The summer’s been a trying season for our friend Aaron who’s determined to erase $11,000 worth of debt over 12 months.
He is now nearly six months into his plan and says the path has been harder than he could have ever imagined. I wrote earlier that he’s also trying to simultaneously build up his cash reserves, which makes it even more difficult to avoid using his credit cards when unforeseen expenses pop up. Between his cat’s medical emergency and a rise in car maintenance costs, Aaron estimates that he is about $700 off his original debt pay off pace. He’s hoping to play some catch up in the coming months.
Here’s an overview of how Aaron’s trying to plow ahead.
A Failsafe Plan
Aaron’s cut up all of his credit cards, except for one…which he’s deactivated and given to his girlfriend to avoid using it in a pinch. “It’s our double-failsafe way of having it if we need it, but we definitely do not want to use it,” he says.
Knowing that the holidays are an easy time to rack up credit card debt, Aaron’s also begun to save in a separate fund for those anticipated costs such as gifts and travel. The goal is to not use credit at all this year. “We have about $450 in that holiday fund so far. We have a goal of $800,” he says.
Moving to San Diego
Some more surprising (and costly) news for Aaron, who works for the Navy: He will be relocated to San Diego starting next year. This will mean a rent increase from where he currently lives. It’s all adding pressure to his current plan to save more.
He has stopped his Thrift Savings Plan contributions temporarily while devoting more to debt payments and building his emergency fund.
“I give myself a C+ for my first few months. It’s tough to stay disciplined, but staying below my Mint budget threshold has made eyeballing my finances a lot easier,” he says.
Stay tuned to the Mint Blog for more updates on his debt payoff plan.
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Farnoosh Torabi is America’s leading personal finance authority hooked on helping Americans live their richest, happiest lives. From her early days reporting for Money Magazine to now hosting a primetime series on CNBC and writing monthly for O, The Oprah Magazine, she’s become our favorite go-to money expert and friend.