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Remaining Debts

October 16th, 2012 at 01:57 pm

The Debts (as of early November)

Amount Item Interest Expected Payoff

$11554 credit cards (0%)(variable but 2013)
$11499 car loan (1.1%) (March 2015)
$7994 student loan (5.15%)(April 2015)
$115745 mortgage (April 2025)

I thought about posting a budget but its not really necessary. We earn more than we spend and that is true by quite a bit. We were spending fools this summer because of the long overdue items we had been holding off on and we still made progress (and that was prior to my husband's job upgrade). Our choosing to cut back on eating out just allows us to put even more towards the credit card payoffs.

We also have the additional promise of bonuses for my husband in the future. We figure these will go straight to debt or savings depending on which is the priority at the time.

While the credit cards are our lowest interest rate, we want them gone for convenience sake so this last balance transfer round is our final one (which is why everything is based on November, we just played the transfer game this month). Our main goal is to see how quickly we can pay these off. Currently shooting for July but may move that up if our extra income is much larger than expected (no, we still don't know the full amount of his pay increase by virtue of the bonuses and his overtime).

The car loan and the student loan vanish at a similar point in 2015 which is why we are thinking of letting those two run their course and build savings in the meantime (not to mention both are designed to make it difficult to make extra payments).

I think I would be happier having a full emergency fund which is something I haven't been able to justify while the credit cards are around. That said, I suspect that when my cash equals the remaining balance on either of those two items, I will just make one final payment and be done with it.

Also, after the credit cards are gone, I will have both of us ratchet up to 15% in the 401(k). I have a roth I contribute to as well though the amount is only 2.6% of my income.

So current goals

1. Payoff credit cards
2. Up 401(k) contributions to 15%

Its steps 3 and 4 I am not sure about. Should I up my roth, build my savings, payoff the student loan (car loan is kind of pointless other than to say its gone) or some combination of the above. I have plenty of time to decide so its not like I have to make up my mind immediately but I am not used to being so wishy washy on my goals. I think part of the problem is that I really won't know the full extent of our extra income until spring so I won't know how many goals I can work on simultaneously until then.

For now though, those two goals should be good. If I blow through the first one faster than expected, then I will probably have enough extra income to work on multiple goals which would change them anyway. :P

What would you do as your next steps?

2 Responses to “Remaining Debts”

  1. MonkeyMama Says:

    Oooh - glad to see you back!!

    This is one reason I like to just sit on cash. Sometimes goals become more clearer over time. I also think with the economy and everything, a little extra cash to stay out of debt (during hard times) is a very good thing. But, as you said, once you have accumulated enough to pay off a debt, you will likely just kill the debt. You mentioned the student loan next, which is logical. In the interim, just plan to juice up the emergency fund. The nice thing about cash is it can be used for anything (pay off debt, invest, keep for a rainy day, etc., etc.).

  2. Jerry Says:

    It's great that your husband has some insurance of additional income as well as bonuses! That will lead to some real opportunity when it comes to paying off debt and building savings/EF. Congratulations! I agree with MonkeyMama, cash offers the ultimate in flexibility. Smile Jerry

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