Using Mindfulness to Set Financial Goals

Using Mindfulness to Set Financial Goals

Last week I took a trip out to the East Coast. First of all, I want to note that it was amazing. I had a great experience. My wife got to see mountains for the first time in her life, we drove on the ever-famous Blue Ridge Parkway, climbed to the top of the Humpback Rocks on Humpback Mountain, visited our first Movie Tavern with my amazing uncle, and even stopped at Washington D.C. to see the sights! Not only that, but I also had a guest post go live on another blogger’s site – Using Mindfulness to Set Financial Goals.

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You may remember the post earlier last week on DIY Jahn titled: Using Minimalism to Grow Your Money. Well, the writer of that amazing guest post was Uzy from Coming Om. And, another fun fact, that is the blog that I posted on as well! We decided it would be a great idea to exchange guest posts so that we both could share our knowledge with the other blogger’s audience. I knew that you all would love Uzy’s post on minimalism, and Uzy knew that his reader’s would gain some insight from my post on mindfulness.

Now, I couldn’t very well keep my post from you all, could I? So, I wanted to share it with you today. You see, I wasn’t so sure about mindfulness when I first began my journey, but it has helped me to achieve so many financial goals and to set new ones that I know are right for my family. Using mindfulness to set financial goals has helped me to gain clarity, to save money, to pay off debt, and ultimately, to find hope once again.

Don’t forget to join our 30 Day Minimalist Decluttering Challenge as we enter April! We’ll be starting it up quick. Click HERE to read the rules and join our mailing list today!

Anyway, I would love it if you would bop over to Coming Om and read my post. You can find it by clicking HERE or by using the links below! Thanks for reading and supporting DIY Jahn.

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Using Minimalism to Set Financial Goals

Using Mindfulness To Set Financial Goals


Using Mindfulness To Set Financial Goals

Budget Savings, Increase your Spending Power

Budget Savings, Increase Your Spending Power

Today we’re talking about how to budget savings and thereby, increase your spending power. Household financial responsibilities are widespread, prompting spending in various categories. From home ownership to feeding families, modern expenses add-up quickly, without signs of slowing. For some high earners, demanding financial circumstances are easily managed, without creating undue stress. For most people, however, personal money management is a continued effort to balance household cash flow, without sacrificing the comforts of a good life.

With so many financial obligations on your plate, consistently making ends meet presents an ongoing challenge. Fortunately, the wide array of spending obligations before you yields opportunities for savings – when you know where to look. By carving out budget savings, you’ll increase your spending power in other areas, so it pays to periodically evaluate where your money goes.

As you establish or revise your household budget, use the following tips to highlight savings. You may be surprised by the promising, money-saving possibilities found, by placing your finances under review.

Budget Savings- www.diyjahn.com

Domestic Expenses Yield Room for Savings

It takes a substantial flow of cash to meet monthly household expenses. Rent payments, mortgages, insurance coverage, and utility costs add-up quickly – regardless of where you live. Home ownership has advantages, but the cost of maintenance and upkeep can strain budgets. As a tenant, you may be able to sidestep some of the costs of living, but food, energy bills, and other household obligations still tally significant sums. There is good news for consumers, however, because each spending category offers savings potential, which may be easier to tap than you think.

Energy is a major expense. Utility payments represent spending most people could do without. The services are needed, mind you, but the bills themselves can be hard to reconcile. After all, there is no tangible reward for money spent toward gas and electric bills. Heat and power increase comfort and facilitate our favorite modern appliances, but it is hard to put your hands on the direct benefits, as you can with many other purchases. At the same time, many users simply pay their utility bills, without looking for ways to reduce what they owe. This is an expensive oversight, in many cases, leaving money on the table, which could be applied to other expenses.

When household cash flow is at odds with your cost of living, reducing your utility bills could help provide relief. And there are several ways to get started saving money. Evaluate your household habits to get started on the path toward lower energy, beginning with these common concerns:

Heating and Cooling Expenses – In many regions, heating and cooling costs represent the lion’s share of utility spending. As a result, this is a good place to start saving money. Replace your thermostat with an efficient, programmable model, in order to dial-in energy use to your daily needs. Use it to program your furnace to send heat only when you are at home, and then lower your thermostat setting by a degree or two, across the board, for additional savings.

Conserve Electricity by Managing Devices – Modern energy users live in a plugged-in world. From laptops to music players, nearly every aspect of daily life calls for an electronic device. Each gadget has its own power functions, which typically include conveniences enabling them to power-up quickly. Unfortunately, these stand-by modes draw energy, which ultimately adds to your utility costs. To use less energy, unplug devices from the wall or use power-save setting to reduce electric bills.

Household debt adds interest charges. There are plenty of reasons to responsibly manage debt, not the least of which is controlling the amount of money spent paying-off interest. Various loans, credit cards, home mortgages, and other obligations each come with a price, which can strain your household budget. In order to make the most of your financial resources, repayment obligations should be managed and prioritized, using the best available resources to meet your financial needs.

As credit demands arise, compare and contrast various forms of financing, ensuring your funding doesn’t include unnecessary interest charges. Short-term costs, which will be paid back quickly, are well-served using credit cards, payday loans and other accessible, temporary forms of financing. You will pay a premium for these types of funding, but quickly clearing them from your debt load won’t leave lasting impacts. Long-term financial needs, on the other hand, are better addressed using less expensive options, like equity financing and personal loans. You’ll need lead-time to secure these resources, however, and good credit references, so your immediate financial needs may not wait for approval.

Interest payments and utility costs are two substantial budget entries, furnishing room for savings. And while household spending spirals into many other areas, controlling debt payments and energy use are among the most powerful money saving strategies available to modern consumers. If you are committed to increasing your spending power, start with a close look at these major expenses.

Where can you budget savings and increase your spending power?

Let us know in the comments below!

Disclaimer: Some of DIY Jahn posts contain affiliate links. While I do earn money through Fronto, Ibotta, and other companies, and bonuses for referring people, all of my opinions on the company are 100% honest and my own. Also, please note that recipes, fitness tips, and financial tips are not given by a professional. To understand what this all means for you, click here.

7 Tips to Build an Emergency Fund Fast

7 Tips to Build an Emergency Fund Fast

Unexpected expenses can, unfortunately, wreak havoc on our financial lives. Everything seems to finally fall into place and then all of a sudden, the car breaks down, the kids get sick, or you get laid off of work. No matter what the case, having an emergency fund in place can help you to stay on your feet during a financial crisis. In this post, I’m going to give you 7 tips to get $1,000 in your emergency fund FAST.

Emergency Fund - www.diyjahn.com (1)

Last week, my wife was driving home from work. Every once in a while, she has to work out of town, and this just so happened to be one of those days. She got about halfway home when a dashboard light flashed. Ah, crap!

She continued driving and the car began to shake, the engine power lowered, and soon she was only able to inch the car along at around 20 mph on the highway. Definitely not a fun place to be stuck going so slow!

Thankfully, she made it safely to the mechanic and we had it looked at. Unfortunately, this meant an unexpected expense of around $450!

If this were a few years ago, or even a few months ago, this would have led us to a fully-fledged PANIC. Where would we get the money? How would we pay for this repair? What would we do?

No doubt we would need to borrow money to cover the expense – whether that means arranging to make payments through the shop, taking out a loan of some sort, or putting it on credit. Regardless, the end result was simple: more debt.

But this didn’t happen a few months ago, it happened last week. So, instead of taking out more debt to pay for the repair, we simply pulled out the cash and paid for it on the spot.

You may be thinking: Well, that’s great for them, but I live on a low income and can’t afford to just pay for things like this.

Don’t worry, we thought that, too. Until we made the decision to not allow ourselves to accumulate more debt. We made the decision to create an Emergency Fund and it has made all the difference in the world. No more panicking when unexpected expenses arise, no more living paycheck to paycheck, and no more “waiting” to pay off debt while simultaneously accumulating more debt.

So, here’s why you should start an emergency fund (CLICK HERE), but the real question is: How can you afford to build one when you are starting out by living paycheck to paycheck?

How to stay out of debt

7 Tips to Build an Emergency Fund Fast

While you’re working to stay on top of bills and make sure your family is fed, it’s important to start considering the unexpected expenses that may come up. Here are 7 tips to help you reach $1,000 in your emergency fund FAST!

Tip #1: Collect Your Loose Change

The first thing my wife and I did when we started budgeting was to work toward building our emergency fund. In order to do that, we realized that we really needed to use a cash budgeting system. It’s not that we didn’t trust ourselves not to stick to our budget… but… well, I guess we didn’t really trust ourselves to stick to our budget.

Anyway, we started using a cash budgeting system and fell in love. If you want to know how it works, you can visit our post Why We Love Cash Budgeting (& Why You Should, Too) CLICK HERE

Point is, we started to use cash to buy EVERYTHING. Then we created a new rule – we would use cash for everything, but we weren’t allowed to spend coins. You won’t believe how much money we saved up by not spending coins!

Soon, our jar was full and we had an extra $100 to add to our emergency fund.

Emergency Fund Start: $0
Emergency Fund Addition: $100
Full Emergency Fund: $100

Tip #2: Stay Home on the Weekends

One thing our friends love to do is to go out on the weekends. I don’t necessarily mean that they enjoy drinking (though some certainly do), but they like to go out and eat, go to the movies, or walk around the stores shopping.

All of that is fine and dandy, until you need to save money, of course. When my wife and I started skipping the weekend ventures, we realized that we were saving a lot of money. That doesn’t mean that we didn’t enjoy our friends’ company, of course, only that we got to enjoy their company in a frugal way.

Maybe we had some wine and cheese and played games, maybe we had a Redbox movie marathon instead of going to the theater, or maybe we found a new recipe to try instead of going out. In all cases, we always saved money and still enjoyed the company of our friends, who we loved dearly. Try staying home one weekend per month, and you’ll save an average of $30.

Emergency Fund Start: $100
Emergency Fund Addition: $30
Full Emergency Fund: $130

Tip #3: Start Writing a Blog

As you know (because you’re reading this now), I started a blog when I began my journey to become debt free. I didn’t start DIY Jahn to make money, though. Actually, this blog was started initially to track my journey and to keep myself accountable. On off-days, I would write about Adulting, a book that I love.

Soon after starting the blog, though, I realized that my passion was talking about finances and how to live a frugal life. I found myself excited to write on these topics, inspired by the stories around me, and enthralled in the response my readers were giving (thank you so much for that, by the way!).

An added perk of this lovely blog, though, is that I do earn a little extra for writing it. It’s not a lot, but I earn some and that’s what matters. Right now, I am on month six and last month I made a total of $222. On average, I’ve earned about $120 per month.

If you’re interested in starting a blog and earning money from it, check out our posts: How to Make Money Blogging (CLICK HERE) AND How to Monetize Your Blog and Quit Your Day Job! (CLICK HERE) Of course, if you have any questions, feel free to let me know!

Emergency Fund Start: $130
Emergency Fund Addition: $120
Full Emergency Fund: $250

Tip #4: Try a No Spend Challenge

In January, my wife and I made the commitment to complete a No Spend Challenge. What did this mean? Well, we were only allowed to spend money on regular bills, gas, and medical expenses. We ate the food in our freezer / fridge / pantry and made do with what we had.

Over the course of the month, we saved over $2,000 – you can read about our experience and all the tips and tricks we used by visiting our page: The No Spend Challenge (CLICK HERE)

We know that if we did the challenge again, we could save at least another $1,500. We had tons of readers join us for the challenge and work with us to save money for their own purposes. The average reader saved a total of $400 (many had rules that differed from our own). All-in-all, stopping spending for one month is definitely worth $400. What would you do for $400?

Emergency Fund Start: $250
Emergency Fund Addition: $400
Full Emergency Fund: $650

Tip #5: Find Some Extra Work

Whether you find work by looking online, find a job at a fast food joint, or simply go to help a neighbor out, working some extra hours can certainly help you to bring in the dough.

My wife and I work for a caterer during our spare time (whenever she needs the help) and we get $100 a piece for our four hour commitment. It’s an easy job, but she needs the extra help and we need the extra money – it’s a win-win.

I work online and earn some extra money by using apps like Ibotta, Ebates, or Epantry. If you’re interested in any of these (or other awesome online opportunities that have been legitimately checked by DIY Jahn) check out our page: Make Money Online Series (CLICK HERE)

Other ideas include: babysitting or pet sitting, helping a neighbor to move, giving someone a ride when needed, fixing items, building and selling furniture, baking bread and goodies to sell around holidays, etc.

Overall, if you put some effort into it, making an extra $200 is a fairly reasonable expectation for someone doing some extra work around their neighborhood, online, or in town!

Emergency Fund Start: $650
Emergency Fund Addition: $200
Full Emergency Fund: $850

Tip #6: Live a Healthier Life

Many times people will tell me that they simply “cannot be healthy because it’s too expensive” and while I agree that some health foods (especially organic) can be a little pricey, I disagree that being healthy is an expensive lifestyle change.

First of all, you need to view your health as preventative care. If you do not take care of yourself now, it will cost you an exponential amount of money in doctor and dentist bills later in life. Can’t stop drinking soda because you can’t afford tea? Wait until that root canal comes up or you need dentures. It’s a lot more than the $.50 you’ll spend now.

Second, being healthy is more than eating organic food. Being healthy means moving more, staying hydrated, and cooking from scratch. All of these ideas can actually SAVE you money (rather than cost you money).

Drink a 12-pack of soda a week? $16 / month
Driving to work instead of walking, biking, or taking the bus? $40 in gas / month
Eating store-bought bread and pasta instead of homemade? $30

The point is, there are many ways in which you can save money by being healthy. If you want some more ideas, read our post: Tips for a Healthy Lifestyle that will Save You MONEY! (CLICK HERE)

Emergency Fund Start: $850
Emergency Fund Addition: $86
Full Emergency Fund: $936

Tip #7: Sell Your Clutter

Finally, let’s not forget about decluttering our houses. Not only will decluttering your house give you piece of mind, but it will also help you to build that emergency fund up and get to your $1,000 goal.

Starting April 1st, my wife and I will be completing a 30 Day Minimalist Decluttering Challenge. Basically, we’ll be doing a small task each day to help us to declutter our mind and our home. At the end of the challenge, we hope to have a significant amount of items to be donated or sold and less “clutter” filling our home.

Want to join our challenge? Visit our post to find out more information: Declutter Your Life, Reach Your Debt Free Goals (CLICK HERE)

After selling a few items of clothing, a piece of furniture, and a couple of kids’ toys we could earn at the very least $75.

Emergency Fund Start: $936
Emergency Fund Addition: $75
Full Emergency Fund: $1,011

Emergency Fund - www.diyjahn.com

7 Tips to Build an Emergency Fund Fast

There it is! We have reached our $1,000 goal and now can begin putting our extra funds from these awesome money-making and money-saving ideas toward our debt or other savings goals. It’s as simple as that.

Now it’s time to go out and do – start building that emergency fund before the unexpected expenses start rolling in. Because we all know that they will.

Do you have any tips to reach your savings goals?

Leave your response in the comments below!

Disclaimer: Some of DIY Jahn posts contain affiliate links. While I do earn money through Fronto, Ibotta, and other companies, and bonuses for referring people, all of my opinions on the company are 100% honest and my own. Also, please note that recipes, fitness tips, and financial tips are not given by a professional. To understand what this all means for you, click here.

Our Financial Goals for 2016

Our Financial Goals for 2016

We began paying off our debt just a few short months ago, but we have already come so far. As you may know, our big goal is to pay off our almost $200,000 in debt as soon as we possibly can. That being said, we haven’t taken much time to sort through our financial goals in writing. Not just the big scary goal, but the little goals that will get us there.

I was scanning a fellow bloggers site and found their list of financial goals for the year. The blog is titled: Debt, Who?? And is filled with inspiring stories of their attempts to pay back their debt (of around $140,000). You can find their 2015 Financial Goals by clicking HERE and read about how they did in 2015 by clicking HERE.

I really appreciated their format, their ideas, and their overall concept. So, I’ve decided to create my own list of 2016 financial goals. Yes, I do realize that it’s a little late (we’re already well into 2016), but regardless, here are the goals we hope to accomplish for this year!

Financial Goals 2016 - www.diyjahn.com

Our Financial Goals for 2016

You guys have read about why we need to pay off our debt quickly before 2017 rolls around the corner, you’ve also read about how we racked up a ton of debt, but we haven’t told you many specifics about what our goals are for 2016. In this post, I’m going to break it down for you all in a similar format to that of Debt, Who?? (linked above).

Big, Scary, Overall Financial Goals

We all have them. The daunting goals that hang over our heads – always close enough to see, never close enough to touch. For many of us, this is what debt freedom is… a ‘pipe dream’ if you will.

I have had many friends ask me about my debt repayment. When I say that I’m putting off getting a house, having children, etc. they all think I’m insane. I’ve heard it time and time again, “You’re never going to get out of debt.” “No one ever ACTUALLY gets out of debt.” “You’re going to miss out on your life trying to get out of debt.”

Of course, these are the same people who are in debt up to their eyeballs and complain about not being able to afford the luxuries of other couples who make the same income… or even afford to fix their cars when they break down.

I get it. I do.

When you’re in the throws of debt, it’s easy to get discouraged and truly believe that debt freedom is impossible. Here’s the thing though: it isn’t. Debt freedom is possible, but it takes hard work, determination, and letting go of some expectations for your lifestyle. Dave Ramsey puts it best: “If you will live like no one else now, you can live like no one else later.”

So, if you want to know why I want to be out of debt it’s simple: I want to live like no one else. That’s my big, scary, overall financial goal: to become debt free and never rack up the debt again, ever.

Big, Scary, Overall Financial Goal: To become completely debt free.

The Timeline

Okay, here’s the other part that I hate to think about. I’ve been paying off my debt like a madman, but I have never set a date for when I hope to become debt free. Sure, I wish it could be tomorrow, but we all know that’s unrealistic.

What does it look like then? I am going to set another big, scary goal of paying off all of our debt by 2019 – that’s three years. Now, I know that our debt is GIANT and that that goal is a little out of our league, but what can it hurt to try? Barring that all of our job and living situations don’t go downhill really fast, and that we stay healthy and happy for the next three years, I hope to have our debt SMASHED by 2019.

Let’s recap:

  • Big, Scary, Overall Financial Goals #1: To become completely debt free.
  • Big, Scary, Overall Financial Goals #2: To do it by 2019.

2016 Financial Goals

Now, that goal won’t happen without some other, smaller goals to get us there. That’s where this section comes into play. Here are our financial goals for 2016.

  • Overall Financial Goal for 2016: Pay off over $50,000 in debt.

Financial “Debt” Goals for 2016:

  • Complete a No Spend Challenge
  • Continue Paying Minimum Payments on car, smaller school loan, & wife’s federal loan (Total: $7,763.52)
  • Pay off our credit card debt (Total: $6,112.04)
  • Pay off the Big9 (new nickname for our high interest loan) (Total: $24,282.64 – not including interest – assume $2,200 interest)
  • Pay off the small student loans (Total: $5,428.86 – not including interest – assume $350 interest)
  • Pay off our car loan (Total: $3,389.97 – after minimum payments for the year – not including interest – assume $311 interest)

Sub-Total Goal: $49,838.03

  • Start putting extra toward my Federal loan (Total: $161.97)

Total Goal: $50,000

Financial “Mini” Goals for 2016:

  • Do not buy any boxed pasta or store-bought bread
  • Stick with our budget of $300 per month for food, gas, hygiene / cleaning, puppy supplies, fun money, etc.
  • De-clutter our home and sell items on FB
  • Work up to an extra $500 per month on the blog
  • Grow and can some of our own food
  • Find side hustles to earn more extra money (such as catering, dog-sitting, on-call crisis line (wife), etc.)
  • Put all extra money possible toward debt repayment
  • Stop stocking so much food in our home (only buy what we need)

2016 Financial Goals- www.diyjahn.com

Our Financial Goals for 2016

There you have it – our financial goals for 2016! The big and scary ones and the small, but mighty ones. All are equally important in helping us to reach our goals. And if we accomplish these goals? Well, we will enter 2017 with only Federal student debt (which will total less than $140,000)! Woohoo!

What are your financial goals for 2016?

Share them in the comments below!


Disclaimer: Some of DIY Jahn posts contain affiliate links. While I do earn money through Fronto, Ibotta, and other companies, and bonuses for referring people, all of my opinions on the company are 100% honest and my own. Also, please note that recipes, fitness tips, and financial tips are not given by a professional. To understand what this all means for you, click here.

Getting Geared Up for the New Year 2017… Already?

Getting Geared Up for the New Year 2017… Already?

Paying off debt quickly is probably the most difficult thing there is to do. Yet it’s also one of the most important. Why? Well, that’s what I want to show you guys today. You see, in 2017 all of our student debt will officially be out of deferment. Once I have graduated from my Masters program, we’ll have a six month “grace period” before minimum payments on our loans begin.

YIKES! As you may know, my wife and I have a LOT of debt. A lot. Which is kind of an understatement. Starting at almost $200,000, we were in way over our heads (you can see how we racked up all this debt by clicking HERE). So, the thought of them ALL coming out of deferment can be pretty overwhelming.

Now, my wife and I are working to pay these off as quickly as possible, but many people have asked what it will look like for us in 2017 when our loans are no longer in deferment. It’s an interesting question for us because it’s something we’ve thought about a lot, but it’s also a GREAT question for you all because it gives me a chance to talk about how important it is to pay more than the minimum payment.

If you didn’t already believe in the importance of an extra ten bucks, you will after today!

2017 - www.diyjahn.com

Gearing Up for 2017… Already?

We started preparing for 2017 back in October of 2015. We were just coming off of the high of our wedding day, loving our lives, living the dream of our honeymoon. We had settled back into our home and were starting up our every day lives again. All was well.

That’s when we did some calculations and made the realization: we have more debt than we ever expected. 

We both knew that we had a decent sum of debt. We both had a rough estimate of our own debt. We had talked about debt and finances. We knew we had a lot. Basically, what I’m saying is: this shouldn’t have been a surprise. The problem was that we never truly did the calculations until this moment. It was just a figure floating in the sky, but once we saw it in black and white, it became more real.

When we saw the figure, we began truly planning for 2017, knowing that my debts would be out of deferment and that we simply could not manage all of the payments. We began planning and working toward the day when the minimum payments would be due.

And that’s what brought us to today.

2017: Paying Only the Minimum Payments

Let’s start from the beginning of 2016 for this estimation. Let’s say that we began January 1, with out hefty load of $185,696.02 in debt.

At this point, we were making minimum payments of

  • $66 – Credit Card 1 ($3,500)
  • $130 – Credit Card 2 ($3,700)
  • $40 – School Loan ($2,500)
  • $468 – Federal Loan ($68,000)
  • $139 – Car Loan ($5,100)

Which comes to a total of: $843 per month for minimum payments.

At this rate, it would take us 260 months (or a little over 21 years) to pay off the debt that’s OUT of deferment – remember, this is not including the debt currently deferred.

Even if we use the snowball method and only put extra toward debt once a debt is paid off, it would take us a total of 145 months to pay off (over 12 years).

In either scenario, we will continue making these minimum payments for a long, long time. Here’s what the minimum payment schedule looks like (if we add do the debt snowball method without upping the total monthly payment of $843).

  1. Car – 41 months
  2. Credit Card 2 – 49 months
  3. Credit Card 1 – 56 months
  4. School Loan – 58 months
  5. Federal Loan – 145 months

This means that when our other debts enter repayment, we will need to continue making both sets of minimum payments. So, the big question is, what will our minimum payments look like?

  • $500 – Federal Loan 2 ($80,000)
  • $300 – Private Loan ($32,000)
  • $40 – School Loan 2 ($3,000)

Not to mention the fact that interest has not been calculated for these two up until that point. Basically, our minimum monthly rate will sky-rocket to a whopping total of $1,683 per MONTH.

It also is important to note that both Federal loans are on a graduated plan. After a few years, the minimum payments will rise.

From the looks of it, we won’t be able to afford our minimum payments once they are all due. Thus comes scenario number 2:

2017: Paying MORE than the Minimum Payments

This is what we are currently doing and you’ll soon see why. As we noted before, our current minimum payments come to $843 (as of January 1, 2016). Now, let’s assume that we can put some extra toward our debt each month.

Let’s first look at how this changes our timeline (and then I’ll tell you some awesome stuff):

  • Only minimum payments = 207 months to debt freedom (including debt that is currently in deferment)
  • Add $10 = 193 months to debt freedom (that’s over an entire year gone!)
  • Add $50 = 184 months to debt freedom (almost another year!)
  • Add $100 = 175 months to debt freedom (this saves us over $67,000 in interest!)
  • Add $300 = 147 months to debt freedom (over 50 months of payments saved!)
  • Add $500 = 128 months to debt freedom

And so on and so forth. Basically, the higher the addition to the minimum payment, the quicker we will pay back our debts and the less interest we will accrue!

So, what about that awesome thing I was tell you about?

Well, we’ve already started putting extra toward our debt. In fact, we put a total of $1,700 extra or MORE toward our debt each month. Every windfall goes to debt, every extra payment goes to debt, bonuses, etc. All toward debt and it’s PAYING OFF.

So far we have paid off our credit card debt entirely! Not only that, we have brought our private loan down to $24,000 (from $32,000) just since January 1!

I know what you are thinking: why are we paying on the private loan that is in deferment instead of the federal loan, car loans, or school loan that isn’t? That’s a simple answer, my friend. The private loan has a super high interest rate of 9%. We want to kick that sucker out of here before we ever make a minimum payment on it.

That’s the plan.

We will pay off the private loan before it goes out of deferment. What else? We also plan to pay off the two school loans before then too. And, if we really work at it, maybe even the car loan. That’s the goal.

So, what would our minimum payments look like in 2017 if we reached our goal?

  • $500 – Federal Loan 2 ($80,000)
  • $468 – Federal Loan ($68,000)

Which comes to a total of $968 per month. Not too bad, right? Sure, its a little higher than what we pay now, but if you figure the difference between this and the over sixteen hundred we would have been paying, it’s pretty great.

Not to mention our debt payoff date which changes drastically. Before I share it with you, I need to note that my wife’s place of work is awesome and if she sticks with them for another year (which she will) she will have $50,000 of her loans forgiven. If she stays another year after that, they’ll forgive another $20,000. And so on. I will be taking this into account in this debt payoff simulation.

Here are our new payoff dates:

  • Only minimum payments: 118 months
  • Extra $200: 92 months
  • Extra $1,200: 45 months

Wow! By paying on our debt with everything we have, we could be debt free in just under 5 years, but if we stick with the minimum payments for the entirety of our loans, we’ll have them for almost 20 years. That’s a HUGE difference (and one that I certainly don’t want to test).

2017- www.diyjahn.com

Gearing Up for the New Year 2017… Already?

So, is it worth it to pay more than the minimum payment on our debts? Is it better to just keep our payments low and have them forever? I’ll let you decide for yourself.

For us, we want to experience what debt freedom will be like and that means putting our all toward paying off our debts for good.

Can we do it? We don’t know, but it is certainly worth a try, isn’t it?

How are you preparing today for a better 2017?

Leave your response in the comments below!

How to Get Out of Credit Card Debt for GOOD!

How to Get Out of Credit Card Debt for GOOD!

One of the greatest struggles faced when paying off debt is the incurring interest. It seems like each month you put 89% of your payment toward interest and barely make a dent in the principle of the debt! Unfortunately, for those of us stuck making minimum payments, it can seem like a neverending cycle. Don’t worry – it’s not. We can teach you how to get out of credit card debt and stay out for GOOD.

Last month my wife and I made our final payment toward our credit card debt and I can tell you one thing: we will never rack that debt up again. After months and months of paying the minimum payment, we realized it would take over 5 YEARS to pay them off at that rate (and our credit card debt wasn’t even as high as most peoples’). We knew something had to give. We had to make a change.

And we did.

How did we do it? Well, that’s exactly what I’m about to tell you.

How to Get Out of Credit Card Debt for GOOD - www.diyjahn.com

How to Get Out of Credit Card Debt for GOOD

When my wife and I first began our journey to debt freedom, we had no idea what all it would entail. Sure, we knew that it would take some hard work and a lot of time, but we didn’t realize all that went into it. You see, when you’re saddled with debt and stuck under the influences of a generation who truly believes they “deserve” to live better, it’s hard to know what truly qualifies as necessity and what doesn’t.

We spent plenty of time frustrated that we couldn’t buy fast food, order a pizza, get name-brand dish soap, or even buy produce all the time. When friends came to visit, it was a struggle to make them food that we ate every day instead of working to impress them with food we couldn’t afford. When we went out of town for work or visiting family, it was undeniably difficult to keep ourselves from purchasing sodas at the gas station or something to contribute to a family meal.

Why is it so hard for us, as a generation, to live within our means? 

Society has taught us that if you attend college, get a good degree, and land a good job you will be well off. And while I agree to a certain extent, there’s also a limit that the world often omits: debt has taken over.

I will be the first to admit that I completely understand that I took out the student debt, I used a credit card, I did this to myself. I got myself into this mess and it is my responsibility as a citizen to pay back my debts and work within our society. I will not whine that I cannot afford to live the life of my dreams because I am doing well: I have a good job, I have a home that, whatever quality, provides my wife and I with shelter, I have food on my table every day, and I have a puppy who I can love on and adore. I am doing well.

The thing to note is: if you spend your money unwisely, if you are flippant with your purchases, if you do not save and take care of your money, you will never find the end to the debt that is confronting you. It’s as simple as that. You must make a plan to take down the debt regardless of your income.

Just because you make a middle-class income does not mean you should live a middle-class life. 

I see so many people within my generation who are buying houses, starting families, buying the newest electronics, spending money on extras, etc. It’s awesome that they feel they are in that place and can afford those things. In fact, I’m happy to see that they are succeeding. The frustration exists when those same people complain about their debt payments (credit card or student) while ordering a pizza every Friday and going drinking on Saturday.

If you are in debt, it doesn’t matter how much money you make: it isn’t yours.

So, if you are anything like the majority of us – in debt up to your ears – you’re probably looking for some tips to get rid of it. I’m guessing you came to this site to find a fast and easy solution to your debt repayment so that you can truly start living the life you have dreamed about since you were a child. Learning how to get out of credit card debt is the first step and I’m not going to say that the whole process will be easy, but I can give you three easy tips that will most definitely help.

Here goes:

Make More than the Minimum Payments

I’m sure you have heard this a thousand times, but I’m going to say it again. The number one most important thing you can learn about how to get out of credit card debt is to make more than the minimum payment. Why? Because all the extra you put toward your debt gets to go straight to the principle.

When you make minimum payments, you payment is broken up in this order: All Outstanding Fees (late fees, etc.), All Outstanding Interest, Principle. Your principle comes last and I’m guessing that your interest payments are outrageous. Some people can barely cover interest with their minimum payment. If only $5 is going to your principle out of your $100 payment, it will take years for you to finally become debt free.

If you have time, check out a snowball debt calculator such as the one listed on Financial Mentor (click HERE). Add in your debts and whatever your minimum payment is. At the bottom of the checklist, add $5 and see how quickly your payments drop. Now try $10. A few dollars a month extra can make a HUGE difference on your debt repayment.

Talk to Your Debt Providers / Lenders

Whether it’s a credit card company or a bank, talk to them and discuss your options. Usually, providers will be willing to offer you suggestions as to how you can pay down your debt quickly. Sometimes, these even include lowering your interest rate, offering you a payoff amount, or simply working with you to make your payoff more manageable.

The thing to remember is that even though the companies may be frustrating, they are run by real people. They have the same innate human-ness that you do and are compassionate, empathetic creatures. Now, remember that I’m no professional and that not all people will be willing to help, but isn’t it worth a try?

This is especially true in situations that may make it difficult to pay more than the minimum payment, but in any case, it’s truly worth it to discuss your goals with your provider.

Create a Budget that You Can Stick To

Finally, don’t forget that one of the most important things you can do when learning how to get out of credit card debt is to create a budget.

Why?

There’s a few reasons. For one, if you have a budget that you can stick to based upon the income that you bring in, you’ll be less likely to take out more debt. I’m sure you’ve heard this many times, but when you are trying to pay off debt never take out more debt. You’ll never escape debt’s grasp if you do. So, stick to your budget!

Second, though, and just as important, is that if you have a budget you can stick to, you’ll be able to easily find places to cut back on expenses. When you cut back on unnecessary expenses, you can put extra money toward your debt! You’ll quickly reach debt freedom, which is the ultimate goal, right?

Need help setting up a budget? Don’t worry! I wrote a whole post about how easy it can be if you follow a couple of simple steps. Check it out by clicking HERE.

How to Get Out of Credit Card Debt- www.diyjahn.com

How to Get Out of Credit Card Debt for GOOD

Are you ready to learn how to get out of credit card debt for good? Are you ready to implement these three easy steps to bring you to debt freedom? It’s time! Don’t let debt hold you back any longer.

Here are the three easy steps we talked about:

  • Make More than the Minimum Payments
  • Talk to Your Debt Providers / Lenders
  • Create a Budget You Can Stick To

What is your #1 tip for getting out of debt?

Leave your response in the comments below!


Disclaimer: Some of DIY Jahn posts contain affiliate links. While I do earn money through Fronto, Ibotta, and other companies, and bonuses for referring people, all of my opinions on the company are 100% honest and my own. Also, please note that recipes, fitness tips, and financial tips are not given by a professional. To understand what this all means for you, click here.


Live in the Moment or Pay off Debt? – Embracing the Dichotomy

Live in the Moment or Pay off Debt?

YOLO – the popular phrase that almost everyone knows, You Only Live Once. It’s a phrase that started as a joke, but has built into our beings the true meaning of this dichotomy we are stuck in: do we live in the moment or do we plan for tomorrow?

Do you eat that slice of cake or do you go for a run?

Live in the Moment or Pay Back Debt - www.diyjahn.com

For some it means more than for others, but no matter who you are I can bet that the dichotomy is vividly present in your life. For those with debts, it becomes even more present.

Should I live in the moment or work hard to pay off my debt now?

The Dichotomy of the Present and the Future

There’s a dichotomy present within the world today and it’s focused on debt. No, it’s focused on whether you should live in the moment or live for tomorrow, but for many? This means deciding whether to live for today or pay off debts.

Let’s face the facts. The majority of people between the ages of 18-40 have debt that is higher than their income. The combined debt of my wife and I is over 3 times our combined income – it’s not something that’s going away any time soon. A study I read recently said that somewhere between 70-80% of millennials are putting their lives on hold because their debt is so high. My wife and I are a part of that group as I’m sure many of my readers are as well.

So, the dichotomy is: do we live in the moment, present, happy, focusing on the good or do we think toward the future and how we want to live better then?

Choosing to Live in the Moment Means Fewer Regrets (& more debt)

There are so many reasons to choose this side. An article I read last night stated the nine most common regrets that people had at the end of their lives. The article was posted by MindBodyGreen and was a fantastic read – Click HERE to read it.

Now, there were many regrets stated, but here are a few that pertain to this post.

  1. “I wish I had not spent so much time working”
  2. “I wish I had taken more risks”
  3. “I wish I had been happier and enjoyed life more”
  4. “I wish I had done more for others”
  5. “I wish I had chosen work that was meaningful for me”

Read more on each of these by clicking HERE (you can read the rest of the points as well).

The problem is: most of these regrets are focused on what they could have done in the present – and directly affect your debt repayment. For those asking how to get out of debt fast, it can be hard to see why these areas would be important.

  1. We are encouraged to work extra shifts, pick up side jobs, and work as much as we can now despite so many regretting working so much.
  2. We are encouraged to “play it safe” and pay our bills fast instead of traveling, seeing the world, and doing the unthinkable.
  3. We are focused on our debt and how consuming it is, struggling and fighting to enjoy our lives and feel happiness.
  4. We are encouraged to keep our money and put it all toward debt, despite the desperate needs that are present in our community, in our friends, in the world.
  5. We are encouraged to stick with whatever job we can find, despite how unhappy it makes us, because we need to pay our debts off quickly.

Choosing to live in the moment is something that we hear about every day. From the teenagers shouting “YOLO” on the streets to the millennials trying to have a baby despite tens of thousands of dollars of debt they are under. We are encouraged to live our lives to the fullest – leaving the debt where it is because it’ll be there tomorrow, but we might not be.

Live in the Moment or Pay Back Debt- www.diyjahn.com

Choosing to Live in the Future Means Sacrificing the Now (& more regrets)

When does choosing to live in the moment moment become too much? Or rather, when is it not enough? I ask myself every day whether I should focus more wholeheartedly on living in the moment, enjoying every minute and when I should ask myself: do I really want to plan for no tomorrow?

So many times we hear the phrase: Tomorrow isn’t promised. And it’s true. It’s absolutely, 100% true.

Tomorrow ISN’T promised.

But if history has taught us anything it’s that tomorrow is pretty likely. We can live our lives to the fullest now, ensuring to have no regrets, while in our mind we are half-expecting that tomorrow won’t happen. We are living like there is no tomorrow quite literally.

When tomorrow comes though: will we regret being stuck in debt when we could have been out? Will we regret suffering from lack of funds, living paycheck to paycheck because we knew there was a chance that we wouldn’t be here today?

Planning for the future means working those extra few hours, skimping on the trips, and putting our all toward paying off debt so that our future can be brighter. Believing fully that tomorrow will come and tomorrow will pass and the world will continue to spin as it always has. Is living like there is no tomorrow truly a smart and advisable way to live?

Monetarily? Probably not.

Embracing the Dichotomy

Therein lies the problem. Do we focus our attention on living for today or for tomorrow? How can we embrace both?

For my wife and I, we have come to believe in the importance of embracing the dichotomy. As you can read in my blog’s tagline: our goal is to live our lives to the fullest. But it doesn’t end there, does it?

Our tagline is to live our lives to the fullest on a frugal budget. Instead of accepting that only one way or the other works with the amount of debt that we have, we have chosen to embrace the dichotomy.

  • Sure, we spend a lot of time working, but we choose to work at jobs that help us to feel fulfilled, that are meaningful to us. If we have to work at a job we hate, we spend some time searching for a job we love while we do it.
  • We may have to work extra hours, but during our non-working hours we enjoy each others company; we laugh, we smile, we love deeply, and we experience the joys of the world.
  • Yes, we skimp on trips and extravagant purchases, but that doesn’t mean we don’t have quality experiences in the here and now. We find loads of free things to do that help us to embrace our need for adventure, our curiosity, and lead us to an outgoing and altogether wonderful life.
  • When people need help, we focus on helping them. We may not send large donations to each organization that we believe in – though we certainly hope to someday – instead, we help those we are close to. When people need food, we feed them. If someone needs a little bit of money, we help them when we can. We do what we can to help the world within our budget – knowing that when the time comes and our debt is paid, we can help the world more fully.

We embrace the dichotomy because we understand that life is fluid.

The world is a scary place and I will be the first one to tell you that living in the moment is crucial to leading a happy life. Anything can happen – today, tomorrow, next week. We are never truly as safe as we believe. There’s always something that could happen.

But focusing on that doesn’t seem like a very fruitful way to spend my time either. In fact, it seems pretty depressing to be quite honest.

Then again, living for only tomorrow means losing out on all of these beautiful, wonderful, marvelous days. One of my favorite quotes by Anne Lamott reads

“Oh my God. What if you wake up some day and you’re 65, or 75, and you never got your memoir or novel written; or you didn’t go swimming in warm pools and oceans all those years because your thighs were jiggly and you had a nice big comfortable tummy; and you were just so strung out on perfectionism and people-pleasing that you forgot to have a big, juicy, creative life of imagination and radical silliness and staring off into space like when you were a kid? It’s going to break your heart. Don’t let this happen.”

Quote - Day 2

I don’t want to miss out on this crazy, wild, and amazing life I was given because I’m focused on debts. It’s a dichotomy we face every day. So, what does that mean?

It means that living life to the fullest doesn’t have to cost more it just has to be more. Yes, you read that right. Your life needs to be more than it is. Focus on each gorgeous minute, each beautiful hour, each extraordinary day.

It doesn’t have to be so hard; your life. It just doesn’t.

No matter where you are in your debt repayment, you can live in the moment while still living for tomorrow. Let yourself experience the beauty and the pain, but most importantly, remember not to lose these days.

My wife and I find happy moments every, single day to remind us of how much we love our lives. We live in the moment while paying off our debts quickly.

It’s hard, but it’s possible.

I’m not telling you that you should try to embrace the dichotomy. I’m telling you that you have to.

So many believe that you are going to have regrets regardless of the decision you make – it’s just which regret do you want. You either live in the moment now and regret it when you are struggling to make ends meet or live in the future and regret it when you’re older. I’m here to tell you that those things you hear? They aren’t true! You don’t have to choose one regret over the other – say no to both of them and choose to live a life that is extraordinary.

Live in the moment and work for tomorrow.

You can do this.

You need to.

Now, go.

Do.

Need Help Paying Off Student Loans? – NSC Series

Need Help Paying Off Student Loans?

If you’re anything like my family, you know what it’s like to be in debt. In fact, you probably know it all too well. I’m guessing you have tried to get out, too. That you have worked your butt off and that you have paid on it for years to no avail. Well, today we created an infographic just for you to give you some much needed help paying off student loans!

I’ll show you and walk you through it below!

Need Help Paying Off Student Debt- www.diyjahn.com

If you are new to our NSC Series, start here!
-If not, you can skip this section-

As some of you may know, we are in the midst of our first ever No Spend Challenge (NSC) which started January 1.

The short story is that my wife and I racked up a ton of debt (read how HERE) and want to pay it off as quickly as possible so that we can live our dream lives (read about our goals HERE). This challenge will help us learn about living frugal, saving money, and paying off our debt faster.

Visit our post, Frugal Living at its Finest: the No Spend Challenge, to view why we are doing the challenge, what the challenge entails, and the rules.

The hardest thing about budgeting and frugal living is doing it alone and that’s why we want to invite you all to join us on our NSC. Sign up below to opt-in to our email community, filled with exclusive tips and tricks for saving money to survive living frugal during your NSC month.

Follow our rules or make your own! Join for one week or the entire month! We know that not everyone is in the same situation we are in. Stick with the No Spend Challenge for as much or as little as you are able in your situation and don’t be afraid to hop on after the starting date (it’s never too late to join in on the fun!).

We’ll be taking the challenge right alongside you – with daily blog posts, encouragements, and exclusive email information and communication: this will be the single, greatest choice you make to jump start the New Year.



Help Paying Off Student Loans

Today we are sharing an infographic that we think will be helpful as you strive toward that goal of debt freedom. It’s a long journey, but I promise that it’s worth it. Here are some tips to help you out! Of course, if you want more tips, want to share your story, or have any questions, concerns, or suggestions, let us know!

Don’t forget to look below the infographic for even more helpful information!

Help Paying Off Student Loans Infographic - www.diyjahn.com

  1. Tips to build a better budget for you and your family can be found by clicking HERE.
  2. Tips on determining which debt repayment method is right for you can be found by clicking HERE.
  3. Tips to help you Make Money Online right away can be found by clicking HERE.
  4. Tips for saving money and living frugally can be found by clicking HERE!
  5. Tips for creating goals for debt repayment (including ways to celebrate) can be found by clicking HERE!

Today is day 26 of our No Spend Challenge and we are only FIVE DAYS away from the finish line! If you need help paying off student loans, I definitely recommend trying out our No Spend Challenge in February.

Our quote today is by Shauna Neiquist, who is one of my favorite authors.

“It is not hard to decide what you want your life to be about. What is hard is figuring out what you are willing to give up in order to do the things you really care about.”

What are you doing today that will help you live the life you want to live?

Leave your responses in the comments below!


Disclaimer: Some of DIY Jahn posts contain affiliate links. Also, please not that recipes, fitness tips, and financial tips are not given by a professional. To understand what this all means for you, click here

Debt Snowball Method VS. the Debt Avalanche – NSC Series

Debt Snowball Method VS. the Debt Avalanche

I’m sure you’ve heard the terms before, especially if you are fighting tooth and nail to get rid of that debt. The debt snowball method and the debt avalanche have been around for as long as I can remember. The big question is – which one is better?

My wife and I have been aggressively fighting our debt for a few months now, though we have had debt for much, much longer than that. We worked toward paying them off, but we didn’t have a system and our efforts kind of… fell flat.

I’m sure all you readers can relate. You work and work and work to pay off these debts, living paycheck to paycheck and sacrificing as much as you can, but you still aren’t reaching your goals. Your debts are threatening to crush you, they’re emotionally killing you, they’re holding you back, but no matter what you do, you can’t seem to get ahead.

What’s the problem? Why can’t you make a dent in those debts?

Well, there could be a lot of reason – like not building a budget that’s right for your situation, not implementing a cash budget system, or even not stocking up enough in your emergency fund to cover unexpected expenses. I’m betting there’s a bigger reason than that though:

If you aren’t making progress on your debt repayment, you probably don’t have a good debt repayment method in place.

Once my wife and I started utilizing our debt repayment method, we made huge strides in our debt repayment leading to paying over $20,000 off in a few short months! You could be debt-free by now if your debts were $20,000 or less, but even if they’re not, you could be well on your way to debt freedom.

As I said before, the biggest question to consider in this scenario is which debt repayment system is better?

Let’s take a look at the debt snowball method VS. the debt avalanche.

Debt Snowball Method VS. Debt Avalanche Method - www.diyjahn.com

If you are new to our NSC Series, start here!
-If not, you can skip this section-

As some of you may know, we are in the midst of our first ever No Spend Challenge (NSC) which started January 1.

The short story is that my wife and I racked up a ton of debt (read how HERE) and want to pay it off as quickly as possible so that we can live our dream lives (read about our goals HERE). This challenge will help us learn about living frugal, saving money, and paying off our debt faster.

Visit our post, Frugal Living at its Finest: the No Spend Challenge, to view why we are doing the challenge, what the challenge entails, and the rules.

The hardest thing about budgeting and frugal living is doing it alone and that’s why we want to invite you all to join us on our NSC. Sign up below to opt-in to our email community, filled with exclusive tips and tricks for saving money to survive living frugal during your NSC month.

Follow our rules or make your own! Join for one week or the entire month! We know that not everyone is in the same situation we are in. Stick with the No Spend Challenge for as much or as little as you are able in your situation and don’t be afraid to hop on after the starting date (it’s never too late to join in on the fun!).

We’ll be taking the challenge right alongside you – with daily blog posts, encouragements, and exclusive email information and communication: this will be the single, greatest choice you make to jump start the New Year.



Debt Snowball Method VS. the Debt Avalanche

The debt snowball method was designed by Dave Ramsey (from what I can tell) who, by the way, is an awesome financial advocate if you are looking for more ways to save money. I truly recommend reading his books, listening to his podcasts, and overall just learning from him. I will admit, though, that there are certain areas in which I agree wholeheartedly with Mr. Ramsey, and other areas where I disagree, just as wholeheartedly. I digress.

On the other hand, there’s the debt avalanche system which was designed by who-knows-who, but is sometimes referred to as the “debt stacking method.”

Now, I’ll admit right up front that both of these methods have some pros and cons. As with all of your financial situations, remember that any opinions are up to you. It’s personal finance, after all. You have to make a personal choice as to how you handle your finances and one system may work better than another given your financial situation.

Let’s take a look at both of these systems more in depth before we compare and contrast the two.

Debt Snowball Method Overview

The debt snowball method is designed to help you overcome your debt by playing into psychology. Therefore, you begin by paying minimum payments toward all of your debts.

Let’s look at George as an example. He owes debts to:

  • School loan: $45,000
  • Car loan: $5,500
  • Credit Card: $12,000

His minimum payments are $450, $212, and $326 respectively. If he were to simply put the minimum payments toward debt each month, it would take him a total of 139 months to pay off his debt and would cost him over $24,000 in interest.

But George is smart and knows that he can pay them off way earlier than that. He decides to start paying extra toward them each month.  He has budgeted a total of $1,200 to use toward debt.

His total minimum payments come to $988 which means he has an extra $212 to utilize toward paying off his debts. Now, in all debt repayment methods you should always ensure you can make the minimum payments before adding extra to any other debt.

In the debt snowball method, the goal is to choose the smallest debt first and begin throwing all of your extra funds at that debt. In this case, George would pay minimum payments for both the credit card and the student loan, but starting putting his extra $212 toward the car, making his monthly payments toward the car $424.

Once the car is paid off, he would begin putting the entirety of the $424 toward the credit card loan (the second smallest debt) and once that’s paid off, the whole $1,200 would go toward the student loan.

Now, what’s the point of paying off debt this way? Well, it saves both time and money! By using the debt snowball method, George’s debts would take roughly 64 months to pay off (saving over 75 months!) and would only cost him around $13,000 in interest (saving him over $10,000 in interest!).

Here are the basics of the debt snowball method:

  • Continue paying minimum payments on all debts
  • Focus your attention on the smallest debt
  • When one debt is paid off, add all of the payments from that debt to the next smallest debt and continue paying

The goal is to pay off the smallest debts first in order to give you wins right away. Once you are excited because you have paid off a smaller debt, you’ll be more capable and motivated to pay off the next debt, and so on and so forth.

Debt Avalanche Method Overview

Similar to the debt snowball method, the debt avalanche asks you to continue paying minimum payments on all of your debts and to focus your attention on a singular debt. When that debt is paid, you snowball your payments to the next. The big difference between the two is that the debts are paid according to interest rate rather than debt amount.

Let’s look at George as an example again:

  • School loan: $45,000
  • Car loan: $5,500
  • Credit Card: $12,000

The minimum payments for these are the same as the last example. Again, George wants to pay them off quickly so he allots a total of $1,200 to put toward his debts each month. In this scenario, though, we also need the interest rates which are 6, 5, and 19 respectively.

In order for George to utilize the debt avalanche method, he will start paying minimum payments toward all debts. However, he will also add his extra $212 toward his credit card debt because of its high, 19% interest rate meaning his payments toward this debt will be $538. After that is paid off, his payments will snowball into his student loan (so that he will be paying the minimum payment of $450 + his extra debt payment of $538) which has an interest rate of 6% and finally to his car (so that he will be paying the minimum payment of $212 + $538 + 450) which has an interest rate of only 5%.

Again, similar to the debt snowball, this method saves you time and money. Let’s look at how much of each George saves with the debt avalanche method. If George uses this system, his debt will be paid off in 63 months (saving him 76 months) and he will only pay around $12,000 in interest (saving him over $11,000!).

Here are the basics of the Debt Avalanche Method

  • Continue paying minimum payments on all debts
  • Focus your attention on the debt with the highest interest rate
  • When one debt is paid off, add all of the payments from that debt to the next smallest debt and continue paying

The goal is to pay off your debts in order of interest to save you time and money in the long run.

Debt Snowball Method VS. Debt Avalanche Method- www.diyjahn.com

So, which is better?

Well, I have to be honest, they can come pretty close. As I’ve always said, personal finance is something that is just that: personal. Which means that you need to make personal decisions for yourself as to what will work best for you in your situation. And remember, I’m not an expert.

However, if you were to ask me which one I personally thought was better, I would go with the debt avalanche method, hands down. Why?

Well, the debt snowball method was created to help maintain motivation throughout debt repayment which, I’ll admit, can be difficult to do. Motivation is hard to keep hold of when you are living on next to nothing, so if you struggle with maintaining motivation, I encourage you to utilize this form of debt repayment.

From a strictly financial point, though, the debt avalanche method is clearly the winner. You see, no matter what, if you are paying on the highest interest first you will save money and time in your debt repayment.

Now, perhaps you only have a couple of loans and they all have low interest rates and are low amounts… In that scenario, it probably doesn’t matter which debt repayment plan you pick.

But if you are like the average American, you’re probably not that lucky. You most likely have over $30,000 in varying interest rates worth of debt growing each and every day. As Dave Ramsey says, “Debt is normal, be weird.”

Yes, it is weird to pay off your debt, but if you do it right you could be out of debt soon and experience the beauty of debt freedom. Okay, I’ve never experienced it myself, but I imagine that it’s the greatest sort of peace that there is.

Anyway, in my mind, debt freedom is the ultimate goal and I want to get there as soon as possible. Sure, I’m not always 100% gung-ho about spending all of my money on debt, but I know that if I work hard now, I can pay it off and live a better life in the future.

So, you ask which repayment method is better and I am certainly going to say the debt avalanche method over the debt snowball method. I mean, let’s look at George again. Sure the debt snowball method saved him thousands of dollars and only took him 64 months to pay off. But the debt avalanche method saved him even more money and only took him 63 months.

What’s the difference between the two? Well, for George it was a month and $1,200. Are you willing to give up $1,200 and a month of your life in order to have a happier experience paying off debt? Well, it’s really up to you guys. For me, that month could be a month of debt freedom. For some, the motivation to get started is enough to keep them going.

Like I said, it’s personal finance so the decision may vary for your personal situation.

Debt Snowball Method VS. Debt Avalanche

So, let’s look at what we found out today:

  • the Debt Snowball Method focuses on paying off the smallest debts first.
  • the Debt Avalanche Method focuses on paying off the highest interest debts first.
  • Overall: the debt snowball method helps you to stay motivated while the debt avalanche method saves you time and money.
  • Both are great, but only you can decide which method is right for your situation.

And now onto some information about our No Spend Challenge: It’s day 25 and we are looking forward to only SIX DAYS LEFT! Today’s quote is by an unknown source is:

Quote - Day 25 (1)

“The only man who sticks closer to you in adversity than a friend is a creditor.” – Unknown

Okay, I don’t need to explain that one, right? Let’s get out of debt and get those creditors off our backs!

Which method are you using to pay back your debt?

Leave your answers or a story in the comments below!

How to Stay Out of Debt with 1 Simple Trick – NSC Series

How to stay out of debt

How to Stay Out of Debt with 1 Simple Trick

The most important thing to do when you are trying to get out of debt is learning how to stay out of debt. This may seem silly, but I’ve seen so many people try to pay off their debt and all the while, they are using credit cards for their groceries and buying more items with loans. The problem is that by using this method, these people will never achieve the ultimate goal: debt freedom.

How do you stay out of debt while you are striving to reach this goal, though?

The problem is that things come up. The car payment is overdue, but you just realized that you’re out of milk to make cookies for your daughter’s class, somebody gets sick and you have to go to the doctor, or you car breaks down and you’re stuck on the side of the road.

Unfortunately, all of these take what you don’t have: money.

Since you’re working to pay off your debt, you don’t exactly have a savings built up to cover these sorts of emergencies. However, there is one simple trick that you can use to save you thousands of dollars of debt and I’m going to tell you exactly how to do it.

how to stay out of debt

If you are new to our NSC Series, start here!
-If not, you can skip this section-

As some of you may know, we are in the midst of our first ever No Spend Challenge (NSC) which started January 1.

The short story is that my wife and I racked up a ton of debt (read how HERE) and want to pay it off as quickly as possible so that we can live our dream lives (read about our goals HERE). This challenge will help us learn about living frugal, saving money, and paying off our debt faster.

Visit our post, Frugal Living at its Finest: the No Spend Challenge, to view why we are doing the challenge, what the challenge entails, and the rules.

The hardest thing about budgeting and frugal living is doing it alone and that’s why we want to invite you all to join us on our NSC. Sign up below to opt-in to our email community, filled with exclusive tips and tricks for saving money to survive living frugal during your NSC month.

Follow our rules or make your own! Join for one week or the entire month! We know that not everyone is in the same situation we are in. Stick with the No Spend Challenge for as much or as little as you are able in your situation and don’t be afraid to hop on after the starting date (it’s never too late to join in on the fun!).

We’ll be taking the challenge right alongside you – with daily blog posts, encouragements, and exclusive email information and communication: this will be the single, greatest choice you make to jump start the New Year.



How to Stay Out of Debt with 1 Simple Trick

Last month my wife and I were headed to the grocery store when we noticed a light come on in our car: Airbags. Now, I bet you can guess what we were thinking and they weren’t exactly kind words. Lights coming on in the car is never a good sign, but when it’s something as dire as the airbags? You can’t simply let these problems go – having a working airbag can be the difference between life and death.

We brought the car into the shop, begrudgingly, and asked them to repair the airbag or whatever needed to be done. It turned out to be a computer chip that wasn’t functioning properly and cost us almost $400 to fix. Of course, they also did a free inspection while they were making the repair and ended up finding a few more problems that were going to cost around $900 to fix within the next few months. When we brought the car in to get those fixed, they found another issue.

We have a used car and we expected to have to make repairs, but they all came at us so quickly that we weren’t really sure what to do. Thankfully, though, we had planned for this type of expense and while there was an option to take our credit card and pay the amount without thinking about it: we didn’t have to. In fact, despite fixing each of these issues, we incurred no further debt.

How did we do it?

Well, the answer is pretty simple. We set up an Emergency Fund to catch all of the slack and unexpected expenses. Here’s how you can set one up to avoid incurring future debt because learning how to stay out of debt is the first step toward becoming debt free.

How to stay out of debt

Setting Up an Emergency Fund

An emergency fund is typically $1,000 during debt repayment. However, I want you to think about it as one month’s expenses. For my wife and I, $1,000 covers a month’s worth of expenses (which can cover us for pretty much any situation).

Now, if you weren’t paying back debt, I would encourage you to work toward having a six month emergency fund in case somebody is laid off, disabled, or otherwise can’t work for a while. However, in this scenario, we are assuming that you are working toward paying off debt as quickly as possible, which means saving enough to cover 1 month’s expenses or $1,000 – whichever seems more manageable.

As for the rest of your savings? Other than retirement-type accounts and your emergency fund, I encourage you to use all of your savings to reach your goals of paying off debt (remember, I’m not a professional. Read the disclaimer below). Why? Because while those savings accounts may be accruing interest at a small fraction of a percent, your debt is most likely accruing it much faster.

In the long run, paying off your debt will likely save you more money than having any funds within a savings account. Keep in mind that this does not include retirement accounts which I believe are super important.

What if you don’t have the funds to create a $1,000 emergency fund?

This is where I would change your efforts. In order to get out of debt, you need to learn how to stay out of debt, right? And that means having an emergency fund to cover unexpected expenses (like your car that won’t stop breaking down).

Before you go putting extra money toward your debt, starting adding some to a savings account for your emergency fund. If you aren’t putting any extra toward your debt, either learn how to build a better budget or start by contributing $5-$10 a month. Soon it’ll add up. Perhaps in two months you can put $20 per month and a few more months down the line you’ll be putting $100 a month. Once you reach your goal of $1,000 or 1 month’s worth of expenses, you can start putting that extra cash toward your debt repayments.

How to Stay Out of Debt

Building an emergency fund can seem tedious. However, it is one of the first steps that you should take in order to reach your debt repayment goals. Learning how to stay out of debt means that while you are paying off your debt, you aren’t consistently incurring more. How do you build an emergency fund?

  • Work toward having one month’s worth of expenses or $1,000 in a separate savings account
  • Add a few dollars per month toward this account until you reach your goal
  • Use this account to cover unexpected expenses such as medical bills or car repairs
  • Don’t forget to pay back your emergency fund if you end up needing to use it!

Now that we know how to stay out of debt, let’s look at our quote for day 21 of the No Spend Challenge by Ernest Hemingway.

Quote - Day 21

“Live the full life of the mind, exhilarated by new ideas, intoxicated by the romance of the unusual.” – Ernest Hemingway

This quote is where we have based our goals for this blog: living life to the fullest on a frugal budget. Because living life to the fullest is one of the most important things we can do. Paying off debt, saving money, these are all important in helping us to achieve our goals, but don’t forget to enjoy the beauty, the exhilaration, the intoxication of the every day.

What are your least favorite unexpected expenses?

Leave your response in the comments below!


Disclaimer: Some of DIY Jahn posts contain affiliate links. While I do earn money through Fronto, Ibotta, and other companies, and bonuses for referring people, all of my opinions on the company are 100% honest and my own. Also, please note that recipes, fitness tips, and financial tips are not given by a professional. To understand what this all means for you, click here.