I pre-scheduled this post since we just got back to Tucson late last night. I’ll try to pop in later with an update from our travels!
I keep making, and changing, our debt-repayment plan of action. It has become such a regular thing for me to change up the game plan that last time I even added the disclaimer “subject to change.” Haha!
Well, here we go again!
I have been stewing over the game plan for awhile. I keep coming back around to the fact that I prefer to pay off the car rather than the student loans (regardless of the difference in interest rates). The problem, of course, is that my minimum student loan payment is so high (over $1,000/month) and deferment ends in February so I’m scared of getting stuck with BOTH the super high student loan, in addition to my hefty sized car payment ($415/month).
In addition to that, I’ve got to be honest. I’m loosing the power of focus. I’m starting to take on additional monthly expenses (gym, extra monthly savings, and something else I can’t reveal yet but will be discussed in the weeks to come), and have been fantasizing over starting a savings fund for a house down payment (don’t worry – its not happening yet, but it doesn’t stop me from fantasizing!). Basically, I’m wanting to split my goals into a ton of different things (instead of focusing solely on debt-reduction).
This is a debt-reduction blog. Not a savings, or an investing, or a lifestyle blog.
The problem is that I have a LOT of debt. It will take me several years to pay it all off in full. And I have admitted before that I believe we will start splitting priorities before the debt is gone (e.g., buying a home before the student loans are completely gone).
So while I still have momentum on my side I want to switch gears. I’m going to finish paying off the license fees first (and put that chapter of our lives behind us). But after that, I’m going to tackle the car. Once its gone, I’d feel more comfortable about starting a house down payment fund and splitting my goals between student loans and other “life” things. I owe about $20,000 on the car (last debt update here). At this point, it seems like it could take 9 months to a year to pay in full. But then again, I managed to pay off over $10,000 in credit card debt (plus other minimum debt payments) in just a little over 3 months. And now I have the benefit of not having those pesky credit card bills every month eating up my income. So we’ll see.
I’m calling it, “the race to 20K.”
Wish me luck!
Note: Some have asked why I would want to pay off the car before the student loans, particularly given the discrepancy in interest rates. Paying off the car will mean we’re free of any consumer debt (only remaining debt would be student loans). Additionally, my student loans have no actual “asset” associated with them. The car is an asset so once its paid we will own something with a monetary value associated with it (as opposed to my loans….which, even when paid in full, have no monetary value on their own).