Sam D. Miller

Marketer and YouTuber based in Atlanta

Emergency fund, check! Zero balance on credit card, check!

Today is a good day. I’m happy to report that I’ve paid off the entire balance on my Citi credit card! I carried a balance on that thing for over a year! Fortunately, I only had to pay interest charges for the past two months ($30 total or so). I first got the Citi card in college, was immediately granted a $4,000 credit limit and 15 months no-interest, but made purchases wisely and paid it off in full every month. However, over the past year or so, a number of financial emergencies and frivolous purchases crept in.

Citi Card Paid Off Sam Miller

Before tackling the Citi card balance, I stocked away $1,000 in an emergency fund. I haven’t had $1000 or more in my savings account in over a year – since I bought my current car and paid cash for an (absolutely amazing) engagement ring. So, I’ve got Dave Ramsey’s first baby step checked off, and now I’m at step number two – paying off all debts (except the mortgage – of which I don’t have).

Our household debt is just under $90,000, which includes the financing of two undergraduate educations at a private college, a car loan currently at $11,321, and nothing else. I originally planned to be able to pay the entire thing off in two years, but I think that’s a little too ambitious. Three years is definitely more of a reality.

At the moment, my plan is to pay off private student loans first. Why? The interest rates on the private loans are much higher than the rates on the federal loans. Once that’s taken care of, it’s on to the federal student loans, where I’ll use the Dave Ramsey approach of snowballing the debts, starting with the smallest balance loan (rather than the one with the highest interest rate). There’s not much difference in the student loan rates on the federal loans, so I’m not worried about the small loss from not paying off the highest rates first.

Looking at my household monthly budget, after all bills are paid we are left with about $2,400 to spend on food, gas, miscellaneous expenses, a little bit of fun, and the rest can go towards debt. For an aggressive month, we could probably put down about $2,000 towards debt. For a typical month, $1500 is more realistic. But only putting down $1500 a month will mean we won’t be debt free for another five years – that’s a long time. $2000 per month would put us around 45 months, or just shy of 4 years. But that math isn’t including the fact that as soon as we pay off one loan, we’ll be able to throw that money at the debt, too.

Our household’s minimum monthly loan expenses come out to $860.47. Just the thought of not owing someone that money each month is extremely exciting to think about. I’m always looking for ways to make it a reality sooner than later, too. What my math above (the $1500 or $2000 per month towards debt) doesn’t include is the fact that our household income should go up pretty significantly in the next few years. From side projects to part-time jobs to bonuses and raises, there’s a lot of extra money we’ll be able to throw at the debt. And I’m pretty good at not blowing ‘extra’ money away.

To wrap things up, I’ll say that overall I’m extremely excited that progress is finally being made. It has felt like it has taken forever to start knocking out this debt, but the ‘fires’ are starting to die down and there hasn’t been a financial emergency for a month or two now. Things are looking up! I know getting out of debt isn’t an overnight thing, but I can live with that. As long as I stay focused there’s no reason my family won’t be able to enjoy a very comfortable lifestyle within the next five to ten years. As Pat Flynn’s intro always starts, “Work hard now, so you can sit back and reap the benefits later.”

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4 responses to “Emergency fund, check! Zero balance on credit card, check!”

  1. Congratulations on getting your debt snowball going! Good luck with the money makeover!

  2. Congratulations Sam. Keep working and refining your plan. That 4 years is going to go faster than you think.

  3. It’s amazing how emergencies don’t really come around when you have an emergency fund.

    1. Right?! There’s something magical about that cushion.

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