My Quest For Creative Financial Freedom pt. 4: Getting Ambitious - How I Plan to Pay Off $20,000 of Debt in 6 Months

Sharing my financial info with the Steemit community has been one of the best decisions of my life.

_{Earning more money is just another puzzle.}

Every time I think about doing something stupid, I think of y’all. “Just made $100, time to go buy fancy cheese at Whole Foods!! Wait, fuck, I gotta tell Steemit about my finances on Monday. Alright, I’mma go buy that $2 block of cheddar at Walmart.”

The biggest lesson I’ve learned from you is this: Nothing is more important than paying off the debt.

I’ve tossed around a few goals in my recent posts - trying to reach the top 1,000 of Steemians (https://steemit.com/steemit/@heymattsokol/getting-into-the-top-1-000-steemians-how-feasible-is-it), thinking about cryptocurrency investing, moving away from Connecticut… These are all cool.

But time and again, one phrase surfaces in the comments: “Great ideas, Matt - as soon as you pay off that debt.”

“Yup, just take care of the debt first.”

“You’ll crush it after the debt is gone!”

FUUUUUCK.

OK, you win!! I get it. Paying off my debt is THE goal. Full stop. All other goals pale in comparison, and will be much easier in the post-debt phase of my life.

—

Doing the Math: How Much Do I Need to Earn to Pay Off $20,000?

_{My face when I have to do math.}

I discussed in part two how I allocate my income: Basically, I filter it into a few buckets based on percentages. Rather than keep a budget and try to measure exactly how much I spend on food, fun, bills, debt, etc - I just allocate in advance to different bank accounts.

Here’s my current split:

5% - Emergency Savings
45% - Pay off Debt
30% - Bills & Essentials
20% - Guilt-Free Spending

Next week, I’ll be opening a new savings account to put away 15% of income to pay taxes with. Let’s not think about that quite yet. Right now, we’ll use these simple numbers.

If 45% of my income goes into debt payments, that puts me WAY ahead of schedule. I no longer think about debt in terms of when “the payment is due” - FUCK that, those payments are designed to extract a ton of interest from me. If I only pay the minimum payments, or even $50 more than minimum, I end up paying 3-4x what I actually owe before the debt goes away.

This is why most people I know who are in their 40s or beyond have already paid more than the cost of their house in mortgage payments - and STILL owe hundreds of thousands of dollars. In America, this is considered normal. I consider it complete insanity.

_{Pay four times the cost of the house? ….what?!}

Worst of all, it makes people get used to the feeling of perpetual debt as “normal” - and they never end up paying it off, they just buy more stuff on credit and let it ride. Terrible, terrible strategy.

As Ramit Sethi says, paraphrased - “If your goal is to waste money on a bunch of crap, your best strategy is to pay off your debts immediately. Then you’ll have the maximum resources for buying fancy cheese.”

_{(cheese emphasis = mine)}

Here’s the math - if I put 45% of my money into debt payments, and I owe about $20,000 in debt, I’ll need to earn $44,444 in the next six months. Whoa, cool number.

Most people would see that and say - oh well, that’s crazy.

I see it and say: Challenge accepted.

Breaking Down a Huge Goal Into Smaller Chunks

There are six months left in the year. I’ll need to earn an average of:

$7,500 per month
$1,709 per week
$244 per day

I started this year earning $5 per hour. Now I’m earning around $30 per hour. I’ll need to get up to an average of about $100 per hour to work 20 hour weeks and reach this goal.

I think it’s easier to perform at a $100/hour level 20 hours a week, than to perform at a $50/hour level for 40 hours per week. The latter requires too much endurance, and besides, I’d like to spend all my spare time making music. I need to retain some energy for that.

_{pixabay.com // It’s a sprint, not a marathon}

Here’s my earnings for June (Steem multiplied by 1.16 to factor in expected earnings the next five days):

Steem Earnings: $1,500
Textbroker Earnings: $230
Constant Content Earnings: $130
Private Client #1 (Tech Blog): $600

TOTAL: $2,460
aka $615 per week
aka $87 per day

I need to triple my earnings to reach my goal. That’s not so bad! Everybody in the silicon valley hype-sphere talks about “10x-ing” your current output - all I need to do is “3x” it. Easy!

Of course it won’t be a perfectly even jump - I don’t go from $2,500 per month to $7,500 per month instantly and chill. It’ll be a gradual growth curve that needs to average $7,500 per month. It’ll probably look something like this:

July $4,000
August $5,500
September $7,000
October $8,500
November $10,000
December $10,000

Great. That means: My big goal is to pay off my debts before the end of 2017. My immediate goal is to earn $4,000 in the month of July.

Clarifying the objective is the first step towards figuring out how to get there.

_{See it how it is, then act.}

July’s blogs will be all about this task: I’ll show you my adventure to try and earn $4,000 in that month, an increase of about 75% from this month.

The most obvious thing is to cut out my low-earning shit - Textbroker and Constant Content are officially FIRED. I’ve got some new private clients I’m talking to, which should help. Lots of good stuff to talk about - and I’ll see you next week to talk about it :-D

——

PERSONAL FINANCE UPDATE, JUNE 26 2017

Assets:

Bank Account #1: Guilt Free Spending Account: $40
Bank Account #2: Business & Bills Account: $50
Bank Account #3: Emergency Savings: $80
Bank Account #4: Steem Power: 1,500 SP // $3,150

Miscellaneous Crypto Investments: another $200ish

Total Assets: $3,520

Debts:

Credit Card #1: $5,540
Credit Card #2: $240
Money Owed to My Dad: $12,000
Years-Old Debt to an Old Bandmate I just remembered: $700

Total Debts: $18,480 (Hey, it’s lower than I thought!)

--

past posts in this series:

Part 1: https://steemit.com/money/@heymattsokol/my-quest-for-creative-financial-freedom-pt-1-intro-explanation

Part 2: https://steemit.com/money/@heymattsokol/my-quest-for-creative-financial-freedom-pt-2-gawk-at-my-pathetic-finances

Part 3: https://steemit.com/money/@heymattsokol/my-quest-for-creative-financial-freedom-pt-3-showing-my-income-stats-and-why-i-m-putting-50-of-income-towards-debt-and-savings

——

_{It only takes ten seconds to join my weekly email newsletter, packed with mind-expanding media from around the web. Sign up here: https://mattsokol.us}