Hi all. I need advice on my payoff plan. I have horrendous money management skills. I turned 25 and live at home, but I would really like to move out and I know I can't do that if I don't change my spending habits. We're a low-income family and I was never taught how to manage my finances, as my parents also have terrible spending habits (getting into unnecessary debt, overspending, collections, filing for bankruptcy, the whole shebang). I don't want to be like them. I'd like to present you with the debt I have and my plan to pay it off.
I make about $2000 after taxes each month. I'm currently ~$7500 in debt from credit cards, a car loan, an orthodontist loan (I shouldn't have done this), and a car part loan (it was too expensive for me to pay at the time and my car was failing). It's crucial for me to pay off my biggest loans before June 2023, because my job (at a school) puts me on furlough during summer break. I won't have any income from all of June to mid August 2023 as a result. It'd be disastrous if I don't pay off those big loans by then. I'm on winter break furlough right now so I can't start this payment plan until next month, January 2023. My loans look like this, from most to least owed:
Credit Card 1: $2800
Orthodontist (Invisalign): $1700
Car Loan: $1788
Credit Card 2: $638
Credit Card 3: $430
Car Part Loan: $290
My plan is as follows:
Biweekly to Credit Card 1: $430 ($860 every month), projected payoff date is March-April 2023
Monthly to Credit Card 2: $100, projected payoff date is June 2023
Monthly to Credit Card 3: $100, projected payoff date April 2023
Monthly to Car Loan: $142, projected payoff date December 2023
Monthly to Car Part Loan: $60, projected payoff date May 2023
Monthly to Orthodontist: $130, projected payoff date January 2024
This would leave me with ~$500 left each month, at least until around April 2023. After paying off my highest balance CC in April 2023 I'll probably have ~$1400 leftover each month. I'm planning on putting more money on the rest of my loans after August 2023, but I'm not sure how much. I'm very privileged and get food stamps, don't pay any rent, utilities, phone, etc. However, I'm horrible at spending on eating out, online shopping, and just random silly purchases. I easily spend ~$500-600 on all those careless purchases each month.
I would really have to watch those leftover $500 each month so I don't get to $0. I've never budgeted before. I cancelled a lot of my unnecessary subscriptions and am planning on only spending $150 on the essentials (dog food, toiletries, $25 gym membership) each month so I can save up ~$350 a month before summer break. That way I can have ~$1700 in savings to sustain me/pay for loans during those 2 months of summer break. It's no guarantee I'll get a summer job after all...
Right now I have about $900 in my checkings because of my terrible habits. I don't have any savings. I really want to do better! What do you guys think? Am I being too optimistic with this plan? Is my math right? I desperately need to commit to this plan and not fall back to my old ways.
Side note: I'm pursuing higher education, I have a Bachelor's right now and want to eventually get my PhD. I graduated debt free (woohoo Pell grants!) but I know as I go on I'll gather some debt, even with scholarships. I want to break the cycle of poverty in my family. I don't really know where to start looking for resources because this is all new to me; it's all so overwhelming. I know it's a long post, so any advice/encouragement is greatly appreciated. TIA!
Submitted December 03, 2022 at 10:12PM by sadpinkeyes0012 https://ift.tt/tWhKwAL
