Drowning in debt, hah! Well not completely but yes I am digging my way out.

I am a frequent follower of Reddit r/personalfinance and if I had to guess my debt would be frowned upon on that subreddit. Although today while checking my assets and liabilities I finally have a positive net worth.

The last few years I have been frivolous with money once again. New job, new clothes, new car, new trips, new hobbies, all came with a price. However the new job gave me a nice pay raise and I am finally earning a fairly decent salary. What I make now is almost double what I made when I first moved to Colorado, but yet I still find myself with a large amount of debt.

It was not until I received an inheritance from a relative did I really start looking at my dire financial situation. And no, the inheritance was not much, but it gave me a bit of a psychological cushion to allow me to seriously tackle my debt.

You Need A Budget

For years after bankruptcy, I kept a spreadsheet much like a check register. I would log each transaction at the end of the day and look at how much I had leftover to spend. I never really kept a true budget but I looked at trends in my spending. What I failed to include were all the credit card purchases.

After realizing much of my mistake I began tracking using Mint. It took a while to set up but after I had all my accounts I could see the transactions from my checking account and credit cards. I categorized them and built out a budget. But did I stick to what I came up with? Absolutely not.

My failure was not accounting for every penny spent. I never missed a payment on a bill but if I was out somewhere and did not want to spend money from the checking account I would just put it on credit. Even at the beginning of this year, I was juggling cards and payments while carrying close to $30k in debt.

Found Money

Reality hit once again. I put the numbers into the spreadsheet and felt awful. Reading r/personalfinance I looked for strategies for paying off the $30k. I built another plan and took some money out of savings to pay off the first credit account. And then I became addicted.

I took every last penny of my budget that I had left over and put it towards all the debt that I had. I paid off a second account, and then a third. Now I was down to the larger more ominous one’s but I had a fatal flaw. My spouse also had accrued a lot of debt after the bankruptcy. So the real number was higher and I did not account for that in our plan.

And then the pandemic hit and our spending went to zero, while we both kept our jobs.

The Pandemic Refocused My Efforts

The first few days when the stock market tanked I was checking out my retirement accounts to see how bad the damage was and realized that I still had medical savings account at my old employer. This one account could only be used for health care and was supposed to supplement retirement. However, looking back through my documents I realized that I could use this money now without penalty. Apparently, since I left the old employer it allowed me to withdraw the funds.

And there staring back at me was $3,600 in found money. Yes, it was my money that I put aside from my paychecks but it was money that I could use right away and had no idea it was there\. I just had to come up with that much in medical bills from the past two years. Apparently, that was fairly easy and within weeks I received a check and quickly used the money to pay off several of my spouse’s accounts.

Adding the $2400 stimulus check the pandemic gave us and we paid almost all of our small debts off within two months. While this was not earned money or me just spending less and budgeting, it gave us the kick that we need to take a deeper look into our debt and spending.

This started a cascade. It also freed up extra money to pay off the larger debt and now I am staring down the idea of being debt-free by December. I should note that this is credit card debt, my next debt to tackle will be my auto loan but that is for another post.

Almost $30k paid off in just about seven months. The psychology of paying off debt is incredible and addicting.