New Goal for Paying off Auto Loan and Others

Back in April, I laid out our goals for paying off our debt. In there, I figured that after paying off the credit card debt, we could put all our resources towards the auto loan. The earliest I figured we could pay that off was August of 2014. Well, now that we have paid off the CC debt earlier, I believe that we can tackle the auto debt earlier. If all goes to plan, we will have it paid off by December of 2012. That would be welcome news, as we would then begin to tackle the 2nd mortgage.

By then, the mortgage will have about $56000 remaining. I would give us 3 years of accelerated payments to finish off that loan. That would be December of 2015. All that would remain now would be the 1st mortgage with $115000 remaining in principal. By throwing all that extra dollars($1350) into the principal every month, I see us paying off this debt within 3 more years. This means by December of 2018, the house will be all ours. This is one lofty goal, but if we can get back to two incomes next year, it will be totally doable. Also, I plan on working in some extra hobby income as well.

Mid December 2010 Update

It has been some time since my last update. I have been super busy and not had much free time to think about a post. Lots of stuff happening between work and home. We have made a big decision to use some of our retirement savings to level our debt. I know that this is number 1 on the list of things not to do financially, but with our situation (one income, mounting debt payments, chronically sick child), we felt this absolutely necessary.

Doing this is actually saving us money now, since we don't have a that 6% finance charge every month anymore. It is one less expense that we don't have to account for. Also, we are not having to set aside $380+ towards debt payment. It eases our monthly overage quite a bit, almost putting us in the black when we get some extra income in.

So with that said, here is our latest new worth statement.

So we see that our retirement accounts have taken a hit, but we have the up-tick in savings. Half of those savings will go towards finishing off the remaining credit card debt as well as another outstanding one. From here, we will see where our tax return and next years bonus put us. I would like to eliminate the auto loan next. Also, we hope to bring in some extra income with some ideas that I will go into later.

Big Day Today

Last week, I stated that I would put $1000 towards our one of our outstanding credit cards which is at 4.99%. Well, today I did just that, knocking the balance down to around $5806. I did not stop there though.

As I was looking at our other outstanding credit card, which is at 1.99%, I decided to check out my rewards balance. I was elated to find I had enough to throw $25 at that balance. It is now down to $6925!! That brings the total of both down to $12781. Boy that that feel good. Now, I wish that I could throw this type of money at the balance every month, but this was a great opportunity.

I won't have this chance to bring the debt down for a while, as we have some summer projects lined up. We need to finish reseeding our lawn and also need to retile the bathroom and put in some new fixtures. While these are some big expenses (probably around $500 total), they are sorely needed. We want to make sure the house is sellable if the opportunity arises.

Tackling Our Debt

On our 5 Steps to Acquiring the Dream, number 3 was getting out of credit card debt. To that, I would like to add an auto loan and a second mortgage. We also have our first mortgage, but getting that one done soon does not seem realistic, and I would like to hit the others before the mortgage. Actually, the 2 mortgages provide some tax savings versus the others, so I am going after the bad ones first.

I am going to list our debt in the order that I would like to attack them.

1. Credit Card One: $7000 @ 4.99%.
2. Credit Card Two: $7200 @ 1.99%
3. Auto Loan: $21000 @ 5.49% for 6 years
4. Second Mortgage $66,000 @ 6.25% with 13 years left
5. First Mortgage $134100 @ 5.75% with 24 years left

That bring our debt total to $235,300, give or take a few dollars since I rounded everything up. I am going to hit that first credit card as hard as I can. Every bit of leftover cash we have at the end of the month will be going towards that one. My goal is to have it paid off in 15 months. That puts us at August of 2011. In the meantime, I plan on paying the minimum the second one. At about 2.5% as the minimum, that would leave around $4700 left there.

The next step would be to roll the payments from the first credit card, into #2. I see myself finishing that card off in 12 months. So, by August of 2012, all the credit card debt would be gone. Then it would be down to the auto loan, which at that time would be down to about $13000. Agian, rolling the old payments from the credit cards into the auto loan would finish that one off in another 19 months. This would put us out to about March of 2014.

That means in 4 years, we will have knocked off $35000 in bad debt. Our second mortgage will be down to about a $51,000 balance with 9 years remaining. Throwing the payments from the old credits cards and auto loan into this one would have us done with it in less than 4 years, putting us at Jan of 2018. At this point, we can tackle the last piece which is the first mortgage.

By 2018, the first mortgage will have $108,000 in balance remaining, with 15 years left on the loan. Now, will all that extra money from the old debts being thrown into this one, the house will be totally ours by 2020. That would mean we would be totally debt free have over $2000 a month going towards savings. I see us being able to put some money into a NYC property by then.

Of course, there will be setbacks from now until then, but there will also be bright spots, so I hope they will even out. If my wife can go back to work full time as well, then we can accelerate the payoffs. It is good to dream you know!!!