My 30th birthday is this Sunday. Many people see this birthday as a big milestone. A lot of people don’t look forward to 30 because it seems like you are supposed to be meeting so many goals and reaching them seems daunting. Others, like myself, try to take the day in stride. After all, turning 30 is better than the alternative.

That being said, I am always reflective around my birthday. I’ve been thinking about everything I’ve accomplished over the last year and the last three decades. I’m proud to say I’ve come a long way.

Remembering What’s Important

One of the things I have grown to focus on in the last year is remembering what’s really important in life. A lot of the time, my anxiety tries to take over and I have to take a deep breath and remind myself that it isn’t the end of the world.

More importantly, I need to remember why I work so hard, and why I do anything. I want to be able to provide a spectacular life for myself, my baby, and my family as a whole. So, when things start to get heavy, I’ve started to unplug and focus on the most important people and things in my life.

Financial Accomplishments And Beyond

Over the last year, our family has had a lot of changes financially. My husband got a full-time corporate job with benefits and it has changed our lives for the better. We were married to the idea that we both want to work for ourselves (and still do). However, holding down this job has made it possible for us to have the quality of life we want and deserve.

Slowly but surely, we are stacking up money for savings, paying off debts, and preparing to move into a new home later in the year (hopefully). Considering six years ago we were homeless and living in a motel, that is amazing! It still blows my mind sometimes when I sit back and think about it.

On top of that, I have accomplished a lot personally as well. I have stepped outside my comfort zone to make new friends, friends who have become important parts of my life. Throughout the year, I have also worked on communicating better and listening. These two things have served me well in various areas of my life.

Hey, 30 Isn’t That Bad

While I know I haven’t accomplished everything I’ve ever set out to do in my 30 years, it doesn’t matter. The things that didn’t work out weren’t meant to be. More than that, the sequence of events led me here – where I have a beautiful family, a fulfilling career, and everything we could need.

So, I won’t be having any breakdowns around turning 30. It’s not all that bad. In fact, from where I’m sitting, it looks fantastic.

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Saving is a huge part of becoming (and remaining) debt free. If you don’t have an emergency fund things can pop up and cause you to rack up some serious debt. Similarly, you can go into debt buying things if you don’t save money for big events like birthdays and Christmas. But, saving money is hard. Really hard.

Thankfully, the internet has come up with fun, catchy challenges to make you more financially aware and help you save money. After looking at some of the different challenges, I’ve decided to create my own 12-week challenge for savings.

Savings Challenges

About five years ago savings challenges began popping up on the internet. First, it started with the 365-Day Money Challenge. This challenge lasts throughout the year, as the name suggests, and helps you put aside small sums of money each day. The first day starts out with you saving just $0.01.

Next, is the 52-Week Money Challenge. Like the 365-day challenge, it lasts the entire year. However, this challenge ends with a larger amount in savings and focuses on putting money away weekly. The first week, people participating in the challenge put $1 into savings and work their way up to $52 by the end of the year.

Both of these are easy and help people who aren’t so great at managing their money or saving get some cash put away (even if it is only a penny at a time). Many people have been wildly successful at saving this way. So much so that they’ve put other twists on it, like the Bi-Weekly Money Challenge, Reverse 52-Week Money Challenge, and the Mega Money Challenge.

My 12-Week Challenge

For the most part, each of these challenges takes an entire year. If you’re also actively trying to pay off debt it can be overwhelming trying to put money into savings while effectively snowballing what you owe. That’s what got me thinking about a savings challenge with a shorter timeframe: 3 months.

Here is what I got figured out for a 12-week challenge…

• Week 1: $100 total
• Week 2: $250 total
• Week 3: $350 total
• Week 4: $500 total
• Week 5: $600 total
• Week 6: $750 total
• Week 7: $850 total
• Week 8: $1,000 total
• Week 9: $1,150 total
• Week 10: $1,250 total
• Week 11: $1,400 total
• Week 12: $1,550 total

For the first week, we will start by putting $100 into savings. Then, the second week, we will increase our contribution to $150 (making our total savings $250). Throughout the 12 weeks, we will alternate between putting $100 and $150 into savings. The fluctuation will account for the weeks we have “additional” expenses like health/beauty supplies or cleaning items around the house.

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The purpose of this blog is to take you through the exact process that my husband and I have used to pay off more than $65,000 of debt in 11 months on a single middle class income.

To get you started on your journey, there are a number of things you need to do get your house in order.

1. Make a promise and get your spouse on board
2. Calculate your net worth
3. Review the checklist for a strong financial plan
4. Set your goals
5. Track your spending.

This posting is about a key part of the process in your debt payoff journey – developing a debt payoff plan using the debt snowball.

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Now it is time to develop your payoff plan

This step is where you determine which debt you will pay off first, assuming you have more than one debt. We need to prioritize your debts so that you will focus on paying off one debt at a time.

If you make extra payments at one time toward all of your debts or even just a few, it will take much longer to realize significant results. This may lead to feelings of discouragement and frustration with the debt elimination process.

By focusing your energy on eliminating one debt at a time, you will see quicker results and earn a greater sense of accomplishment for all your hard work.

You will work on paying off the smallest balance first and make the minimum payments on each of the other debts.

Put as much money as you can each month toward the smallest debt.

Once that debt is paid off, you will cross it off (and celebrate!) and move on to the next debt on the list. Add the amount you have been paying on your first debt to the minimum payment for your second debt on your list and that becomes your new payment amount for your second debt.

This is called the debt snowball method. As you pay off the smaller debts, the amount of money you have available to pay off your bigger debts increases.

You will gain momentum as you rapidly cross the smaller items off your list. Paying off the smaller debts quickly gives you a series of “small wins.”

In his book “The Power of Habit” Charles Duhigg states, “Small wins fuel transformative changes by leveraging tiny advantages into patterns that convince people that bigger achievements are within reach.” Basically, this means that when you have a series of small wins and you see progress as your snowball grows, paying off the larger debts will feel more achievable.

By the way, Duhigg’s book is great, I recommend you pick up a copy if you get a chance.

Let’s look at an example

Let’s say your debt snowball looks like this:

Paying off your total debt of $31,850 probably feels overwhelming. Perhaps it is almost as much as your annual salary from your job. You might be thinking that it would be YEARS before you would be able to pay it all off.

And that might be true. It might be years but probably not as many as you think if you are intentional and focused on your goal.

Let’s say you work really hard in finding room in your budget (we’ll discuss strategies for this in a future post), and you are able to pay $500 toward Credit Card 1 each month while making the minimum payments on each of your other debts.

After two-and-a-half months, you have paid off Credit Card 1!

The following month you add $500 to the minimum payment for Credit Card 2. We’ll say that amount is $95. So in month four, you pay $595 toward Credit Card 2.

At that rate, it will take you about four months to pay off Credit Card 2.

After eight months, you have paid off two credit cards totaling $3,550!

Achieving those quick, small wins makes paying off your auto loan feel much more attainable. Your enthusiasm for paying off your debt has increased, and now you are even more motivated to pay off your auto loan as quickly as possible so that you can move on to paying off your last debt!

In month nine, your excitement spurs you to find an additional $100 in your budget so instead of adding $595 to your auto payment, you are adding $695 to your minimum payment of $250.

How long do you think it will take you to pay off your auto loan when you are making payments of $945?

Possibly only five months because your balance has decreased while you have been working your debt snowball even though you have only been making the minimum payment up until this point.

After thirteen months you have paid off three debts totaling $9,050, and you are able to add $945 to your minimum payment for your student loan!

Even though your student loan balance may still be over $20,000, you realize that in thirteen months, you have been able to pay off almost a third of your original debt total. And as your income increases over time, you will be able to pay even more toward your student loan each month.

In this scenario, I anticipate that it might take you another year-and-a-half to pay off the student loan. As a result, it has taken you two-and-a-half years to pay off your total debt balance of $31,850!

Exciting, right?

And it is completely doable.

This is the method my husband and I have used to whittle away more than $87,000 of debt in 20 months on a single income, but our numbers were much larger.

If we can do it, you can do it too!

Keeping Up The Momentum – Should You Refinance?

If you’re making good progress on your debt payoff and your credit is good, you might consider refinancing. If you’re going to do this you might consider going with a company like SoFi. They’ve been making waves with their low priced loans.

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