Pay down and out

Since we have recently sold one of our vehicles (we now have 2 vehicles) due to buying a 'new' (aka new to us), I used that money to pay down a good chunk of one of our loans. As soon as I get back to work after maternity leave and get another paycheck of decent size, I will start heavily paying down our debt again. I pay at least 2-3 times what the minimum is due on all debts.

Here is how we stand being a 2 income family with 1 child (after paying down yesterday):
Loan 1: $5,800 : 15% interest (UGHH!!!)
Student Loan 1: $4,400 : 6-8% variable interest
Student Loan 2: ~$20,000 : 5.625%
Student Loan 3: $1,500 : 5%
Sears: $700 : 0% till May

Besides that we have our mortgage which is $126K left to pay with a 5.875% interest. That will be the last thing we work on, although I think I will start rounding up our monthly payments which pays down $75 more a month, thus an extra payment and some yearly.

I plan on paying off SL3 in Sept/Oct. Then when I get my disability leave pay I will throw that down on either L1 or SL1. I will have Sears paid off before interest hits. I pay a certain amount by the way I divided out the months, so it goes down each month. SL2 I pay a little extra each month, but not too much, b/c this will be the last debt we tackle. Also if something happens I'm good on my payments till 2013 so we wouldn't be falling behind or whatnot. The other debts would come after you, that debt is paid up till 2013 (it was at $40K until I saved up and knocked that out last year).

So that's where our debt stands. I get really excited thinking about when we pay it off. Already this year we have paid back my grandmother (for our house down payment) and a Best Buy credit card.

We go from the teachings of Dave Ramsey with some Suze O. I, though, modify it to our family. We saved up a good little piece before I went on maternity leave, just in case anything happened. Which after I get back to work, we can use that to pay down debt. In addition, I pay extra on all debts, not just the one with the highest interest. Although after paying the extra, I will knock out the highest interest debts first with the extra extra payments (if that makes sense).

For being married for 1 yr and having a baby, we're doing pretty good. We have worked up our savings accounts quite nicely. We have our emergency fund (baby step 1 check) which I build each month, b/c $1000 won't get many people far nowadays, plus savings for our LO, dogs (b/c of vet expenses, food, etc), vacations (2010 and future Disneyworld vacation w/ LO in 5 yrs), car insurance, and my hubby's income from freelancing (he's saving for a jeep...but to get one I will approve of, it's going to take awhile ;)

I plan to have all debts paid in full by May 2010, with regards to the SL2 which I'm hoping by December 2010 it will be gone.

Goals for rest of 2009:
Pay off SL1, SL3, and L1.
Continue funding savings.

Goals for 2010:
Pay off SL2 and Sears (which is not a problem).
Increase mortgage payment to shorten loan period from 30 yrs to 15 yrs or less.
Open up Roth IRA's for both of us.
Research best ways to save for college for our LO (instead of just a savings account).
Open savings account to fund an Europe or Ireland trip.
(Our plan is to save for 1 major vacation each year & 1 minor (weekend trip). Our honeymoon in 2008 was Cape Cod and saved for, 2009 no vaca b/c of new baby!, 2010 an all-inclusive in the Carribean (already being saved for and DisneyWorld (2014/15/or 16? depends on maturity of LO), which will be a major, major trip with all the icing and cake!!!)

So there it is...our debt situation, which isn't all that bad. I'm confident that it'll be down and out before we know it. All the more towards our (well mine in specific) to be able to do what I love and really want as a job and not feel as though I 'have' to work, b/c we need the money. Don't get me wrong, I love the people I work with now and am so thankful I'm no longer at the place I use to work at earlier this year (aka hell). However, it's a difference of the feeling inside. Like knowing that I can quit my job and go do what I want is something I really look forward too.

1 comment:

  1. Hi there,

    I just wanted to comment on this post and some of the key points you touched on that seem to really be working for you and your path to financial success, particularly having an emergency fund!

    My name is Marty and I work with State Farm and I often recommend that our policy holders integrate insurance considerations into their overall budget plan and emergency fund planning, especially now more than ever as the economy continues to fluctuate.

    Another thing I wanted to suggest for you, or others looking to get started, is using a financial calculator when assessing your own finances as a great way to chart out where your money goes each month and how that will impact your situation.

    There are a lot of different calculators out there but one I’ve found helpful and comprehensive is available from Kiplinger: http://www.kiplinger.com/tools/budget.

    As people think about how to establish their emergency fund, we at State Farm urge our customers to incorporate the cost of potential insurance deductibles – auto, home, health, and others – in the event of a claim – as you never know when an emergency will arise.

    Hope this helps underscore the importance of emergency fund planning for folks out there - does anyone else have helpful tools people can use when trying to chart their finances as a means to reaching a specific financial goal?