Y'all think it's bougie, I'm like, it's fine but I'm tryin' to give you a million dollars worth of game for $9.99. - The Story of O.J., Jay Z.

So this new way of life isn't the easiest.  I have to constantly tell myself "you don't need that ish" every time I want a caramel macchiato or see that BR has a sale or don't feel like cooking.  This is an adjustment.  How do I stay focused? I look at my goals every single freaking day, all the time, morning, noon and night.  I'm learning to forego temporary or short-term satisfaction for my ultimate goal.  I just keep telling myself the same thing I say when I'm fasting..."this is temporary, it won't last forever."  Also, the more I do now, the shorter the time it will take for me to reach my goal.

So what's my strategy?  I'm using the debt snowball.  People have different opinions on the best method to get out of debt.  This is the one I chose because it works best for me.  You have to pick what works best for you.  Some of the strategies I've heard discussed are as follows:

• Payoff your debt in descending order of the highest interest rate to the lowest (called the debt avalanche)
• Payoff your debt in descending order of the highest minimum payment to the lowest
• Payoff your debt in ascending order of the lowest balance to the highest (called the debt snowball)

Regardless of the strategy you choose, it will work if you work it.  Consistency is the key.  So what is the Debt Snowball?  The idea is to make minimum payments on all of your debt and apply all extra funds to the debt you have prioritized as the first to payoff, the one with the lowest balance.  Once you have paid that debt off you apply the minimum payment of that debt to the next one on the list while throwing any extra funds at debt number 2.  You keep doing this until all of your debt is gone.  Below is an example of the Debt Snowball.  In this example this person's debt is listed from smallest to largest which is also the order that they will pay off their debt.  How does it work?  They will pay the minimum payment on all debt and add any extra money, in this case $200, to the Target account until it is paid off.  This will take 2 months.  Once the Target account is at a zero balance they continue to pay the minimum balance on all debt and apply the money that was going towards the Target account, $225, to the Shell account until this account has a zero balance.  You keep applying these steps until all of your debt is paid off.

So why the Debt Snowball?  Because just like a diet, people are far more encouraged to keep going when they see progress.  Is the Debt Avalanche better mathematically?  I believe the Debt Avalanche will shave off a few months towards reaching your goal but you have to crunch the numbers to make that determination.  Ultimately, you have to find the plan that works for you and stick to it.  This one works for me...as of today I have paid off two credit cards.  I will be paying off the third card by the end of this month.  

You can do anything you put your mind to, it is what you tell yourself that will determine your outcome.  I encourage myself constantly, not just with this plan of getting out of debt, it is a strategy I developed at a young age.  Every time I had to run during cheerleading or dance practice I'd tell myself "the faster you run, the faster you're done Lani."  When I fast I remind myself that this moment of forgoing food is nothing in comparison to the number of days I've eaten throughout my life, it's a minute percentage.  Further, this is a healing process that will make everything in my life better once I reach my goal.  I say to myself, "you can do anything for a day Lani."  I talk to myself A LOT!  

I have constantly prayed for wisdom, James 1:5 says "If any of you lacks wisdom, let him ask of God, who gives to all liberally and without reproach, and it will be given to him."  It is wise to be a good steward of your money.  I believe the revelations I've had recently are a direct result of my prayers.  I admit I feel a little late to the party but better late than never.  Debt is voluntary slavery, it hinders you from so many things.  But like any bad habit, each individual has to come to this conclusion and be self-motivated to change when they are ready.  I also realize that when you're in survival mode, you can't hear any of what I'm saying.  I've been there, just focused on bringing in enough money to cover my bills, sometimes I simply didn't have enough, so something had to give.  Maslow's hierarchy of needs is real, I had to do what I had to do at that time in my life.  It was a choice between food, water, transportation and power versus anything else, my necessities won every time.  So, if you are still in survival mode, I encourage you to keep pushing forward, don't give up because it will get better.  I'm a living testimony.  I've gone from lack to surplus because I refused to give up.  No matter how many times I heard the word no or was rejected when I was trying to put myself in a better position, I knew and kept telling myself that God loves me too much to let me stay like this.  Guess what?  He didn't let me stay like that.  So again, I encourage you to keep pushing forward, things will change.

And deep in my heart the answer it was in me, and I made up my mind to define my own destiny - The Miseducation of Lauryn Hill, Lauryn Hill

I had a moment of self-loathing while digesting all of this. I was upset with me, I mean I consider myself to be fairly intelligent but I felt so dumb.  I have been wasting money and I could be a lot further in life financially.  I kept wondering, how did I get here?  Where did my miseducation start?  I've never been the type to say I deserve anything or I work too hard not to have "insert whatever luxury item" but then I realized something.  Even though those words never came out of my mouth, I was saying these exact statements through my actions.  Every time I bought something that I didn't have the cash to pay for, every time I swiped my credit card I was acting like I was entitled to these things.

Honestly, my miseducation came from several places.  I remember my first credit card, a Macy's store card that my Mom suggested so I can establish my credit.  I bought a few items and when the bill came the next month I paid off the balance in full, approximately $112.  I told a friend about this and they immediately asked me why did I do that.  I was confused, I thought you were supposed to pay what you owe and if possible, pay in full.  But this friend told me the way to get my credit score higher is by maintaining a balance and just paying the minimum.  I'm sorry to say, I listened to this friend.  Today, I have a lot of credit cards,  They don't all have a balance but I do have a lot, 13 to be exact.  Out of those 13, four have balances.  I was able to pay one off in July, a small victory for me.  I started with the one with the smallest balance, $65.  It's not much to brag about but previously I was content with paying the minimum balance, so before I set out on this journey that $65 would have taken another 3 or 4 months.  My plan is to pay off two more credit cards over the next two months.  This will leave me with two cards to focus on.  

Then there is my car note.  I never wanted a car note but the ex (how I refer to my ex-husband) totaled my old truck while we were married, so we bought another truck for me.  This time, we opted for a luxury vehicle, first mistake.  Then came the divorce and after that divorce the vehicle started going downhill.  Now this was my moment of truth.  I could buy a cash car or a less expensive vehicle, but oh no, I bought the same luxury vehicle because I became accustomed to the luxury and I didn't want to give it up, second mistake.  If I knew then what I know now...I cannot wait to pay this vehicle off!  When it comes to car notes I know several people who accept that they will always have a car note, They like upgrading their vehicles every few years so they build a car note into their monthly expenses.  But, if I can help it, I will never have a car note again.  If this truck dies, I'm buying a cash car, period!  I don't care if I'm driving an '89 Oldsmobile.  We will discuss car notes and leases at a another time.

Finally, there is my student loan, that I have deferred so many times I lost count.  Almost half of my debt is my student loan and it's all from undergraduate school.  I grew up thinking that was normal and everyone had a student loan.  Again, a lot of people I know have just come to accept their student loan as a payment they will always have.  I use to be one of those people, until I calculated the interest I will pay if I continue on my current track.  Absolutely ridiculous and unacceptable.  We will breakdown student loan payments later too.

If I had the chance to do it over again I would have never started on this downward spiral of credit cards.  It makes no sense to spend more than you earn, that displays a lack of self-discipline and self-control.  I would always buy cash cars so I wouldn't have a car note.  Lastly, I would have worked during undergraduate school so if I did have a student loan, it would be much smaller than what I have now.  But hindsight is 20/20 and I cannot dwell on the past.  So guess what?  I forgave Lani and decided to focus on the things I can change.  Again, my goal is to have all of this debt paid off in 36 months.  

Just to recap, these are the things I have changed to help meet this goal:

• I take Marta to work each day.  Now I fill my gas tank up every 3-4 weeks.  Previously I filled my gas tank up every week.  Savings: about $204/month or $2450/year
• I reduced my internet, power and cable bills. Savings: about $100/month or $1200/year
• Claimed my appropriate allowances for my tax deductions.  Savings: a lot more than the above :-)

So I found a significant amount of extra money to throw at my debt each month.  Is anybody going through these steps with me?  Were you also miseducated?

My Debt Breakdown:
Credit Card Debt: 32.0% Total Debt
Car Loan:               22.4% Total Debt
Student Loan:      45.6% Total Debt

Mini Milestone Celebration: August 21, 2017, Month 1/36 = 1 Credit Card paid off

She told me to walk this way! Talk this way! Walk this way! Talk this way, just gimme a kiss...like this - Walk This Way, Run D.M.C. and Aerosmith

How sobering was that (calculating your monthly surplus or deficit)? Now that I know exactly what I'm working with I realize I have work to do. But where in the world do I start? Well being that I don't believe anyone is the end-all be-all on any subject I decided to read as much as I could from many different sources. My goal is to be financially independent and right now, at the rate that I'm going, it will take me decades to reach this goal. I'm at a small surplus. No bueno. Below are a few sources that resonated with me once I started my research to determine the path to get me where I want to go:

• Dave Ramsey - I listened to his youtube videos and figured out his 7 baby step program (https://www.youtube.com/user/DaveRamseyShow)
• Mr. Money Mustache - This very informative website was shared with me by a colleague who is also on the road to financial independence. This blog is by a guy who retired from his job at the age of 30. (www.mrmoneymustache.com)
• Radical Personal Finance - Another youtube channel that I found very informative, he interviews a lot of people who have mastered the art of personal finance, he even has an interview with Mr. Money Mustache (https://www.youtube.com/channel/UCifiRyWskTPUB5i9f1IlabQ)

I discovered there is a LOT of great information out there waiting for us to grasp. Despite every journey being different, each individual has nuggets of wisdom I can apply to my life and situation. Dave Ramsey will help you organize a plan on how to attack your debt by using his 7 baby step program. Mr. Money Mustache will help you realize how much money you waste each and every day.

Looking at my budget I calculated how much money I put into monthly debt payments. I felt so dumb when I thought about how I could be saving that money or investing into mutual funds. What is worse is when I calculated the interest I had been paying and will continue to pay if I don't make some changes. I have so much I want to share with you but I will take it step by step. Step 1 was to calculate your net income and monthly "out-go" and determine if you have a surplus or deficit. Step 2 is to calculate how much of your monthly expenses is debt payments. Now look at that number and think about what you could be doing with that money instead.

Step 3 is to formulate a plan to attack this debt in a reasonable amount of time. There are several ways you can do this, below are a few noted from my research:

• Reduce your bills. You can find a cheaper alternative to that $200 cable bill. Reduce your plan down to basic cable or no cable at all. Reduce your power bill by finding ways to be more energy efficient. Take public transportation instead of driving everywhere. Stop eating out and cook more. Remember this is only temporary until you are out of debt, not forever.
• Increase your income. This can be done by working overtime, if your job allows it, or by getting a part-time job. You can even start your own business. An unconventional way of increasing your income would be if you stop investing temporarily and/or by claiming the appropriate allowances to pay your exact tax bill instead of overpaying and receiving a refund.
• Sell something. Look around your house, there maybe gold in there that you haven't unmasked.

What I learned is that those who have successfully mastered financial independence found many different ways to accomplish the same goal. For example, Mr. Money Mustache is a huge advocate for riding bikes. It's actually a great way to stay healthy while reducing your expenses. He encourages people to ride bikes everywhere, including to and from work. While Dave Ramsey encourages you to stop investing temporarily, until you are out of debt. He also advocates looking at your tax bracket and claiming the allowances that will ensure you do not get a refund check. In other words, you pay exactly the taxes that you owe for your salary range. This was a huge eye-opener for me as I always looked forward to my refund check. But I realized that I could be using that money to pay down debt each month. Just to give you an example, if you get back a refund of $6,000, that means you are overpaying the government. That is an extra $500 per month that you could be using to pay-down debt ($6000/12 months = $500 per month)

Here are the things I did to work on Step 3:

1. I have been taking Marta since I started working at my current office. ​I fill my gas tank up every 3-4 weeks since I started taking public transportation.
2. I reduced my cable, internet and power bills.
3. I claimed the appropriate allowances so I will not receive a refund next year, I will discuss this in another post.
4. I am starting to list items on Craig'slist to sell

Now that I have made these tweaks, I have a LOT more money to attack my debt. My goal is to be debt free, except for my mortgage, in 3 years or less. If I get rid of all my monthly debt except my mortgage, I would only need a net yearly salary of $30,000 to live on very comfortably. Looking at these numbers made me want to take a shot of hard liquor. I wish I came to this realization when I was in college.

Your next homework assignment is to calculate your total amount of debt, minus your mortgage. Now set a goal date to eliminate this debt. Mine is 36 months (3 years) from now. I'm willing to make sacrifices now to reach this goal as quickly as I can. The question is how bad do I want it? It is always a question of will I, not can I.

I will admit, this is the point where Dave Ramsey and I differ. Baby step 1 of his plan states to have a $1000 emergency fund before you move to baby step 2 (eliminating debt). Let me have a moment of transparency with you. I have more than $1000 saved up and I am unwilling to part with that money because I am traumatized from my divorce. I am also still investing 6% of my income to take advantage of my employer match on my 401K. I realize that anything, I mean anything, can happen and cash is king. I'm terrified of being in survival mode again. If I can help it, I will make sure that I will never be in survival mode again in my life. So, yes, I'm willing to make sacrifices up to a point; you have to do what gives you peace. This may change in the future but it hasn't right now. I know that the faster I get rid of my debt the faster I can start back saving and investing. But right now, I'm not ready to make those two changes. However, I am a numbers person so I will calculate the mathematical differences of me applying my savings to my debt and pausing my 401K investment to make my final decision. So, this is to be continued...

In the meantime, I'll check back with you to see if you have completed your homework. In case you were wondering, below are Dave Ramsey's 7 Baby Steps. His program is designed to be done in the order listed. Baby steps 4, 5 and 6 are supposed to be simultaneous.

*Dave Ramsey's 7 Baby Steps:

1. Save money to establish a $1000 starter emergency fund
2. Pay off all your debt, except your mortgage, using the debt snowball
3. Build up 3-6 months of expenses in savings (ex: If your total expenses are $3000/month you need to save $9000 - $18,000)
4. Invest 15% of your income towards retirement (ex: a Roth 401K)
5. Save for your kids' college fund
6. Pay off your house in 15 years
7. Build wealth and give