by Claire
First of all–thank you everyone for the great feedback on last night’s post! We are still digesting info and will report back with our decision. We do know that we have much work to do on defining our budget items. As of now we have no defined budget for a lot of the items mentioned. It was a huge step to just define a lump sum 5 months ago to stop the bleed. Now it is time to tighten up the spreadsheet.
I am very excited to share that we have a plan. Here it is:
December 2013 is our goal date for credit card freedom-that is, all debt except for the car loans. That is a very aggressive goal but I want to outline it for you. We are using Mint.com to monitor our progress. We will be paying off cards in the order of highest interest rate to lowest interest rate. Below are payments to be made through December 2012.
I hope to be able to report June 1 that the $245 credit card is gone. The debt to dad will be down to $305. The rest play out like this:
Credit Card 7 (15.7%) $1,607 payment in June, balance of $774 in July.
Credit Card 11 (12.9%) $560 payment in June, $1,325 in July, $2167 beginning in August and continuing through December (and beyond).
Credit Card 10 (11.9%) and Credit Card 6 will remain at the minimum payments for the remainder of 2012. That is $268 on #10 and $50 on #6.
We have decided to pay $650 per month on the $11,000 signature loan beginning in June. This puts that debt on track for December 2013 payoff.
If you are curious, this plan pays $1,917 on top of the $1,233 in minimum payments for a total of $3,150 per month going toward credit card debt. Now…go ahead and excuse yourself to go vomit as you think about that!
A comment just came up that is perfectly timed. “Unlike many folks, you guys are very fortunate to actually have the earning power to dig out of this deep hole relatively quickly by throwing not hundreds but thousands of dollars per month at it.” Thanks Joe! We are very fortunate and are determined to be better stewards of the good fortune.
Born and raised in Texas. I’ve at least driven through every state in the US courtesy of a roadtrip loving Dad.
I’m single with two children and a good parenting relationship with their father.
I am a “life is just half full of funny” kinda gal. Humor is my saving grace and I am thankful for it every single day. I have a strong Catholic faith and am thankful for that foundation.
I read a lot for a living but still enjoy a good book. I love biographies but in recent years have found the need for fun fictional books–sadly, for a long time I just didn’t enjoy fiction!
I love live theatre of any kind–from local productions to Broadway.
I love to scrapbook and pride myself in my kids’ albums.
I love being a mom but also love my career. I’m blessed to have found a balance allowing me to be at everything my kids need and want me to be at–while also having a career.
Favorite Quotes: Well behaved women rarely make history.
Behold the turtle. He makes progress only when he sticks his neck out. -James Bryant Conant
Great job, Claire. I look forward to reading about your progress. I just found this article on money.com. Thought it was relevant. Especially the very last sentence.
http://management.fortune.cnn.com/2012/05/16/student-debt-business-school/?iid=HP_LN
Wow that is a lotta cash to kick your debt in the behind!! It is so great you can make such aggressive payments! It looks like you two make a more clear and better path everyday.
Crunching some numbers and setting a date, really helps. It’s like planning a vacation. Something to look forward to!
As Dave Ramsey says “Your income is your biggest wealth-building tool”.
I have been there done that, and I’m glad you guys are using your income as a tool to get out of debt!
My take home pay was $1182 every 2 weeks and $800 of that went towards paying off debt. $382 to last me two weeks! (No kids, not married, temporarily living with the parentals)
Goodluck! There will be ups and downs, but I love that you guys set a goal date!
Also forgot to mention and of course sorry about shoving Dave Ramsey in your face again, but did you ever consider debt repayment from smallest to largest balance? Quick wins help motivate 🙂
Great to see you have such an aggressive plan in place! We were also slapping $3,000 a month on debt (but car payments though, as we have no cc debt) and everything was moving awesome the past 3 months with an expected payoff on our vehicles ($34,000) of April 2013 and then we hit a major snag. We just got word yesterday our tenants are breaking the lease early (using the military clause so no security deposit forfeited) and leaving us paying 2 mortgages for an uncertain amount of time. Luckily we did a re-fi on that house last Dec. and our payment is under $1,000, but now we’ll only be able to throw $2,000 on the cars. Just wanted to share that there’s bound to be bumps in the road and staying motivated gets really difficult when they happen. ( you stated you also have a rental property, right?) Be prepared if you do when situations like this happen.
And for what it’s worth, we are also like you and your husband, only I think a bit worse. We have about $1,200 of “blow money” every month and somehow manage to spend it all ( I’ve cut it back from $1,700 a month). It’s true what they say–the more you make, the more you spend.
I’m still easing into this and intend to stop blowing so much money. So far this debt payoff thing hasn’t been very painful for us and I think it should be.
Cathy,
How about you cut the “blow money” to $200/month and stick $1000 per month in a separate savings account for an end of debt celebration? Next spring you could be taking a fabuous $10k+ holiday to celebrate paying off the cars. Paris in the spring anyone? I’m going to guess that would be far more memorable than whatever stuff is being bought with the money on a monthly basis.
Also, it would probably be wise to start discussing NOW what will happen with that $3k/month once the cars are paid off. Otherwise you may find yourself in the same situation as Claire and her husband. Maybe you want to payoff you primary or rental property mortgage, maybe you can sock away a ton and retire early (my personal favorite), or something else. Just make sure you have a clear plan and know where that $3k starts going the month after the last car payment.
Well, I like your thinking, but there’s no way we would be able to cut the blow money to $200/mo. We simply don’t have enough motivation or incentive to do it. We prefer to buy what we want with that money each month knowing that we are putting a significant amount towards debt and fully funding our retirement at the same time.
When we pay off the cars we plan to take 2 months of that money ($5,000-$6,000) and take a vacation most likely somewhere tropical as a reward. Then it’s back to work on the debt payoff with a goal of $30,000 per year on the principal of the investment property. I want the option of selling it if we want/need to which we don’t have right now. Once we’ve paid that down some and sold it we’ll work on our primary mortgage.
I have a plan that is reasonable and still allows us to live our life as we do now, but has all of our debt including mortgages paid off within 10 years. I’m comfortable with that.
Our situation is also a bit different with regards to retirement as my husband is retired military collecting a pension and VA disability for life and adjusted for inflation. We are still funding investments at 15% of our annual income, but don’t feel as great of a need to clean up this debt quickly. Kind of explains my reluctance to short ourselves that extra “blow money”. That and the fact that we lived with very little for so long that it’s hard to not spend on ourselves now because we finally can.
Although its a different source, your midway payoff date is identical to ours! After two years of being unemployed I finally have income and can start crushing out our debt.
Our 50k student loan with 8% interest has been the bain of my existence for about 7 years now. I am planning to put $2700 extra towards payments on that loan a month. Making the payoff YE2013!
And yes, that 3k is hard to swallow. But its also awesome to have that much power. Remember there’s others in the same boat. Our plan is to put my entire salary to loan payments. Which comes out to $3,725 a month, for the next 3-4 years.
Great post! I think you are doing a great job in paying off debt and living a happier life. I think others can relate. I know I certainly can. Keep up the good work.
What I can appreciate most with your sharing is the fact that even though you have a high income, it can be difficult to get rid of debt quickly and/or easily.
Many people with low incomes think that a higher income is the ONLY answer to debt problems. But income, many times, is irrelevant. Debt problems are SPENDING and habit problems, not always income problems.
I have to agree with you about income not necessarily meaning better money management. I have heard so many times that if you cannot make 50,000 work for you due to overspending, 150,000 is going to be just as hard to manage. One of my and my husband’s good friends works in the same field as my husband and he brings home almost twice as much as my husband does yet our friend has no savings whatsoever. Unfortunately our friend took on some bad spending habits after he graduated and began his career. My husband and I have given him the come to Jesus talk a few times, hopefully he comes around soon!
What an awesome and ambitious goal.
I’ve learned that you never know what you can do until you challenge yourself. It’s amazing what can be done when you put your mind to it.
Good luck!
Yes and Yahoo! Great big numbers for debt reduction – LOVE THAT!
Now, think how quickly those cars will go when you can roll all of that $3,100 a month at them?!?!! And then, when the cars are gone…what dreams will you make happen with all that money???? Dream! Its not too far away!
Terrific! I’m happy that my comments were appreciated. Now I’ll leave the heavy lifting to you! 🙂
Wow, just wow – that’s a lot of money! And just think of how that will add up after debt is paid off – increasing savings by $3k/mo or $36k/year. Mind blowing.