First Step To Getting Out of Debt: $1000 in savings, DONE!

first step to getting out of debtThis is going to be a short post but some news that I think is worth passing on to you lovely readers.

If you don’t know, I am in quite a lot of debt. Around $38,000 to be precise. Luckily for me this debt is tied up in a system set up by a charity linked with the UK government. I’m on a debt management plan that means for now all my debt is frozen of any further interest and I pay an equal amount to all creditors every month. This means 100% of my payments go towards paying down debt. On my current plan it will take 18 years to pay off at approx $200 per month…. I don’t want to be paying debt for 18 years so I am working hard to getting a large wad of savings to pay off the debt in one big bulk payment as soon as possible.

If you want to know more about why and how I am in debt see the post Me, My Debt and I.

First Step Achieved, $1000 in an Emergency Fund

If you are trying to get out of debt or have been in debt and have been reading then no doubt you have been hearing about the method of getting $1000 put aside for any emergency that might pop up. This idea of The Emergency Fund is very much pushed by the likes of Dave Ramsey and many others. Personally I am not dead set on calling it an emergency fund but I do see it as a good buffer fund to have as a minimum in savings whilst paying down debt. This can really help you avoid getting any additional debt.

Yesterday I finally received some money I was owed and after working all my budget out I had enough to finally fill my savings account with it’s first deposit, $1000! I can’t tell you how good it felt to finally put that sum in the account and see the 00’s gone.

I’m winning the battle, what now?

I have been reading blogs like crazy, some real life books and generally keeping myself motivated. My hard work on my online business and cheap living in Egypt are allowing me to start getting my life together.

Next month I want to deposit at very least another $500 into the savings account and really start to get those numbers up. I don’t own property, I don’t have any large bills so I can see no reason to have to take any of my savings back unless something really serious happens (fingers crossed this won’t be the case).

How are you doing? I would love to know how you are winning the battle against debt.

If you think my $1000 this month was good then I am nothing compared to Red over at Girl With The Red Balloon. She was able to pay off over $3300 in debt this past month!!!!

Jolyn also just published a post with links to many other blogs showing debt payments and their monthly net worths. Great inspiring read! Read it here: Debt Snowball Update. She will be doing this every month.

For those needing help you should check out Money Help for Christian’s excellent debt snowball spreadsheet.

28 thoughts on “First Step To Getting Out of Debt: $1000 in savings, DONE!”

  1. Thanks for the shout out! $1,000 is great! I can imagine the relief you feel having that emergency money set aside! :) And gosh no, who wants to be paying off debt for 18 years? Geez…
    Red recently posted..Julys debt wrap-upMy Profile

  2. Great job! You’re on your way!

    I just did a round-up of a bunch of Yakeziers who posted their debt updates recently, but I missed this one! I’m planning on doing a link-up every month for people to share their debt and net worth post updates… Would you do me a favor and go to my site and link-up this post? I’ve never used inlinkz before and I’m anxious to see how it works! (Hopefully I did it right and it Will work! ;)

    1. Hey Jolyn, I tried the inlinks but it just took me to a blank page after I submitted… Let me know if it came through.

      That’s an excellent post you have done, I am adding it to this post now.

    1. I went into a debt management plan with a company recommended by the government sponsored charity…. Been meaning to write up about it for a long while so will try and move it to the beginning of the queue. The debt itself started from borrowing money for family members…. I wish I could have at least had some fun with the money I owe but sadly I spent none of it :(

  3. Forest…well hot dog! I’m not there yet with the savings but manage to erase a tiny bit of debt each month.

    You inspire me to set aside something every month (a habit I have not practiced for a few years now) that can be applied as a long term debt payoff. Every little bit helps.
    simply stephen recently to mobilize your lifeMy Profile

    1. Thanks Stephen, that’s prob the best way to get some savings racked up. Mine was a lump sum but I have been planning it for a few months. Next month should be another lump sum but then will likely be down to smaller monthly installments for a while.

  4. Forest,
    Congrats on your $1,000 “buffer” account! You are on your way! How long do you think it will take you to save the entire $38,000 needed to pay off all your debt?

  5. Great job! Don’t diminish your accomplishment…$1000 bucks, is $1000 bucks!

    The small victories help fuel the fire (a la Dave Ramsey style). We took a Dave and Man vs Debt Debt Tsunami approach and paid off a debt that was emotionally draining, and it was fantastic. We are going to pay off one more smaller debt, then tackle the larger ones, in interest order.

    I am proud of ya!
    Mysti recently posted..Bliss – August 4- 2010My Profile

    1. Thanks, yes Egypt does help but on the flip side it’s pressuring to go and do touristy things as you always think “I will probably never come back once I leave!”.

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  7. Way to go, Forest. Another thing you will notice is that when you start to save, it gets easier with time. And the awesome “peace of mind” you will get from just having it there, will totally motivate you to add more and more and more.

    Keep it up and in no time that $1,000 will be $5,000 and so on.

    Happy to hear of your progress, as usual will keep following to hear more.
    Danny @ Frugal Quack recently posted..Freebie Friday- Lotion- Pet Stickers- Cheetos and MoreMy Profile

    1. Hey Danny, thanks very much for your comment. I am already looking forward to the end of this month so I can pile some more cash in there…. Every payment is like dropping a little stone of the weight that i carry on my back.

  8. I don’t claim to be an expert in the field, but I do see some inconsistencies in your logic. I do, however, appreciate the fact that you took the time and effeort to address this sensitive topic. Thank you.

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