by Adam Dawson
After talking it over, Emily and I (together) decided to go for it! We are going to try to pay off our debt in 2 years. Here is the plan.
Monthly
Monthly payment snowball: $2386
Debt sinking fund: $1200
Total: $3586
We liked the idea of the debt sinking fund because we will have access to the cash while we save it. It will cost us a little extra in interest, but it will provide us a little emergency fund boost and peace of mind. I’m not sure when we will make payments out of this fund. Perhaps once every 3 or 6 months. I have set up direct deposit to put $600 in the debt fund twice a month.
In addition, we will need to come up with another $15000 over the course of the 2 years to stay on schedule. So I’m calling this the Race to $15k. We will sock away whatever money we can find to get past this hurdle as fast as we can. Right now the balance is $0. Hopefully we can get a boost by saving some money from our budget periodically. But I expect that this account will be funded by tax returns and bonus checks.
Balances
Emergency Fund: $5000
Debt Sinking Fund: $600
Race to $15k: $0
The expected payoff is December 31, 2015. 25 months from now.
The race is on! Wish us luck!!
Way to go guys! That’s about the amount we’d have to payoff monthly to finish off our 65k debt in 18 months (While actually its 3172+578 min payments). After working on debt payoff for what seems like years now I’m not sure I’m ready to take that plunge. Decision making has never been my strong point.
Right now I’m tempting to stop my accelerated payments to start saving to invest in a business or buy a house. Knowing I could stick with you through your journey to keep up motivation makes debt repayment a little more tempting…
Great luck. I know you can do it!
Do it Katrina!
this is the rub, right? you always think debt repayment will get easier as you go because your income will generally increase, you’ll get used to making those payments, etc.
but in reality, you get all these other ideas and plans you want to pursue, so sticking with the payoff plan just gets harder and harder. which is why you should do it now!
all your other plans are good too but being out from under those payments will feel great.
That’s the challenge of personal finance for me – competing goals!!! Luckily I paid off my consumer debt years ago, but I still have the question of what to focus on. I want top payoff my mortgage early, but I also want to save for retirement, and it’d be nice to someday have living room furniture and walls that are not the eggshell white the builder picked 😛 And which priorities I choose will be different than what someone else chooses.
Woohoo!! Best to you in working your plan!! Will check in to see how you two are managing and know you’ll be able to succeed.
Oohwee, here we go! You’ll be amazed how fast you can save 15k when you put your mind to it. (or just sell a kidney)
As for the debt payoffs: Suck it up cupcakes, and stick to the plan!
you keep mentioning tax returns. you should be taking all your deductions so that you get the money on each paycheck instead of a lump sum, less likely to blow it this way in my opinion.
it’s just the opposite for me. if the money is in our paycheck we’d blow it. if we get it in a big chunk once per year we are more likely to use it for debt payoff.
Hopefully by the end of this journey that won’t be true. 😉
That’s super awesome! GO GO GO!
I admire your enthusiasm, but I think you’ve gone from one extreme to the other. It was OK to rack up 170 in debt, but now it all has to go, yesterday.
It’s great that you are so gung-ho (gazelle intense lol), but remember that your SLs funded your education, which is what is allowing you to earn the salary you are currently earning. That education helped you get the job that didn’t fit, and it helped you get this better job, which will hopefully be a much better fit.
Personally, I would NOT feel as “rabid” about getting rid of the SLs as I would about consumer debt. Unlike the meals out, vacations, or objects you might have put on your CCs, they were an investment in your future. Pay them off ASAP if you like, but please keep the distinction in mind.
Also, with all kindness, I am 53, and frankly, “shit happens”. Your cars may not make it, if your family does not live close by, there may be weddings, births or funerals you will want to attend.
Also, 15K is a lot of manna to fall from the heavens. If you are planning on getting a lot of that back from tax refunds, you should readjust your holdings and just have more every month.
Personally, I’d set myself up for a slightly longer payoff, 2.5 or 3 years. If you beat that, fantastic! And if you don’t, if you have to fly out for grandma’s funeral one day, or replace your car, at least you’re not setting yourself up for failure.
Think about it: if your high mileage car dies tomorrow, will you really want to save up for an “old beater” so you can continue to put nearly 4K towards your SL debt, or would you rather buy a newer, more dependable car?
Best of luck to both of you, whatever you decide!
I agree with you, and I think that’s why they went with a sinking fund. If shit does happen then they’ll still have access to cash to handle it.
I think with such an aggressive plan they need to be able to give themselves permission to “fail” if something big happens. Obviously, they shouldn’t just give in easily, but if a big setback happens then they shouldn’t beat themselves up for not making the goal.
Wow! I am so proud of you right now! I feel the same way, the sooner the better. Congratulations on making this choice.
I am so excited for you guys! This motivated me to put almost all of my recent paycheck towards my credit card debt (3 paycheck month, luckily). Aside from what any negative nancy may say, you guys will do great! And yes, things may come up but that you both came up with a great plan for those exact reasons! I am so excited for you both and it really motivated me too, thanks!
Love the intensity and wish you ALL THE LUCK. Can’t wait to hear about your ‘deadline’ being met.
So how does the mini windfall play into this?
That’s what I was wondering
Co-sign. What was the final decision on the windfall?
SO excited for you guys!! You will be amazed at the good things that will come your way when you’re this focused and knocking it out! 2 years is nothing!! Really, nothing!! You can do it! Yes, there will be things that come up and setbacks, but you will learn to dig deeper and recover from them faster than before because your goal will adjust your thinking. Your thinking will adjust what you will strive to do to make it happen.
I launched my own business during our journey and initially it brought in an extra $500-$600 per month. The more intense I got about debt payoff, the harder I worked at my business. I’ve now grown the revenue to $2,000 this month and it’s only half over!! I’ve only been at this for 10 months.This all happened because of determination and setting that bar ever higher!
Good luck to you both! I look forward to reading here, once more!!
Awesome! Now, this is getting good 🙂
Good luck you two! You can do it!
whooooo go go go go
[imagine the clapping all along the marathon route]
Excited for you guys. I’m on a very similar payoff timeline right now, so I’m looking forward to you guys holding me accountable when it is oh so easy to just book a pair of plane tickets to somewhere lovely at a cost a month of snowballing.
That said, my favorite way to find extra cash to browse Craigslist ‘gigs’ and ‘wanted’. More than once I have found somebody looking to buy something that I just so conveniently had sitting around to sell.
I Never knew of the craigslist gigs/labor section! Thank you for sharing this!
Really motivating post, it’s such a liberating feeling when you start to take charge of your finances, especially your debt. I was in a very similar position where I had approximately £50k in debt, so far I’ve paid off £30 using the method you’ve outlined and only have £20k to repay, I dream of the day I become debt free and then I’ll be free to set my sights on financial independence.
Awesome. Good luck!