Welcome to part three of my debt free journey series. Be sure to check out the series introduction to catch up on anything that you may have missed. I also apologize for my absence last week. I will write more about that in the next few weeks. Today we will talk about how much debt we have paid so far.
According to this article on MSN last year, 80% of Americans are in debt. Within that 80%, at least 44% have mortgage debt included. The median amount of debt for the average American family is about $67,900 for households without a mortgage and $103,000 for families with a mortgage.
So where do we measure in this equation? In 2014 we started with a total of $114,000 worth of debt without a mortgage. This number included three college degrees, two car loans, a couple of small credit cards and one or two emergency room visits. We have since paid down over $12,000 of this debt including both car loans, all credit cards, and the emergency room visits prior to 2015.
With that being said, our amount of debt is now much larger than the starting number. We owe a whopping $124,000 in debt at this very moment. We got married in February of 2015 and were fortunate enough to pay cash for everything while we were paying down debt, so we do not have any wedding debt. Thank God!
While we have not added any new car loans, credit card debt, wedding debt, or student loans, we have racked up a sizable amount of new medical debt. My husband has had three surgeries, one outpatient procedure, and a number of doctor and emergency room visits since April of 2015. You can read more about his condition here if you are interested.
Although our amount of debt is pretty large for us not to have a mortgage, we are not discouraged. I know that we have been working hard at paying down our debt, and we will continue to do so. We still get excited at every milestone, and we enjoy using our budget to watch individual bills be paid down.
Our debt is separated into three large categories in order to see things more clearly. We have medical debt, student loans, and things (mostly medical) that have been sent to collections. The categories help us tremendously with our debt snowball. We have all of our bills organized by smallest balance to largest balance no matter the category. The way it works out is that the medical debt with a few of the collection items and smaller loan balances are being paid down first.
We completely understand that the interest is building up on our student loans, and we track the interest as well. Our thoughts are if we pay the student loans first, it will take longer for us to see any progress because the balances are much larger than the others. We need to feel like we are accomplishing something in order to stay motivated. We do pay the minimum balance on our student loans each month at the moment and plan to have a VERY large snowball by the time that we reach the loans in our process.
I couldn’t imagine having $50 and $300 medical bills being added to our collections category because we have decided to pay off our loans first. The loans are accruing interest whether we pay them first or last so we have decided to just leave them in their place based on the balance due.
I think that we have done well paying off debt even though we are still receiving new medical bills daily. It does not bother me anymore that our amount paid is going down while our amount left to pay goes up. If I stopped to dwell on this, I would probably become depressed.
Instead, we just focus on what we are accomplishing by paying the things that we can at the moment. The number of different medical bills that are sent for one surgery or procedure are ridiculous in my opinion and I think that everything should just be sent on one overall bill, but that is for another day. When a new bill comes in, we just stick in its place in our snowball. We are eager to pay off every penny of our debt because this is very important to us. We also have a few naysayers, but we know that it can be done.
My advice to any of you that are on a debt free journey is to just keep going. Do not get discouraged. You know that you have a goal and that the reward will be great when it is accomplished. Also, don’t forget to live and have fun during the journey.
Next week’s topic will be budgeting. I hope that you will join us as we tackle our debt one payment at a time.