How I Can Afford to Travel the World

If you read my last post, you know that two years ago I was deep in debt and had exactly $0 in savings.

So how was I able to quit my job two months ago to plan the round-the-world trip that I'll begin this Sunday?

And how much money do I have to spend on this trip, anyway?

Here are the short answers for those of you who don't want to wade through this whole post:

• a lot of self-control, some extra effort and a bit of good luck
• $26,000

Interested in learning more? Read on, my friends.

LET'S START WITH THE LUCK

I was desperate to find a job after I graduated college, and in the fall of 2009, I began working as a proofreader at an advertising agency. 

It wasn't my dream job — I had studied journalism and was unsuccessful in my this-close attempts to land a job with The Seattle Times — but it was work, and I was in no position to be picky. I had big credit-card payments to keep up with, you know.

This particular ad agency paid quarterly bonuses to all employees once they had worked there for three quarters. I began earning bonuses in July 2010 (after I had already become debt-free), and I collected six bonuses during my time there.

Each bonus was in the mid-to-high four figures, and a few were five figures. Altogether, they more than doubled my annual salary.

I consider that to be very lucky indeed.

NOW FOR THE SELF-CONTROL

I could have easily raised my standard of living to meet the amount of money I was making. I could have bought a new car, upgraded to the latest iPhone every time one came out and updated my closet with nicer clothes. It seemed like many of my co-workers did just that.

Instead, I continued to live on my base salary (less than $30,000) and squirreled those bonuses away in my savings account. Maybe I wasn't the coolest kid in town with my 1993 minivan, my lack of an iPhone and my arsenal of cheap, plain t-shirts, but I had more than $10,000 in the bank by the end of 2010.

I eventually gave myself permission to spend money on some stuff — including expensive stuff — but only if that stuff was really important to me. In 2011, I bought a new laptop and a DSLR camera, entered several road races and traveled to Hawaii, Portland, Vancouver, B.C., New York City and Las Vegas.

Sure, I would have a lot more money in my travel fund now if I hadn't spent money on those things, but I don't regret a single penny. Every purchase and experience was planned and meaningful; none of it was frivolous shit.

OK, maybe this beer was frivolous, but I stand by it, too.

Plus, it kept things exciting when the ultimate goal — a round-the-world trip — seemed so far off in the future.

A LITTLE EXTRA EFFORT GOES A LONG WAY

It was awesome to watch my savings grow by leaps and bounds every three months, but I felt like I could be saving even more.

In July 2011, I took a good look at my fixed monthly expenses and realized I had no immediate need for $350 of each paycheck. That's an extra $700 a month, or $8,400 a year! (I guess I lived wayyy below my base salary.)

I immediately opened an ING Direct savings account — nickname: Freedom Fund — and set it to automatically withdraw $300 from my checking account each payday. I decided to save $300 per paycheck instead of $350 just to give myself a bit of a cushion.

Guess what? I never missed that $300 per paycheck. Not once. 

I continued contributing to the Freedom Fund all the way through the final paycheck I received on Nov. 30. The account now holds more than $3,300. That represents thousands of dollars I never missed, but easily could have wasted on a bunch of little things if it had remained in my easily accessible checking account.

PRIORITIES, PRIORITIES, PRIORITIES

I had planned to continue working through 2012 to become fully vested in my employer's 401(k) match, but I became absolutely miserable and just couldn't stick it out.

By changing my initial plan, I missed out on adding thousands of dollars to my 401(k) and tens of thousands of dollars in bonuses to my travel fund. At first, I felt crazy to give it all up.

But it just wasn't worth another year of my life. In this video, I said, "Over the course of my life, I can make the money back. I just can't get the time back."

You know what, though? I doubt I'll ever make that money back, and I'm not at all torn up about it. I will never regret my decision.

My friend Mike Krass once left this incredible comment on my blog: "No matter how rich or poor, young or old, wise or foolish you are, there is no force powerful enough in this world to recover time for those who have let it pass them by."


BACK TO THE MONEY I DO HAVE

See how easy it is to get caught up in the money you could have, no matter how much you already have? Ugh.

$26,000 is quite a bit of money and I'm happy to have it. (This is what I have after being unemployed for two months and paying for all of my pre-travel preparations, by the way). It may not be much to speak of in terms of getting by for a year in the U.S., but it's more than enough to have some fun around the world, especially while traveling in developing countries. (Check out Shannon O'Donnell's detailed RTW budget — it cost her about $18,000 to visit 15 countries in 11 months.)

I'm operating with a fixed amount of money, though, with no current plans to make more money as I go. My travel fund will only go so far, and I have to consider how much I'll need to return home, if that's what I end up doing. Who knows!

It'll definitely be a challenge to keep an eye on my spending while also making sure to enjoy myself. That's why I'm going to New Zealand and Australia first — they're expensive! I want to visit them while I still have plenty of money.

I plan to use these frugal strategies throughout my travels:

• Stay in inexpensive hostel dorms and guesthouses
• Couchsurf
• Cook my own food when I have access to a kitchen
• Seek free Wi-Fi or use my Kindle 3G to connect
• Refill my Klean Kanteen instead of buying bottled water (and use my SteriPen in areas with unsafe tap water)
• Use my credit card that has no foreign transaction fees (Marriott Rewards Premier Visa — also earns points that can be converted to miles)
• Redeem points and miles for major flights
• Travel slowly and overland as much as possible

Feel free to add your money-saving travel tips in the comments!

I've loosely planned my trip through July, and the rest of the year is open. If I still have money to travel by then and I'm not sick of life on the road, I'll keep going. If not, I'll do whatever I need to do.

I consider myself extremely privileged to be able to travel for any amount of time, let alone for a full year. I'll do my best to stretch my money far and wide, but no matter what, I'll have a hell of a time.

***

I plan to put together a post about my packing list this weekend and set it to post on Monday. After that, full blog posts will likely be few and far between due to my uncertain access to Internet.

I should be able to update my Twitter and Facebook page via the Kindle 3G, though, so check them for updates!

There are only two days to go until I depart. While many of you are watching the Super Bowl, I'll be in the air heading to New Zealand!

Let me know who wins. : )

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How I Found an Extra $8,400 in 20 Minutes — Seriously

On July 16, 2010, I paid off the very last of my debt. After six months of intense number-crunching, frugality and focus, I was rid of the $9,000 weight that had been on my shoulders for the past few years.

For the next six months, I focused that same intensity on saving. I paid myself first and spent only what I had to, also allotting a very small amount of money to spend fun stuff to keep me sane. I was able to move out of my mom's house the day after Christmas with more than $10,000 in the bank.

Since then, I've enjoyed living in my own place and not having to worry so much about money. I've put more money in the bank (nearly double) and also spent a fair amount, too. I vacationed in Hawaii, spent a weekend at a conference in Portland, went skydiving, paid several race entry fees and have already paid for a few more small trips, including a long weekend in New York City this fall and a few days in Las Vegas to run my first marathon in December.

What I haven't been doing is budgeting or consciously saving money from each paycheck.

I've decided to change that this month and go back to basics. I've had my fun; now it's time to get serious about the things I want in life and how I'm going to fund them.

I'd love to travel much more, dive further into photography and continue to do adventurous activities — and all that ain't coming for free.

For the first time in a long time, I wrote an old-school budget using a pen and paper. I figured out my all my monthly expenses, which I really hadn't done since I moved out of my mom's house:

• Rent
• Utilities
• Internet/cable
• Car insurance
• Cell phone
• Prescription

I also decided what I'd like to realistically spend on things that don't have fixed monthly costs, but are instead determined by my choices:

• Groceries/toiletries
• Eating out/having fun

My health insurance, 401(k) contributions and bus pass payments come directly out of my paycheck, and I fill my gas tank maybe once every three months. I own my car outright. My gym membership is prepaid for a year. I don't really shop for clothes, and I rarely get my hair cut. Pretty much anything else I'd spend would be by choice.

I also hadn't really looked at my income in relation to my expenses. It recently changed (in a positive direction — woo-hoo!), but I wasn't sure how much more I was earning per month than I used to.

Once I figured everything out, here's what I discovered: I could be putting as much as $700 per month into savings.

Whoa. That's $8,400 a year!

Good thing I figured that out, huh?

The reason I have as much in savings as I do is because I earn substantial quarterly bonuses at my job. I put those bonuses directly into savings, and it all adds up quickly. But I've overlooked the additional money I could save from each paycheck, and that's going to end right now.

I set up my first ING Direct savings account tonight and deposited $300 into it. I also set it to auto-transfer $300 from my checking account on the 15th and last day of each month (my paydays).

Now I'll automatically be saving $600/month that I otherwise would have let sit in my checking account, only to be wasted on a bunch of little things simply because it was there.

I'll see how the $300-per-paycheck works out over the next few months as I actually live on this budget, then adjust the auto-transfer higher or lower accordingly. I'm hoping that I won't even notice the money when it magically leaves my checking account, and that I'll stockpile $3,600 or more in the ING account by the end of the year.

I've named that account my Freedom Fund.

As I look back on the last year and a half, I can identify three distinct periods of how I used money:

• Six months of intense debt repayment
• Six months of intense saving
• Six months of enjoying and spending money while still saving some

Ever since I've become debt-free, my biggest mission has been to stay that way. That means I need to find a balance between enjoying money and continuing to save it.

I have no regrets about how much money I've spent in the past six months; everything I spent it on was completely worth it. But now I'd like to put more of a focus on saving again, and I feel good about the steps I've taken to do so.

Personal finance is about much more than getting out of debt. It's about deciding what's most important to you and directing your finances to support those things.

One of my favorite ideas from Dave Ramsey is that rich people tell their money where to go, and broke people wonder where it went.

I don't ever want to be left wondering.

Have you re-evaluated your finances lately? What kind of money could you be missing out on if you haven't?

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1/1/11 in photos, plus 2011 goals

The Resolution Run 5K and Polar Bear Dive...

Fish and chips and beer at Paddy Coyne's...

Aaron doing something I cannot do in front of a random apartment building...

Not pictured: a delicious nap, a ridiculously cheesy grilled cheese sandwich, watching Easy A and watching episodes from the first season of Dexter.

A solid first day of the year.

As for the rest of the year...


Devon's 2011 Goals


Running

- Run a sub 27:00 5K — 2/12/11
- Run the Warrior Dash — 7/16/11
- Run a 10K (Bellevue 10K) — 4/17/11
- Run a 15K (Seattle's Best 15K) — 5/21/11
- Run a half marathon (Seattle Rock 'n' Roll) — 6/25/11
- Run a marathon (Las Vegas Rock 'n' Roll) — 12/4/11

Writing

- Develop a regular posting schedule for this blog (3x a week; M/W/F?) — Ongoing attempt!
- Be honest — Ongoing
- Be myself — Ongoing

Finances (i.e. the thing I've gotten lazy with lately)

- Write a budget before each payday (twice a month) — Didn't do this!
- Go back to using cash for discretionary spending — Nope
- Save bonuses, as well as a portion of each paycheck — started automatic savings account 7/1/11
- Have one year's worth of salary in savings by the end of 2011 — YES! Allowed me to quit my job 11/30/11

Health

- Get at least 7 hours of sleep per weeknight — HA! I was terrible with this
- Eat more fruits/vegetables/whole grains — I did well with fruits/veggies and AVOIDED grains for stomach reasons
- Eat less dairy (cheese in moderation, especially) — Success
- Eat even less meat (I hardly eat it anyway) — I ate MORE meat (still not much) for protein during marathon training
- Find and stick to half-marathon and marathon training programs — Very successful!
- Do more outdoor activities (like hiking) — I hiked, biked, skydived, learned to surf, swam and ran my little heart out

Random

- Go skydiving again — 3/2/11 on the North Shore of Oahu
- Learn how to wakeboard — Nope
- Go rock climbing (even just at REI) — Nope
- Have coffee with Nicole Brodeur — I emailed her and she agreed, but I failed to follow up. Oops.
- Visit New York City — 10/7-10/10
- Have regular lunch/dinner dates with my dad — Not as many as I would have liked!
- Buy a digital SLR camera and use it — 2/9/11
- Buy a new laptop — 1/29/11


That's all I could come up with for now. It'll be nice to revisit this list and be able to cross things off, or check back on it when I'm in a rut and see what I need to work on achieving.

Speaking of crossing things off... here's my completed (and very short) 2010 list of goals:

1. Pay off my credit card by my birthday.
2. Pay off my student loan by July 1 (actually July 16).
3. Move out of my mom's house by the end of January 2011 with no debt and more than $10,000 in the bank.

The final portion that I just crossed off the list — in bold — was moving out of my mom's house. I moved into a townhouse with two of my great friends on December 26. I love it so far, and I'm so glad I was able to start 2011 out on my own.

2010 was the year of getting my finances straight and becoming independent. 2011 will be about maintaining and adding to what I achieved financially in 2010, plus tackling new athletic challenges, embarking on more adventures, embracing new hobbies and overall becoming a healthier person.

Bring it on.

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G.O.O.D. Tip #3: Get thee to an ATM — start paying with cash

I can't tell you how many people have completely freaked out on me when I say that I always carry and pay with cash.

Remember cash? Those green, paper bills you see sometimes? You're still allowed to exchange them for goods and services!

"But aren't you afraid of being robbed?" people ask. Yes, I am afraid of being robbed, whether I carry cash or not. That's why I have pepper spray in my bag and a baseball bat in my car.

Just give me a reason.

And let's face it: I'm not Diddy. We're talking about Hamiltons here, not Benjamins.

The fact is, I've never been robbed (and I'm probably jinxing myself, but, again — baseball bat), but I have gotten into trouble by using my debit card and credit card. It's so easy to overspend when all you have to do is slide that little piece of plastic. It's so difficult to mentally stick to a budget while you're out grocery shopping or bar-hopping.

I use cash to make things easy on myself. Prior to each paycheck (twice a month), I sit down to create my next budget. I list all the regular payments I'll need to make during that period; determine how much money I'll immediately transfer from my paycheck to my savings account; and designate a small amount of money to take out in cash to spend for two purposes: groceries/toiletries and going out/having fun.

Usually I divide the amount equally between these two purposes, but if there are birthdays or other events approaching, I'll lump more money into the fun category.

Once I have this predetermined amount nailed down, I hit the bank after I get paid and withdraw the cash. I divide it up into its two purposes, make note of the starting amounts on a couple of post-its, and keep track of my spending on those post-its throughout those few weeks. When I run out of cash, I run out of cash. That's it.

This method has helped curb my spending for a few different reasons:

• It's much more difficult to part with tangible money. I tend to think twice about handing over a bunch of cash when I can physically see how much I'm spending. With a debit or credit card, the swipe is equally painless whether you're spending $7 or $70.

• Having a predetermined "allowance" in cash encourages more frugal decisions. If I have $50 designated for fun stuff that needs to last me two weeks, do I want to blow it all on one dinner? Or would I rather have one beer on Friday night, go out to lunch on Tuesday, buy an inexpensive shirt on Thursday and see a movie on Saturday? With a debit card, I might have spent the $50 on dinner without thinking, then spent more money later on a beer, lunch, a shirt, etc. Cue me at the end of the month asking: "How did I overspend? Where did all my money go?"

• It's easier to accept or reject social invitations when you know that you have X amount of money to spend (before you get into a situation where you're forced to spend money anyway). If my friend asks me to go get mani/pedis with her and I have $10 left in fun money, I may politely decline the invitation and suggest a less-expensive alternative. Or, I may pull $40 that I have left for groceries/toiletries and cobble together enough cash to accept. Either way, I'm able to think ahead of time about the money required for this particular activity, and whether I'm willing or able to spend it. (If your friends make fun of you for this, work on getting some better friends.)

Above all, using cash puts me back in touch with reality and makes me feel more in control of my spending. I'm a bit of a control freak — hello, I'm a proofreader — so I love the fact that I can look back at any one of my budgets from this year and find those little post-it notes stapled to the page, along with receipts, detailing exactly how I spent my cash.

Dave Ramsey likes to say that rich people tell their money where to go; poor people wonder where it went. Try using cash to help you stick to your budget, and you just might like how it works out.

G.O.O.D. Tip #1: Get organized — write everything down

The first tip in my amateur getting-outta-debt series is simple:

1. Get organized — write everything down

Find a piece of paper and a pen. Make a list of all of your debts: credit cards, student loans, bank loans, car loans, mortgages, money you owe friends or family members or dealers, etc. (Just kidding about the dealers, but no judgments here.) Once you have a complete list, do some digging and figure out exactly how much you owe on each debt.

If you're like me, you won't know this off the top of your head — I was too afraid to look at the big, scary numbers — so pull up your online records, rescue your crumpled statements from the back of a cluttered drawer, call your parents and ask how much you owe them (I guarantee you they know!), whatever it takes.

When I took this first step in January, my list looked something like this:

• Credit card: $4,700
• Student loan: $2,800
• Mom: $1,200 (for those pesky minivan repairs)

Yikes. Looking back, I recall that once I had these figures, I did not add them up — and that's a good thing. These debts were overwhelming enough individually; having the grand total burned into my brain would have only made me feel more hopeless. For your own mental health, it's best to attack each debt one at a time.

Your plan of attack will start with a written budget. At first, I created a budget in Excel (which is how my mom manages hers), but I quickly grew tired of fiddling with cells and formulas. It didn't help that I use Excel all day at work; using it at home only made me feel like I was still at work. (Also, my laptop died around this time and I lost the budget template that I had created. Blast.)

It turns out that good ol' pen and paper worked just fine for my obsessive-compulsive mind. I like to be able to scribble my budget down quickly, cross things out, highlight things, staple receipts to the paper, etc. It works for me; you can do whatever the heck works for you.

First, list your monthly non-debt expenses. These should be essential, recurring expenses that are about the same every month. For example, mine were:

• Cell phone
• Car insurance
• Gasoline
• Medical (prescription)
• "Rent" (my mom charges me $65/month to offset her food and utility bills. Yup.)
• Groceries/toiletries (I buy some of my own food, too, just for kicks)

If you're not living with your parents, you'll also need to include:

• Rent or mortgage payment
• Utilities (water/sewer/garbage, electricity, gas, etc.)
• Cable/Internet
• Home phone (please cancel immediately — welcome to 2010)

And don't forget miscellaneous expenses:

• Other insurance (if not automatically taken out of your paycheck)
• Other transportation (bus pass, parking permit, etc.)
• Anything else that I'm not thinking of!

Once you have your list of recurring monthly payments, add 'em all up. Subtract your total monthly payments from your monthly income. The amount of money you have left over is the amount you could be using to pay off your debt.

However, I had another category in my budget that was quite essential to my getting-outta-debt success:

• Going out/having fun

We've all gone on diets. When you try to restrict yourself too much, you only end up binging on Reese's Peanut Butter Cups (my drug of choice) by the end of the third day. Then you feel like you've ruined your diet, and you give up completely. If you don't allow yourself to have some fun, you will probably fail.

I used this category as an "allowance" for myself. Each month, I gave myself a small amount of money to blow however I wanted. I was able to go to bars, go out to dinner, buy an inexpensive item of clothing here and there, whatever — but I only used the cash that I had allotted for that purpose, and once my cash was gone, I didn't spend any more.

You will probably be the designated driver for a while. Just sayin'.

This will also help eliminate mindless spending with your debit or credit card. That's what got me into such deep trouble in the first place — lots of little (and some big) purchases that added up over time.

Now we'll look at where you'll be throwing the difference between your income and your monthly expenses. Next to your list of debts, make note of the minimum monthly payments.

My foggy-memory version:

• Credit card: $4,700 — min. payment: $150
• Student loan: $2,800 — min. payment: $50
• Mom: $1,200 — min. payment: $0 (a mother's love!)

Along with your monthly expenses, you'll continue paying these monthly payments. But, here's the fun part! Pick a debt that you want to pay off first. Dave Ramsey suggests that you pay off the smallest debt first; this will give you a relatively quick "win" and motivate you to keep going (imagine the equivalent of losing 5 lbs. in the first week of a diet — woo-hoo!).

I followed his advice and chose to pay my mom back first. Then, I would attack my high-interest credit card. Since the interest rate was so outrageously high compared to the rate on my student loan, I decided to whittle down the balance quickly, thus reducing the interest charges as well. Last but not least, my student loan would bite the dust.

Let's say for the sake of example that I came up with $500 a month to throw at debt (I was actually able to come up with more; yay for living at home!). I would pay $150 on the credit card, $50 on the student loan, and have $300 left to give my mom each month. I would do that every month until she was paid in full. Then I would continue to pay $50 on my student loan each month, while throwing $450 at the credit card until it was paid in full. Then I would throw the full $500 at the student loan until it was paid off. This is Dave Ramsey's debt snowball plan — click to read more.

Since I knew how much I could afford to throw at my debt each month, I was able to make a "debt payment schedule" — basically, I created a chart that helped me project when each debt would be paid off. This was another motivating feature of my plan (and another Dave Ramsey trick) — I caught a glimpse of freedom in the very near future! I highly suggest you make your own debt payment schedule.

My projections were almost dead-on, too (keep in mind I get paid twice a month; my projections were based on which payday would yield the final payoff):

• Mom projection: March 15; Actual: March 15
• Credit card projection: May 15; Actual: May 15 (read about it here)
• Student loan projection: July 1; Actual: July 16 (read about it here)

These projections turned into solid, written goals. I was in a competition with myself to meet these deadlines, which motivated me to stick to my budget.

OK, that was a really long first tip. But once you have everything written down — your debts, an accurate budget and a debt payment schedule — you have a solid framework for starting to pay off your debt. It was so key for me; all I had to do was follow the plan once I had it in writing.
_______________________________________________

The next tip will be an exciting one! Be on the lookout for G.O.O.D. Tip #2: Get angry — raise a little hell
_______________________________________________

Disclaimer: I'm not a financial expert by any means, and the only proof I have that these tips work is the fact that they worked for me. I don't claim that these tips are new or original; I learned how to get out of debt from Dave Ramsey, and I will link to his Web site on several occasions, as well as other Web sites as needed. I simply add my personal experiences along with these tips in the hopes of motivating and/or helping others to get out of debt. Cheers!

Getting the ball rolling

I'm no financial expert, but I successfully got myself out of debt — with help, of course. Not help in the form of money, but in the form of support and wisdom.

I have to thank my mom, who sat me down and set me straight. I have to thank Dave Ramsey, whose books and simple get-outta-debt plan guided me through the process. And how could I forget my dad? His college graduation gift to me was a check for a nice chunk of money, along with two of Dave Ramsey's books, Financial Peace and The Total Money Makeover. The accompanying "Con-GRAD-ulations!" card said, "Please read the books before you decide what to do with the money!"

I cashed the check. I did not read the books until seven months later. Pretty dumb for a recent college grad with a shiny, new degree, huh?

Without all this support, I don't know if I would have had the knowledge, motivation or strength to get rid of my debt so quickly. I needed people. I needed advice.

The information I've learned over the course of this experience is simple. There is no secret method of getting out of debt. While reading The Total Money Makeover, I thought, "You mean getting out of debt and taking control of your finances is really this simple? This is all you have to do? Why didn't anyone tell me this before?!?"

(I'll say here, as I have before, that simple does not mean easy. For example, turning down a freshly baked chocolate chip cookie is a simple act, but — at least for me — it is not easy!)

No matter how simple it is,  nobody taught me how to manage my finances before I actually started earning money. Once I had my own money, I got into a bad habit of spending frivolously without budgeting or saving.

Luckily, learning how to manage your money is a better-late-than-never kind of thing. If you're in financial trouble, the only thing preventing you from getting out of it is you.

Think about it: Every month, you decide where your money goes. If you keep track of it, you can make it go where you want it to go rather than later wonder where it went.

If you're in debt and you want to get out, your priority will be throwing as much money as possible at your debt. All you have to do is decide.

For anyone that may need them, I'll be posting some tips for getting out of debt in the coming weeks. I thought they needed a catchy name, so at first I thought of "Getting Outta Debt Tips" — or G.O.D. Tips. Since I usually try to avoid a smiting from above, I went with "Getting Out Of Debt Tips" — G.O.O.D. Tips.

Whether these G.O.O.D. Tips are actually GOOD or not is up to you. If they help you or someone you know, great! If you couldn't care less about personal finance, don't read 'em.

Again, I'm not a financial expert by any means, and the only proof I have that these tips work is the fact that they worked for me. But I know from experience that when you're sitting in a hole of debt — whether you're $500 deep with a retail credit card or $50,000 deep with a student loan — anything helps, and once you decide to turn things around, the only place you have to go is up.

Before and after

Speaking of how quickly things change... this is a photo of downtown Seattle at 8 a.m. on Friday:

The city was in a cloud. I work near the top of my building, so the view outside was pretty freaky. I couldn't see a thing — just dense, white fog enveloping everything. It lasted a couple of hours, too.

By lunchtime the fog had cleared up, but it was still pretty cold out. As I walked over to the market to grab lunch, I zipped up my fleece all the way to my chin.

By the time I walked back to the office, the sun was out and I was sweating.

Welcome to Seattle.

I paid off the last of my student loan on Friday, July 16.

In mid-January, I was in an all-encompassing fog of debt. Now, six months later, the fog has dissipated and the sky is clear. I got rid of all of my credit card debt, my student loan debt and even an embarrassing debt care of the Seattle Public Library — a 60-cent fine.

It's a great feeling to transfer a big chunk of my paycheck into my savings account rather than send that chunk out to a credit card company or to the U.S. Department of Education. (I actually didn't mind sending money to the latter — it made it possible for me to go to UW and get a great education. Thanks!)

It's also strange to be completely in the clear. It's the same feeling I would get after turning in a huge paper or taking a difficult exam in college — I was done and should have been relieved, but instead felt lingering anxiety about the outcome. I had spent all that time working toward something, then didn't know quite what to do after I was done.

I've mentioned how important it is to have set goals; now I just need to focus on my new goal of saving up enough money to move into a place of my own. I'm aiming for, as Dave Ramsey suggests, enough money to cover 6 months of living expenses. That means 6 months' worth of income. That means this next part will take me a while.

My new goal is to move out in January. If I stick to the new plan, I'll have the right amount of money to feel secure on my own. I'll be able to be home with my family for the holidays, then start fresh in 2011. Also, it'll be about a year from when I started this Big Debt Payoff.

I'll look back on 2010 as the year I changed the course of my whole life. It was not always fun and not always easy, but certainly worth the relatively small amount of time it has taken to make my remaining years that much better.

For the win

Victory is sweet.

I actually paid off my credit card in full on April 30 and made a small interest payment in mid-May ($2.40!), but this is the first time I've gotten this email alert with the most beautiful balance in the world: $.00.

I wrote here about my struggle with debt and my plan to get out of it for good. In January, I actually started being smart with my money and wrote a budget, plus a few major goals:

1. Pay off my credit card by my birthday.
2. Pay off my student loan by July 1.
3. Move out of my mom's house by the end of January 2011 with no debt and more than $10,000 in the bank.

It feels so good to cross off my first goal, especially since it means that I have gotten rid of something that has been a drag on my life for four years. After spending carelessly for so long and ignoring the mounting interest each month, I finally woke up and got mad enough to do something about my debt.

I didn't just write a budget. I crafted a plan of attack.

And although I've lived on less these past five months, I can't say that I miss my spendthrift ways. I used to waste tons of money on eating out, going to bars (yay, college!) and buying clothes (with my irresistible employee discount), and then wonder where all my money went. Now I take a small amount of cash from the ATM each payday for fun stuff, and I make it last until the next payday. In fact, oftentimes I have cash to spare when the next payday comes.

(I should note here that it helps to live 30 minutes away from all your friends and to wake up at 5 a.m. five days a week — you won't have much time or energy for expensive fun.)

I've also lost 10 pounds since January. I attribute this to the fact that I have been eating less, eating better, drinking (wayyy) less, getting more sleep and getting more exercise than I ever was during college.

Oh! And I started contributing 6% to my 401(k)! I've got 42 years of compound interest on my side, baby.

Compound interest is so sexy when it's working for you, not against you.

Aaaand I've been reading too many personal finance books. Good night.

Money troubles, and why I love my mom

My mom has influenced me in many ways that I'll always be grateful for. She instilled in me, early on, a lifelong love of reading. Most recently, she's given me the invaluable gift of straight talk.

In January, I mentioned to her that I would like to move into an apartment with a friend of mine in April. She sat me down and showed me how to create a budget in Excel, and how to figure out how all of my expenses would stack up next to my income. The problem was (and is) that I have a student loan. And also something that I had failed to mention to her — make that, had purposefully hidden from her — credit card debt.

Without these debts, I could have been saving up tons of money to use toward striking out on my own. Instead, I was throwing as much money as I could (I thought) toward paying down my credit card debt, while not saving anything and not really keeping track of my frivolous spending.

I broke down and told her about my credit card debt — nearly $5,000, on top of my relatively modest $2,800 student loan balance. She didn't flinch. Instead, she helped me craft a plan to aggressively pay off the debt, and immediately checked out a book from the library for me: Dave Ramsey's Total Money Makeover.

I was skeptical about this Dave Ramsey thing. I didn't want to be preached to about money (although, obviously, I needed to be). But my mom put the book right in front of me and asked me to read it. With two hours of free time each day on the bus, how could I not?