Unfortunately, this is all very difficult to predict due to the fact that I would have been making different decisions if I had less income, starting with the car, and who knows how far the reach would extend from there. I’ve tried my best, though.
As I was driving into work the other morning, I was thinking about my jobs. I’ve been working in the “real world” for over a year now, and have had 2 jobs for most of that time. When I found a new job, my original job said it was ok for me to stay and work afternoons/nights and weekends for a while. I wanted to get rid of my debt fast, so I figured that I may as well give it a swing. I also realized that this was probably the best time for me to do so, as I don’t have children that need to be cared for. It also works well because once I get out of debt, it will be easier for me to build savings (from increased cash flow) and stay out of debt. I also figured that I may not always have as much energy as I do now to work as often as I do.
I began to wonder where I would be if I had only 1 job this entire time. While my expenses would have gone down slightly, it wouldn’t have been much. I’ll assume that my car would still need to be replaced and that every other major thing would hold constant. These numbers will most likely turn out to be quite speculative, as my purchasing and behaviors would have changed if I had less available cash.
Going back to my monthly review in November 2009 on this, the first thing I noticed is that my budget is very, very different now. I pay a lot more for car insurance (here are some car insurance quotes if you need them) and gas, to name 1 thing. The other thing that I noticed is that I was still in my post graduation 6 month grace period for my student loans (It ended in December), so those did not even make the list! There was $4,800+ worth of credit card debt left at that time. I don’t remember what the minimum (combined) monthly payment was for these 3 cards, but I think it was around $200.
After this, my blogging gets fairly thin, but in my next update at the end of February had actually brought my credit cards up to 6,000 total after an adventure in vehicle sales tax. I paid that off right after I charged it, and I was sitting with about 4,000 on credit cards still. Unfortunately, I had taken on a lot more water than I had anticipated. I now had 3 student loans to pay monthly (total: $300) and a car (plus more expensive insurance, total $500). At this point, loans alone were running me about $815 per month. It should be noted that if I only had 1 job at the time, my car purchase would have been much different than it actually was.
I think that I would have limited a car payment to 200/mo, bringing my total monthly debt to 700. With that, there would have been about $400 worth of payments to start my debt snowball with. The way my snowball has been working so far, there has only been 1 month (in 12) where I’ve applied less than 1,000 to my debt. Its usually been closer to 1200 to whatever was the focus of my snowball. Just by that rough estimation, the second job has helped me move 3 times faster than I would have been able to otherwise. Given the hole I was digging out of, this is no small feat, and could mean freedom from debt years earlier.
I’ll be able to start saving more years earlier, and allow compound interest to work in my favor longer.
It’s been worth it to me. Are you willing to sacrifice to slay your debt?