As of today we have paid off over $70,000 in consumer debt. We started on this journey in January 2010 with $70,744.32 in debt and as of today, we are at $0. My original plan showed a pay off in 3rd quarter 2011 but due to hard work on our end, we were able to increase our income quite a bit in 2010.

I’ll be honest, looking back at that $70k+ figure was so daunting. I didn’t think it could be done but I had to change my attitude and just work the plan. I quickly came to learn that monthly payments don’t have to be a way of life and I tell you, looking at April’s budget and realizing that the money is going into MY savings account instead of being sent to the bank feels good!

Here is my final Baby Step 2 Update

• January 1, 2010 – $70,744.32 (I admit to having this number memorized)
• January 31, 2010 – $66,775.51 (5.7% paid off)
• February 24, 2010 – $66,173.36 (6.5% paid off – we paid cash for a $10k air conditioning unit during February)
• March 23, 2010 – $64,857.78 (8.4% paid off)
• April 30, 2010 – $61,637.78 (12.9% paid off)
• May 15, 2010 – $59,907.40 (15.3% paid off – I measured this mid-month because we broke into the $50s!)
• May 31, 2010 – $52,466.34 (25.8% paid off – we cashed in a small non-retirement mutual fund account and my husband’s commission was larger than expected)
• July 5, 2010 – $49,672.57 (29.8% paid off)
• July 31, 2010 – $47, 342.92 (33.1% paid off)
• August 31, 2010 – $40,688.78 (42.5% paid off)
• October 2, 2010 – $36,175.56 (48.9% paid off)
• October 29, 2010 – $35,884.22 (49.3% paid off)
• November 26, 2010 – $29,102.71 (58.9% paid off)
• December 30, 2010 – $21,584.09 (69.5% paid off)
• January 28, 2011 – $16,827.66 (76.2% paid off)
• March 1, 2011 – $4,725.18 (93.4% paid off)
• March 18, 2011 – $0 (100% paid off)

Thank you to those of you that have written and commented to share your support. The blog will still remain as a personal finance resource, which will include updates on our progress through our savings fund, investing, paying off the mortgage and more.

Photo: lusi

I last updated our baby step two progress on February 11 because our debt broke the $10k mark – woo! At that point our remaining balance was $9,824.16 and we’d paid off 86.1% of our debt. We were close to our my 3/1 payoff goal of 88% and we still had my self-employment income and my husband’s second paycheck and commission check to apply to our debt. We ended up beating our goal by quite a bit – woo!

• January 1, 2010 – $70,744.32 (I admit to having this number memorized)
• January 31, 2010 – $66,775.51 (5.7% paid off)
• February 24, 2010 – $66,173.36 (6.5% paid off – we paid cash for a $10k air conditioning unit during February)
• March 23, 2010 – $64,857.78 (8.4% paid off)
• April 30, 2010 – $61,637.78 (12.9% paid off)
• May 15, 2010 – $59,907.40 (15.3% paid off – I measured this mid-month because we broke into the $50s!)
• May 31, 2010 – $52,466.34 (25.8% paid off – we cashed in a small non-retirement mutual fund account and my husband’s commission was larger than expected)
• July 5, 2010 – $49,672.57 (29.8% paid off)
• July 31, 2010 – $47, 342.92 (33.1% paid off)
• August 31, 2010 – $40,688.78 (42.5% paid off)
• October 2, 2010 – $36,175.56 (48.9% paid off)
• October 29, 2010 – $35,884.22 (49.3% paid off)
• November 26, 2010 – $29,102.71 (58.9% paid off)
• December 30, 2010 – $21,584.09 (69.5% paid off)
• January 28, 2011 – $16,827.66 (76.2% paid off)
• March 1, 2011 – $4,725.18 (93.4% paid off)

My goal for 4/1 is NO DEBT!!!

I don’t want to sound like I’m bragging because I’m not – I am so unbelievably humbled and thankful for the blessings that we’ve received over the past year or so. Today our Baby Step 2 Total is under $10k! I was expecting some money this summer but it came this week and the payment has now posted to our credit account.

As of today we are sitting with a Baby Step 2 balance of $9,824.16 and we have paid off 86.1% of our consumer debt. I am having another good month in my business (last month was a 50% increase in net revenues – this month about 35% over a standard month) and it looks like we’ll be done with BS2 no later than the 3/18 paycheck. We already saved up over half of our BS3 emergency fund and so that should be fully funded in April (3 paycheck months rock!). That means that by May 1st we’ll be in Baby Step 4-6 land.

I am so absolutely excited!!

Happy Friday! It’s that time again – Baby Step 2 Update. Here’s our progress year-to-date with the most current figure at the end:

• January 1, 2010 – $70,744.32 (I admit to having this number memorized)
• January 31, 2010 – $66,775.51 (5.7% paid off)
• February 24, 2010 – $66,173.36 (6.5% paid off – we paid cash for a $10k air conditioning unit during February)
• March 23, 2010 – $64,857.78 (8.4% paid off)
• April 30, 2010 – $61,637.78 (12.9% paid off)
• May 15, 2010 – $59,907.40 (15.3% paid off – I measured this mid-month because we broke into the $50s!)
• May 31, 2010 – $52,466.34 (25.8% paid off – we cashed in a small non-retirement mutual fund account and my husband’s commission was larger than expected)
• July 5, 2010 – $49,672.57 (29.8% paid off)
• July 31, 2010 – $47, 342.92 (33.1% paid off)
• August 31, 2010 – $40,688.78 (42.5% paid off)
• October 2, 2010 – $36,175.56 (48.9% paid off)
• October 29, 2010 – $35,884.22 (49.3% paid off)
• November 26, 2010 – $29,102.71 (58.9% paid off)
• December 30, 2010 – $21,584.09 (69.5% paid off)
• January 28, 2010 – $16,827.66 (76.2% paid off)

In my December 30 Baby Step 2 Update I listed a goal of 76.6% paid off and we fell a bit short. However, I have a good reason (excuse?) – I had to transfer my business checking to a new account and there is a 10-day hold on the check. Had that check been applied to debt during the month as expected, our balance would be $14,992.66 and our payoff percentage would have been 78.8% a bit ahead of our goal.

I’d still love to have this paid off by 4/1 but 4/15 is just going to be more realistic. My goal for 3/1 is 88% paid off.

Watch the Shaytards Debt Free Scream video – it will definitely put a smile on your face! Congratulations to you for paying off about $195,000 over the last four years and sharing your call with everyone! Seeing it brought tears to my eyes – I’m so very excited for you!

Happy New Year!

I’ve been thinking about my financial goals for 2011 for several days now. While 2010 was a great year in the Six Figures and Broke household, we are preparing for an even better 2011. To help keep ourselves accountable again this year, we’ve decided to share our personal and business finance goals with you.

Personal Finance Goals

• Finish Dave Ramsey’s Baby Step 2, which is paying off all consumer debt. Our aggressive payoff goal is 4/1/11 but a more realistic goal is 5/1/11.
• Finish Dave Ramsey’s Baby Step 3, which is a fully funded emergency fund of 3 to 6 months of household expenses. We’re halfway through this already. Even though Dave Ramsey recommends that people follow his steps in order we decided to deviate a bit in October/November 2010.
• Bump up my husband’s retirement savings from 6% to 10%. We were contributing 2% for part of 2010 and bumped it up to 6% when he received a 5% raise (we decided to keep 1% for debt paydown.) Again, this is against Dave Ramsey’s teaching so purists don’t wet noodle me!
• Bump up my Individual 401(k) contributions to 6% from 2%. I just opened my own Individual 401(k) in 2010 and funded it with 2% in late December. I’d like to bump this up to 6% by the end of the year and then up to 15% in 2012.
• Officially get my kids set up with a commission structure. We tried a few times during 2010 but neither my kids nor myself followed through with it.

Business Finance Goals

Photo: adria.richards/Flickr

It’s that time again – time to update our progress towards completing Dave Ramsey’s Baby Step 2. Today is Black Friday but for us, it was bonus and commission day. So while 138 million Americans are out shopping, I paid off two more accounts! We are down to four active accounts now.

In our previous update on October 29, which ended up getting tens of thousands of views thanks to The Consumerist, I mentioned that we were almost done with our $7500 savings goal. We ended up bumping this up to $8200 and we have reached that goal. So now we’re back to focusing completely on paying down this absurd debt.

• January 1, 2010 – $70,744.32 (I admit to having this number memorized)
• January 31, 2010 – $66,775.51 (5.7% paid off)
• February 24, 2010 – $66,173.36 (6.5% paid off – we paid cash for a $10k air conditioning unit during February)
• March 23, 2010 – $64,857.78 (8.4% paid off)
• April 30, 2010 – $61,637.78 (12.9% paid off)
• May 15, 2010 – $59,907.40 (15.3% paid off – I measured this mid-month because we broke into the $50s!)
• May 31, 2010 – $52,466.34 (25.8% paid off – we cashed in a small non-retirement mutual fund account and my husband’s commission was larger than expected)
• July 5, 2010 – $49,672.57 (29.8% paid off)
• July 31, 2010 – $47, 342.92 (33.1% paid off)
• August 31, 2010 – $40,688.78 (42.5% paid off)
• October 2, 2010 – $36,175.56 (48.9% paid off)
• October 29, 2010 – $35,884.22 (49.3% paid off)
• November 26, 2010 – $29,102.71 (58.9% paid off)

Unfortunately, I failed to set savings and debt paydown goals in the October 29 post. I’m not forgetting today, though – by my next update at the end of December I’d like to be at 66% of my consumer debt paid off. I’d love to have all of this paid off by the end of April 2011.

Thanks for including this article in this week’s Carnival of Debt Reduction. Check it out here!

At the beginning of the year, when I launched my Six Figures and Broke blog, I wrote a post detailing My Financial Goals for 2010. Now that we’re coming up on the holiday season and the New Year is right around the corner, I figured it would be a good time to look at the progress we’ve made towards this year’s financial goals.

Reducing Expenditures
One of my primary goals was to reduce my outgo and I’ve made great progress in this department, at least in my opinion. We reduced our grocery budget, we reduced our restaurant expenditures, we cut back to basic cable and basic internet, we cut out our mobile broadband internet, and much more. We have shaved several hundred dollars off of our monthly budget over the course of the year.

Paying off Debt
We have made huge progress in this department. Just look at my October 29 Baby Step 2 Update for proof. As of October 29, we were about halfway through our debt payoff. We slowed down on our debt repayment earlier this year while we cash-flowed a new air conditioner/heat pump system and then again in October and early November while we piled up $7,500 in cash. I am projecting that we will be down into high $20 thousands by the time of our next Baby Step 2 update later this month.

Savings
As I mentioned in my January post, we are not following Dave Ramsey’s Total Money Makeover plan exactly. Although he’s an expert in the field and his plan has worked for probably millions of Americans, we’ve chosen to tweak it just a bit. We have saved up more than the recommended $1,000 Baby Emergency Fund and contribute to our 401k.

We initially only contributed 2% to the 401k but when my husband received a 5% raise earlier this month, we upped the 401k contributions to 6%. My husband receives a 100% match with instant vesting on this 6% plus it reduces our taxable income slightly.

Reflections
Last year about this time my husband had started a new job. He had been trying to obtain a position with this company for years and now it was becoming a reality. We were a bit nervous as the base pay was slightly lower than what he was making at the previous position but with the new job came commissions, bonuses and even an RSU stock award. With our new focus we had a plan for this money and in looking back at the first 10 months of this year, we know exactly where it went. I only wish I’d smartened up a few years ago but hey, better late than never, right?

If you made financial goals at the start of this year, I’d love to hear your progress.

This week has been quite adventurous for my Six Figures and Broke blog. I received a mention on The Consumerist website and immediately my blog went offline due to a sudden surge of traffic. Thankfully, I added a caching feature and my hosting provider was fantastic and it quickly came back online and has remained online since. While I learned a few things from a technical standpoint this week, I also got a glimpse into what the masses feel regarding my debt. Today I wanted to talk about why paying off debt is always a good thing.

Really, it is quite simple, paying off debt is good because it allows you (me, us, etc) to put your income to better use. While I had many people cheering me on for my nearly 50% paydown in debt so far this year, I’ve had others berate me for my spending habits, someone commenting that they felt like punching me in my face because of my blog name (I didn’t approve that comment heh) and then others make countless assumptions about our situation.

I don’t think that any of this matters – my previous spending habits, whether someone wants to physically assault me for using a figure of speech and what exactly got us into $70,000 of debt making $100k per year. What does matter is that things are changing. We have learned from our past and are making changes for the future. So regardless of how we got here, paying off debt is a good thing and I applaud everyone who is taking measures to reduce their debt load, regardless of their income or specific set of circumstances.

Here’s another reason why paying off debt is a good thing, especially for those with children – you can help prepare your children for their future. Not only will you have more resources available to help your children transition to adulthood but if you involve them in the process, at an age-appropriate level, you are giving them a financial education that they may not receive anywhere else.

I’d like to take a second to make this even more personal and speak to other families with special needs children. We deal with autism and epilepsy in our household and although no parent knows without a doubt that their child will grow up to be self-sufficient, those of us with children with chronic developmental health conditions are even more uncertain. While we have spent a significant chunk of change to help combat these conditions while the kids are still young, we have also realized that we may need to support them beyond the age of 18…or 21…or whatever age adult children begin to support themselves. So we need to get out of debt now and begin putting our income to work for us instead of for our creditors.

So yes paying off debt is always a good thing. Were we stupid with our money and financial choices – heck yeah we were! Are we making changes? You bet!

Photo: joeltelling/Flickr

After reading the comments on the Consumerist.com article yesterday, I realized that I’m just telling you how much debt we’ve paid off in my monthly update but not really talking about what we are doing to get out of debt. Today, I’m going to rectify that.

First and foremost we are trying to follow Dave Ramsey’s My Total Money Makeover plan. His plan consists of the following Baby Steps:

Baby Step 1 – Start a $1,000 Baby Emergency Fund
Baby Step 2 – Pay off all debt using the Debt Snowball
Baby Step 3 – 3 to 6 months of expenses in savings
Baby Step 4 – Invest 15% of household into retirement
Baby Step 5 – College funding for children
Baby Step 6 – Pay off home early
Baby Step 7 – Build wealth and give!

We aren’t following his steps exactly because, as Dave said, personal finance is PERSONAL. But for the most part we are using his baby steps as a guideline and his call-in radio show as motivation and support to help keep us on track during our get out of debt journey.

Now on to the actions that we are taking to get out of debt. First and foremost we have a big shovel. My husband started a new job last November and while the base pay was slightly lower than his previous position, the new job comes with up to 30% of his base pay in commission. To our surprise, he’s been able to achieve this on a regular basis. So our shovel is even larger. Secondly, I have the ability to be a bit flexible with my income – I can write more and thus earn more.

In addition to increasing our income, we’ve decreased our outgo. Here’s a list of some of the cuts we’ve made:

• Cable TV – we use Hulu, PlayOn and streaming online movies via Netflix to get our TV fix
• Drastically reducing our restaurant visits – Not only do we visit restaurants fewer times each month, we don’t frequent the pricey restaurants we used to
• Reduced entertainment budget – We’ve almost entirely cut out our entertainment budget
• Meal planning and coupons – I plan my meals at least a week in advance, I’ve ventured in to a few once-a-month cooking meals, I coupon and I shop sales
• Monitor home energy use – We live in a hot climate and summer air conditioning bills can get crazy, we turned the thermostat to a higher temperature and saved a little money that way
• Stopped most extracurricular activities – no piano for the kids for a bit

In all of this we have learned a new word – patience. Instead of being a princess and buying what I want now, just because I want it, I am delaying gratification and giving myself time to really think through purchases.

For example, our garbage disposal recently broke. Instead of calling a plumber over instantly, I bought a new garbage disposal at Lowes and my husband installed it. This may sound silly but we easily saved $100+ on a plumber. My point in sharing this with you is that these $100 choices add up.

So there you have it, these are some of the things we are doing to get out of debt. We lived on the edge for far too long and have nothing to show for our fantastic income. Although we’ve made mistakes in the past we’re working on changing them for a better future for our family.