The Momentum-Building Magic Of Small Gains

We’ve been “paying off” our debt for what seems like forever. The underlying problem was our bad attitudes about money.  Every time there was a little available credit, we broadened our definition of what was “affordable.”  We would bring the balances down, only to build them back up.  Now that we’ve changed our perspectives and made awesome goals for the future, our finances are finally starting to recover.  Incrementally, the small gains of our efforts have combined to give us a big push towards the finish line of financial semi-independence.


road, speed, momentum, personal finance



It should come as no surprise that I never gave that much attention to my credit score. Despite our debt, it was never that bad, but it was never very good either. I was just another example of the common problem of financial complacency.  We settle for having some debt, because that’s what is perceived as normal. But, in getting really serious about our finances over the past couple of years, an unintended side effect occurred: our credit scores drastically improved.


One of our credit cards includes a monthly credit score report. I would casually glance at the line graph showing upward movement, just thinking “that’s cool.” Then, my focus shifted to the dreaded interest charges and reviewing our expenses for ideas on new ways to cut back. I always equated credit scores with applying for more credit cards (not doing that) and applying for a mortgage (happy in our current home for the foreseeable future). While the improving credit score registered as a positive, it didn’t really seem that important.


It’s funny how the mail offers seem to increase as you pay off credit cards. These easily-identifiable pieces of mail get automatically tossed in our junk mail that gets turned in for money (post on that coming soon).  However, Mr. Smith actually opened one the other day and I am so thankful that he did. It was for a debt consolidation loan through Discover. We already have one consolidation loan that we opened about a year ago. This was where we were with the credit cards, just last month:


  1. $3,494.15 at 15.24%
  2. $1,731.94 at 9.9%
  3. $175 at 0% (until January 2017)
  4. $2,435.88 at 23.49% (paid off every month)
  5. $9,015.43 at 13.24%
  6. $13,052 on Debt Consolidation Loan at 14.49%


Mr. Smith convinced me to apply for a new loan, due to my improved credit score (752). He thought that they would probably give us a really good interest rate. I didn’t really expect that it would be very different. However, since there were no fees, I figured that there was nothing to lose.  Ten minutes later, after a quick phone call, I was approved for a $25,000 loan at a rate of 7.99%.  That rate is lower than every single one of our credit cards!


We are really starting to get excited about paying off our debt. One month ago, I lamented our lack of forward movement due to car repairs, a vet bill, and my sister’s wedding. Now, we can really start to see the light at the end of the tunnel. In decreasing the amount of interest we pay each month, we can pay off more principal. This statement has been true since we started our repayment mission.  However, the effect multiplies over time and in a huge way with this new loan.  We will be saving approximately $70 in interest every month, just on the new-versus-old consolidation loan. That’s an extra $70 that we can put towards paying off our debt, every month!


I am super excited to announce that we will be entering 2017 with no “credit card debt.”  We will only have the consolidation loan with a relatively low interest rate. The plan is to pay that loan off in full by the end of 2017 (far ahead of the 36 month repayment plan).


In paying off the debt consolidation loan, we will have approximately four years (2018, 2019, 2020, and 2021) to finish fixing our finances. The next focus will be my student loans and the mortgages. We are continuing to pay on them, but after the loan is gone, we can throw a lot of money towards those debts as well as allocating more of my income towards the 401K.


The momentum is building, all thanks to the compounding power of small steps we’ve taken to build a better life.  We adopted frugal habits to keep our expenses low, while earning some extra money to pay off our debt.  As the debt slowly decreased, our credit scores have increased.  This allowed us to obtain a much lower interest rate on a consolidation loan.  Less interest means that we have more money to pay off principal. In June, I posted about my sense that our momentum was shifting, from falling further into debt with any unexpected expense, to steady forward progress.  Now, it feels like we’re picking up speed.


Mr. Smith has gone along with all of the plans, but I think he always doubted whether these rather extreme goals would come to fruition. The recent changes have made him excited about getting the debt paid off and for what comes afterward.  I know we’re really doing this when Mr. Practical starts to agree with the timeline and milestones for our journey.  The future is bright and we’re finally seeing the rewards from our hard work.  For anyone else struggling to get out of debt, take note of how quickly our outlook changed.  And, I’m confident that this progress will effectuate further gains, at an even quicker pace as we venture forward on the path to our dream life.  I promise, you too will see results if you just keep working at it.





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