies. I decided that I can’t live my life like that.
When I first consolidated my loans, I resolved to make the minimum payments until the loan ages out after 30 years, which is when they would allegedly “forgive” the remaining balance. NEWS FLASH: The loan servicers don’t tell you that you’re obligated to pay tax on the “forgiven” balance as if it were actual income… So that’s a huge balloon payment.
In theory, that’s a pretty good deal when you owe the cost of a small house in student loans like I do, right? WRONG! The balance would continue to grow over the years and by the time the loans were “forgiven,” you’d owe so much tax that it would have cost less to have paid off the loans years sooner. And that’s assuming that the “forgiveness” is still available in 30 years… I don’t trust the government so I definitely don’t trust a loose promise that my debt will vanish after 30 years.
How has managing my finances impacted the direction of my financial life?
With that being said, I’m taking control! I will continue to work hard, to live minimally, and to slay this debt. Through discussing the situation with Ryan, I came up with a new goal to pay the student loans off within 8 years of paying off my car. I’m estimated to be debt free by January of 2027 or sooner.
In the spring, I will earn my counseling license and I will start my own business for outpatient counseling. I’m even considering offering financial life coaching services once I’m established. As my income grows over time, I will pay even more towards the debt. Once I’m debt free, around age 35, I will begin to invest my money and save for retirement.
I’m still scared and confused about the stock market, but I’ve got about 8 years to figure it out.
Oh, and did I mention that I plan to make it through this journey without acquiring additional debt? Once my car is paid off, I will put aside $100 weekly to save for my next car. That’ll be a fun day when I’m in need of a new car and I can walk up to the dealership and say, “I want this one, do you accept Apple Pay?”
Becoming debt free is possible, but it requires hard work, minimalism, patience, determination, and lots of discipline… Traits that many of my peers don’t seem to care much about. I don’t want to work forever and I damn sure don’t want to pay on student loans for 28 more years. Ryan always says, “You work too hard to be this broke” and I agree.
So I’ll use my youth to work hard and to make smart decisions so that I can retire someday… with a couple million in my investment accounts that my wife and I can travel the world with and I can sip Long Island iced teas at my leisure.
Sounds a lot better than being consumed by debt my entire life, what do you think?
Thanks for reading!