I’m Paying Off (Most Of) My Debt, Saving Up For A Home Down Payment, And Documenting The Entire Journey
Hey hi hello. It’s been quite some time since we’ve last spoken, pals. Throughout my time writing on Medium, I’ve talked about my experience of going through a coding bootcamp, moving to Austin in search of my first developer job, dealing with rejection, and landing my dream job after a three month search.
You might be wondering “How can he possibly squeeze more content out of this whole coding thing? Is he going to go through ANOTHER BOOTCAMP?!”
No. Though I work for one part-time as a TA, that’s not the purpose of this article. What I’m going to do now that I’ve had some time to get familiar with making and spending developer dollars is have you all join me on my journey toward my next goal.
I’m going to purchase the world’s largest moose.
Surprise. I’ve bamboozled you. Pulled the antlers over your eyes, I have. I’m not buying a large boi. Instead, I’m going to save up for a down payment for an apartment or house somewhere in Austin. I haven’t decided between the two yet, I’ll keep you all up to date as decision time approaches. I’m calling this endeavor C.C. Go Home (Shopping).
This was an easy goal to pick based on where I live — people are flooding to Austin, especially those in the tech industry, and I’m fully expecting the price of renting and buying property to increase accordingly. I’d like to have a place I can call my own before things get too out of control.
If it were as simple as starting from zero debt and getting to $xx,xxx in savings, this wouldn’t be an interesting series. If I had a wife and child to support, the series would likely be extended by several years. As it stands, I am not starting from zero debt and I don’t have a wife or a child. Let me give you some more insight on that first part and no not the second part mom I already told you the dating apps haven’t helped.
Since graduating college, I’ve had a bad habit of spending money I didn’t have. If I was making 30k, I was living a 60k lifestyle. Hypebeast sneakers? Put it on the Amex. Video games? Swipe that Visa until the strip wears off. Everything else? There’s Mastercard.
You get the point. The only purchase I don’t outright regret was the $11k in bootcamp tuition that I put on my credit cards, but even then you could argue that was the first falling domino that set the Rube Goldberg machine that was my struggle with debt into motion. The minimum payments slowly grew from $10 to $50 to $100, the 0% APR introductory periods expired one by one, and I wasn’t making a cent more to offset any of this. I started having to put everyday expenses on my credit cards, guaranteeing myself another lap on the financial hamster wheel from hell.
I didn’t mention this in my previous articles because I was writing about being an aspiring developer, not a dude deep in debt, but also because I didn’t know how I was going to turn my situation around at the time. I was earning twice as much as before, but the interest on my outstanding balances effectively nullified most of the payments I was making.
Thankfully, things changed. I got a $30,000 consolidation loan last August to lump most of my balances under one monthly payment, which was a massive relief. For the past year, I’ve been making those payments and using the rest of my money to reduce the credit card balances I couldn’t cover with the loan and to pay for living expenses.
To keep the responsibility ball rolling, I put all of my regular purchases on a charge card so I’d have to pay the balance in full at the end of every month and avoided buying a ton of high-ticket items. I did make three exceptions: my bed, the MacBook Pro I bought to replace my 2014 model that had called it quits, and my home monitor. When it comes to items I use often, I prefer to buy the best version I can afford once instead of the cheapest version multiple times.
Unfortunately, I started getting a little too comfortable. I replaced buying stuff with new monthly expenses like personal training, personalized diets, and higher rent. Granted, the first two weren’t totally without purpose and the latter represented a minor increase relative to what I got in return. I was getting a lot stronger, losing a lot of weight, and I finally had an apartment I could call my own.
These expenses didn’t seem too bad individually, but let’s see what they look like combined:
- $150 a month for powerlifting programming.
- $100 a month for personalized diet plans.
- $850 a month for rent.
- $70 a month for internet to ensure AT&T doesn’t cut my phone data off.
- $60 a month for electricity to make sure my stuff turns on.
Combined with my occasional splurges and Uber Eats orders, I was probably spending an extra $700-$900 a month. The frugality I’d practiced living out of Airbnbs during my first three months in Austin was long gone.
And then I went and bought a truck. And then I spent north of $8000 on modifications for said truck, obviously on credit.
Do you want to kick my teeth in after reading that last sentence? I sure do, especially because most of those modifications happened within the past month. I sat wide awake in bed two weeks ago, wrought with regret over having fallen into the same cycle I’d just escaped. I thought about how much closer I’d have been toward being debt-free had I just stayed disciplined. My inability to sleep would end up being my wake-up call.
I put together a plan of attack the very next day, starting with a tangible goal and a hard deadline — I would pay off most of my debt and save enough money to have a sizable down payment by the end of 2020. That would make me a homeowner just in time for my 27th birthday.
I started by cutting out unnecessary services. That meant the training and diet programs were first on the chopping block, along with a weekly auto-buy for Bitcoin and Litecoin that I hadn’t turned off for some reason. Just like that, I now had an extra $450 every month.
Next, I looked around my apartment for anything I could sell on Craigslist, Facebook Marketplace, and eBay. So far, I’ve made $2,800 getting rid of stuff I didn’t need, with another possible ~$3,000 if everything else sells.
Finally, a few of my credit cards had extended 0% APR balance transfer offers since I’d managed to be good about not carrying balances…apart from the truck modifications. Those offers added up to $11,000 total.
If you’ve been doing the math with me and The Count, that’s just shy of $14,000 I’ve been able to throw at the consolidation loan in the past week. Once I factor in next month’s scheduled payment, I’ll be $300 away from having it paid off entirely.
I’m going to break down my current fixed monthly expenses and income. For simplicity’s sake, let’s say I manage to sell $300 worth of stuff on Craigslist and pay the loan off to remove it from the equation. I know approaching the subject of money isn’t something many people are comfortable with, but here’s one weird trick I’m using to empower me to do it:
I don’t care what anyone thinks about my finances. Chances are if you’re still reading this after I brought up the $8,000+ modifications, the following section isn’t going to make you stop reading now. Here come the numbers!
- $980 — Rent, electricity, internet. No room for negotiation here.
- $495 — Car payment. This will be refinanced as soon as I bring my balances down because it currently sucks eggs.
- $390 — Student loan payment. The income-based repayment plan has come for me with a vengeance since switching careers.
- $250-$350 — Food. I give myself a $100 buffer here because no sane human is going to be perfect month-over-month
- $135 — Car insurance. The gecko promised me savings. He lied.
- $120 — Gas. Trucks don’t run on smiles.
- $75 — Biweekly chiropractor appointments. I still do powerlifting, so this expense isn’t going anywhere.
- $55 — Gym membership. You’ll have to kill me before I switch gyms.
- $35 — Netflix, YouTube Premium, and Spotify. I’m a millennial. Leave me alone.
- $25 — Renter’s insurance. Because I am a renter.
- $2,480–$2,590 per month
I know what you’re thinking right now — “Christian, why don’t you find a way to get the bank to take the truck back, that’s $495 a month you’d sa-”
“But Christian you can just drive an old Corolla like you used to and save so much on gas and-”
That’s the one thing I’m not budging on for several reasons. It’s my dream vehicle, I’m keeping it until it dies or I do, whichever comes first, the money I’ve put into it can’t be recovered, and the entire loan for the vehicle + extended service warranty is $22k. All said and done, I’m in around $30k for a dream come true. That’s a good deal as far as I’m concerned.
If I were going the Dave Ramsey approach, I’d probably cancel the chiropractor appointments and gym membership and eat nothing but rice and beans while I do push ups at home and watch paint dry for fun, but I’m not going to do that because I’d rather not be completely miserable. It’s called budgeting, not masochism.
Now that we’ve gotten that out of the way, let’s get to the means of attacking my remaining debt and rolling up a happy lil’ snowball of a down payment. The following number represents the amount I make from my full time job and part time job.
- $2,700 — Work work work work work, you see me I be work work work work work. This is my biweekly pay.
- $5,400 per month
After deducting my fixed monthly expenses, that leaves me with $2,740-$2,850 a month. I’m looking into moving into a house and having roommates again, which would bump my savings up by $370. I’m not expecting to hit this number every month, since unplanned expenses will come up occasionally.
Assuming everything stays relatively consistent and I don’t develop a crippling drug addiction, I should have about $12,000 saved by January 2020, all of which will go toward of my debt. From there, I’ll determine how much I pay off vs how much I save. I don’t have to be debt-free to get approved for a mortgage, but I’d rather not have large outstanding balances casting a gloomy shadow over the biggest accomplishment of my adult life.
On that note, there are two sources of debt I’m not paying off at an accelerated rate: my student loans and my auto loan. My student loan interest rate is low enough to where I’m better off putting more money elsewhere and my auto loan balance doesn’t impact my overall credit much, plus the payments will be more reasonable once I‘m able to refinance it.
I understand that this isn’t exactly an underdog story of someone defying all odds. I know that my monthly income makes this goal much more feasible compared to someone earning half as much. I just want to document my personal journey to keep me motivated and accountable. If I manage to relate to at least one other person who also has debt and wants to eventually buy a home, every minute of writing will have been all the more worthwhile.
That should do it for this first installment, thanks for reading! If you’ve made it this far, I’d love to hear your suggestions. Should I make this a monthly series with an update on how much I’ve managed to save/pay off to date? Would it be helpful to know how many outstanding accounts I have and how much I owe to each one? Should I abandon this plan altogether and develop the aforementioned drug addiction?! I’m all ears!