It’s been a pretty normal month for me in terms of debt reduction. I’ve basically paid my minimum payments and left it at that.
With tax-time and the holidays quickly approaching, I’m being more conservative. I’d rather have some cash on hand than be living on the edge.
In a sense, I’m more focused on paying Uncle Sam than repaying my debts. I’d like to put an extra $2,000 to $3,000 in my savings account before January 15. This way I’d have 100% (or more) of my tax bill saved up.
From experience, I can tell you there’s nothing worse than owing the government a HUGE amount of money and not having it. The IRS is one mob… I mean, organization… you don’t want to mess around with.
When I was audited a few years ago, my taxes were paying the IRS auditor to go through all my records. Then I had to pay more money out of my pocket to have my CPA handle the auditor. In the end, I was cleared of any wrong-doing. That’s the good part. The bad part is I was still out the few hundred dollars I had to pay my CPA.
That’s how America’s tax system works. The government can “bring suit” against you. It doesn’t matter whether you’re guilty or innocent; you still have to pay. Which is why it makes good sense to do whatever you can to appease the government and make sure you’re always on the right side of the law.
Here are my debt numbers for November:
I paid off $904.36 in the last month. If I make only my minimum payments during the next 30 days, my debt will have finally dipped below the $40K mark.
I remember back in April 2007 my debt had gotten down to $24,768. That was the lowest it ever got. Who knows? If I hadn’t of made some of the poor decisions I made in mid-2007, my debt might be paid off by now.
I’m looking forward to getting back to that point again. I think once I get there I’ll be able to plow right through it.
Here’s how paying off debt really works:
Progress is slow at first. But the more you pay off, the more disposable income you’ll have to roll back into reducing your debt.
That’s why paying off the second half of your debt will go much faster than the first half. And that’s something we can all rejoice about!
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{ 2 comments }
It is so true that the first part of paying off the debt is the hardest. I remember I had slightly over $20k in debt when I started blogging and it seemed like the payments were not making a dent in the debt.
Now I have about $11k in debt and it motivates me to bring it down more because I have the graph that shows my progress from the start.
By posting my progress publicly, it keeps me motivated, too. Every month I’m vigilant to make sure my debts are going down.
It’s amazing what public accountability can do.
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