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.

The Debt Reduction Journey Begins

Today, I decided to kick start my ambitious debt reduction journey. I am using the Debt Snowball method that David Ramsey has made famous. Basically, he said to list your debts from the smallest amount to the largest, and start paying them off in that order. I idea is that tackling the little ones first gives you a psychological boost. The faster they are eradicated, the more you stick with the plan.

So that $7000 credit card debt @ 4.99% is going to get hit first. Actually I have 2 payments this month going in. Today, I paid $275 and next Monday will see another $1000 go in. Where did that extra dollars come from? My older daughter goes to a private school (we do get some financial aid here) and we pay on monthly installments. It is automatically deducted from a separate bank account that gets money directly from my paycheck. Well, the payment for this year are done, and we had $1100 left over. I decided to put that money towards the credit card debt.

Actually, since we don't pay over the summer as well, I hope to put another $800 towards the debt in August. That should leave the first debt in our snowball down to $4250 before September, if all goes as planned. By August of next year, the first debt in out Debt Snowball will be payed off as planned.