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Wanted to post a quick update - the last time I posted on r/personalfinance was right after I was laid off in September. Lots of good things have happened since then!

Basics: I'm 35 and was laid off six weeks after starting a new job paying $100K. I was laid off with two weeks severance pay and compensation for 14 days unused vacation time. At time of layoff, I owed ~$40K credit card debt and ~$30K student loan debt.

What's happened since then: After losing my job, I found myself in the hard position of owing a ton of debt + not having any income. I immediately got on unemployment, started living extremely frugally on my severance pay, doing whatever freelance work I could find, and looking aggressively for a full-time job.

After having no luck finding a job right away in my field--I work in a city with relatively few job opportunities in my industry of experience--I decided to work self-employed and form a corporation for myself.

The good news! I set a salary for myself, with the remainder of the money staying in the corporation (or taking it out in 2018). I aggressively started going after clients in my field for large projects paying over $10,000 apiece. This strategy scared the heck out of me, but it worked. I received a few referrals and after a difficult first month, my company had 3 paying customers starting in November 2017.

Other concrete steps I took: 1. Spending money only on the bare essentials--rent, bills, and a rice/bean diet. Any extra money would go towards extra payments on my highest interest debts until I became financially stable. 2. Sticking to the salary I draw from my own corporation ONLY. Instead of spending additional earnings right away, I would keep them in my business bank account for a rainy day. 3. I took out a $25,000 loan from Lending Club for my highest-interest credit card debt on five year repayment plan w/ 11% APR. My credit score immediately jumped 30 points, which led one of my credit card issuers to raise my credit limit in response, which led to another 20 point credit score jump. 4. All my extra money went towards paying off my highest interest credit card debt.

Stumbles: I had an unexpected dental emergency in November which required paying approximately $2000 out of pocket, with another $2000 due later in 2018. Boo!

Results: 5 months after I was laid off, I actually have... LESS DEBT THAN WHEN I LOST MY JOB. In September 2017, I had $78,917 in total debt and $35,522 in assets. As of the end of January 2018, I have $78,200 in total debt and $33,716 in assets.

Next Steps:

  1. Consolidating the remaining ~$8000 of credit card debt I have left onto a one-year zero APR consolidation card and aggressively paying it off by 12/18.

  2. Saving $2000 for an engagement ring now that I'm financially stable again.

  3. Building my current $1500 emergency fund into a $10,000 buffer for future hard times.

Summary: This was a modest debt reduction, but one that was TOTALLY AWESOME AFTER LOSING MY JOB. Being able to reduce my debt and keep my head above financial water after losing my job--even after a health emergency--is something I'm really proud of.

I wanted to post this because i know a lot of /r/personalfinance folks are out of work or having otherwise tough times. I hope this helps!



Submitted February 05, 2018 at 04:02PM by thatdarndebt http://ift.tt/2EFvXYh

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