Day 1 - The Plan

So, as I was saying yesterday, I discovered a lot of financial blogs that I enjoyed a lot and paid off my credit cards and car debt and all that jazz. Then I got depressed. I had several thousand dollars of student loan debt and a crappy salary and I was sick of being deprived, working in a cubicle and dealing with my life in general. I'm still all of those thing, btw. So, instead of paying off debt or working to be better, I gave up. I  started spending my money on visiting people and new places and just ignored the happy debt that seems to be mounting. Now, don't get me wrong, it is fun. I like seeing friends and visiting new places and doing new things. It's awesome. It's just that I realized this week that I could do more of those things if I had more money. The majority of my money right now goes to pay other people, which is completely ridiculous. Or save for retirement, which is also silly because it's unlikely that's going to happen. The getting old. Not retiring. I hope to retire sooner that I get old because I'd like to actually enjoy my free time. And the best way to do that is to pay my debts off sooner.

That brings us to the plan. As I said, I love Mr. Money Mustache and would love to be way more logical in the way I approach debt, but... Not sure that's going to happen. So, I'm going to turn to what I think is financial planning for dummies: The Dave Ramsey Method. The truth about this is that it's not great. Paying off the smallest debt with the lowest interest is definitely not the most efficient or fastest way to do anything, BUT it's better than nothing, which is what most people do. Also, his hatred of credit cards is ridiculous, unless, again, you're an idiot with low self-control. If you are, then yeah, you probably shouldn't have a credit card. So... I'm going to follow a modified version of the Baby Steps, with some advice from MMM. This is primarily because I have SOME self-control, but I also know myself well enough to realize that I'll get really depressed if I do one or the other. I was doing Dave Ramsey before, which was fine, but the truth is that it didn't make enough of a dent. I paid off debts that had very very low payments associated with them, so even though they were gone, that 43 cents I got extra every month was not enough to motivate me to be better.


So, here's the idea. I'm going to look at my debts and pay off the ones with the highest ROI first. And the ones that will give me that high first. So, first things first, gotta figure out the payments and all that. Thank goodness there's a handy little chart available at http://www.vertex42.com/Calculators/debt-reduction-calculator.html. It's an Excel table that calculates all sorts of nifty things for you.

	Creditor Information Table

	Creditor Information Table
Row	Creditor	Balance	Rate	Payment	Custom	Interest-only
1	Card #1	1,516.05	0.00%	25.00		0.00
2	Car	-	0.00%	-		0.00
3	Student Loan #1	2,326.75	1.86%	10.27		3.61
4	Student Loan #2	2,935.17	1.86%	12.96		4.55
5	Student Loan #3	7,893.80	6.30%	34.02		41.45
6	Student Loan #4	5,077.80	6.30%	21.88		26.66
7	Student Loan #5	4,680.58	6.30%	20.17		24.58
8	Student Loan #6	1,500.08	1.86%	7.39		2.33
9	Student Loan #7	8,542.17	6.55%	36.84		46.63
10	Student Loan #8	13,883.76	6.55%	59.83		75.79
11	Student Loan #10	7,601.21	6.55%	32.76		41.49
12	Student Loan	7,308.65	5.50%	98.00		33.50
13	Student Loan #9	8,557.23	6.55%	36.90		46.71
14						0.00
	Total:	71,823.25	Total:	396.02

So, according to the debt snowball (lowest balance first), I'd end up paying around $19,000 in interest and be done in May 2025 if I paid a total of $500 towards my debts each month. (Yes, I have other debts, but they're ongoing - insurance, mortgage, etc. I'm only listing things I can pay off for real here). The debt avalanche (highest interest first) would have me pay $15,000ish in interest and be done is 2024. That's vaguely better, but still not great... So...

***Side note, I probably shouldn't list that credit card on here. ***

I'm going to do a custom thing to determine how to pay it off, trying to pay off the ones that will free up the most money first, then moving to the next ones. As you can see, some of those aren't even getting paid the minimum interest, but I suspect that'll change as soon as they're done recalculating my minimums or something. 

For me, the biggest thing is probably maximizing my current earnings. I have some extra money, but an extra $200 a month could be something like $10k in interest savings. Also, no way am I taking 10 years to pay this off. That's ridiculous. I intend to be debt free by January 22, 2016. Don't know how yet, but I'm going to work on it. 

So, first things first:
- Dave Ramsey and Man vs. Debt recommendations: Sell your stuff. I'm also really fond of the Richest Man in Babylon, so I'll also be saving 10% of my income just because. So, this week (I'm having this run from Wednesday to Wednesday), I'm aiming to sell the stuff in my basement. It's been there for 2 years, so I'm clearly not using any of it. Except for my books. God help anyone who touches my books. Unless I leave the state, in which case, fine. >.>
- Optimize my income. This is a Ramit Sethi thing, which I think is often overlooked by most financial gurus. I like his stuff, but it comes with the unfortunate downside of him wanting to be paid a lot of money for his courses. I get that it's probably a great investment, blah blah blah, but I'm not in a position where paying someone 3 grand is feasible. Even if it does get a 100k job. Also, buried in his site, he has stuff like not everyone can earn 100k and explains that it's for top performers. I'm not sure I'm a top performer and unless he has some analysis out there saying that I can earn that, it may not be worth my money right now. What IS worth my money is taking the patent bar. If nothing else, I can write patents. I mean, I studied them. I really want to do copyrights and trademarks, but patents are also amusing. So, those are my things. And there may be other ways to make more money...