January 2023 Debt-Free Journey Update

The first month of the year is done, and 2023 is off to a slow start! It’s time to reflect on the past month to hold ourselves accountable on our 3 year goal.

The start of a debt-free journey is interesting to look at. We stuck to our budget and debt payoff plan, yet despite paying $6,389.36 in January towards our debt, our total only went down 2.84%!

Credit Card Debt

In total we paid $1,833.45 yet only $1,591.34 went to paying down principal. Thats the power of compound interest working against you. Credit Card 1 shows the largest drop due to the balance being currently under a 0% APR promotional rate. This particular credit card has the highest interest rate of all of our debts so we’re starting the debt snowball method here. If we stick to our current strategy we’ll have this debt paid off before the promotional rate expires.

Personal Loan Debt

Here we paid $3,134.97 with $2,631.29 going towards principal. This one sucks because it show’s we’re paying $500 a month in interest for our personal loans alone. That’s enough to max out a Roth IRA annually yet is disappearing into the ether due to our poor choices.

Car Loan Debt

For our vehicles, we paid $1,144.94 and $916.62 went to principal. To put into perspective for myself, our total monthly payment for our cars is more than the monthly payment of my dream super car that was just recently released, the Lotus Emira. Not that I’ll get one, it’s just motivating to know that if we get our finances under control certain things don’t have to be dreams.

Tax Debt

Paid $276 with $266.56 going towards principal. I’m just going to ride this one to the end with minimum payments. The interest rate is so low the benefits would be negligible. This tax bill was capital gains from a stock that popped off for me back in 2019 for those who were wondering.

Moving Forward

It’s interesting to see we paid $6,389.36 towards and only $5,405.81 went towards principal. I know others going through the same see the amount they pay towards interest per each debt as minuscule. But as you can see from our example we’re basically spending $1,000 a month towards interest when you look at all of your debt as a whole. That’s real money. For the next month we’re going to maintain our current trajectory. In the future when I get back from my work trip we hope to sell Car Loan 2 which would get rid of that debt and potentially payoff Credit Card 4