Prologue Part Three: $$$$

"For this to work we need to be open and honest about money."  Or so says every article about being newlyweds. We feel the same way about this debt project. For this to be helpful or interesting (for us and hopefully for you) we need to be specific and in order to be specific we need to show a lot of numbers this week. It's draining but necessary.


This week we want to break down exactly what it is we plan to do. But first we need to explain the numbers: our income vs. our outcome and what that means in terms of paying off our debt. A good starting point is to take a look at this chart that lists our fixed monthly spending (items in red will remain the same each month) our variable monthly spending (items in pink we have control over but still need to pay for) and our montly income (items in green is our monthly salary after taxes and health care). Each amount is a combined total per category for the two of us.

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You might notice a few other rows. Miscellaneous is a non-monthly expense that can be anything from taking our dog Maggie to the vet, getting an oil change, going to the doctors, getting a haircut, going out to eat, gym memberships or getting matching chest tattoos. Additional income is any extra money that we take in for that month which, at least for now, is usually $0.00. So, the amount left over is exactly what you think it is, the amount left over at the end of the month. $575 looks like a pretty great number, but in reality that amount is usually $0.00 as well - because we have been idiots. Where the hell does all of that money go? We plan on figuring that out in the coming weeks.

To continue with our explanation we have also broken down our entire debt. We made a list of each bill from smallest to largest balance, the minimum monthly payments, and the minimum years it will take to pay each one off. These figures DO NOT include interest.

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This is where we got the name of this blog - the combined total debt, again not including that blood sucking interest, is $122,856 and that will take us about 26 years to pay off if we continue paying the minimum monthly payments. First of all with $120k we could have a sizable portion of our dream house already paid for, that would be the dream. OR we could see 4,615 movies in IMAX, buy 652 copies of LOST: The Complete Series on Bluray, buy 5 of our friends a 2013 Toyota Prius or one of our friends 2/3 of a Ferrari. Not to mention in 26 years we will be 51 years old. That is half a century PLUS one. 

We are going to follow a debt strategy called “snowball”, in which we are going to put all of our effort on one debt at a time, starting with the smallest. Most people suggest paying debt off from largest interest rate down but that really doesn’t get you anywhere since our effort gets diluted. For us it makes much more sense to do it from the smallest total balance to the largest. Then with each debt that is completely paid off the old monthly payment gets added to the next, then the next... and the next... like a snowball. Each time you add to your monthly payment the debt will decrease in value quicker and quicker.

That makes sense, right? We can't come up with a great metaphor but we'll try: It's like... well, it's like when... it's... it's like a snowball! 

If we are able to follow the snowball method our debt paying future will look something like this:

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Notice how in the “SNOWBALL” column the payments are compounded as you go down the list so that when we get to paying off our largest debt of over $37,000 we will be paying $1,500 a month on that one single debt. “SB MONTHS” and “SB YEARS are the amount of time it will take to pay off each debt once the snowball catches up to it. So our total time right now, if we follow this plan, is just over 11 years. That eliminates almost 15 years. 15 years is how long it took us to start growing pubes! (too far?)

But, HEY that’s not all.

We want to decrease that even more by taking any monthly savings and any extra income and dumping it on the debt we are currently attacking (remember that $575 from earlier that disappears into our bellies and ink on our chest tattoos?). If we go at this with full force we are hoping to get down to 6 maybe 5 years total. We realize that we SHOULD be able to add over $500 a month if we stopped spending like morons. We have already starting eliminating unnecessary expenses and selling items that we really don’t need anymore but we will discuss that part in a couple weeks.

We don't want you to think we came up with this "snowball" idea on our own though. This philosophy has been around for awhile in a couple different forms, but we were too busy buying shoes to pay any attention. 

Congratulations, you made it through all those numbers. We're really proud of you, we know it was probably pretty rough. As a reward here is an adorable picture of our dog Maggie.