January 2021 Debt Snowball Update
It’s time for the January 2021 Debt Snowball Update. I’m so excited to share what happened this month.
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Our budget was pretty normal this month. We actually came in under budget for all of our categories.
We put all of our extra money from each category towards our debt snowball.
Being that we paid off our car loan in the month of December, the only debts that we have left are the collections and our home loan.
Debt snowball update
Just to give you a recap on our collections, we owe $6,741 and It’s all for medical bills. This debt is split between four different debt collectors.
I wasn’t really sure how to go about this, so I searched Google.
The first thing that I found was to pull your credit report. We did that and found the name and address of the four debt collection agencies.
After that, we came up with a plan to get this debt paid and removed from the credit report if possible.
As I mentioned, the $6,741 is split between four debt collection agencies.
The next step was to send a debt validation letter to the debt agencies.
We don’t know how well this is going to work, so we decided to start with debt collection agency #4 since it has the smallest balance.
We found a sample debt validation letter online and decided to use that as a starting point. It was easy to update and add our information.
In the letter, we were very clear about needing to know the amount of debt, the name of the creditor, which is the original company that we owe, and any supporting documents that they had to prove that we actually owe this debt.
Once we did that, we sent the letter certified and we’re waiting for a follow up letter now.
Make sure that you never sign debt validation letters. Don’t include a phone number, or email address, either. Keep all communication on paper to have everything in writing.
Depending on the company’s response, we’ll either pay the $73 or a lesser amount as long as they agree to stop reporting to the credit bureaus and to remove the debt from my husband’s credit report.
If they don’t agree to that, I’m really not sure what to do at that point but we will deal with that when the time comes.
Since we’re not actively sending money to pay off any debt, we’re saving the money that we would be paying towards debt in our debt payoff category to have when we move on to the next debt agency.
Now, to give you a few totals for our January Debt Snowball. We paid our mortgage, which is $1,265.64.
In addition to that, we put $441.74 into our debt snowball category while we are waiting on the response from the debt collection agency.
The last thing that I want to talk about is our three goals that we set for 2021.
We want to save money for a car because we don’t ever want to have a car payment again.
The second goal is to pay off $25,000 worth of debt in the year 2021, and the last goal is to save $10,000 for a home repair and maintenance category.
In the month of January, we were able to put away $1,291 for our car replacement fund. That’s the money from our stimulus checks as well as $91 that we had left over from one of our budget categories.
We also saved $235 towards the home repairs and maintenance category. That brings our January savings to $1,526.55.
The bottom line
I think that is pretty good for the first month of 2021. Hopefully we can keep this momentum with our debt snowball, as well as with our savings goals.
Now, I want to hear from you. How did your debt snowball go in the month of January? Let me know in the comments.