The talk went well. There was good news and bad news. The good news is we are going to put the “found” money in savings…so our emergency fund should increase by $400 by the end of April. That keeps us on track for the goals I set forth back in early March. We decided on $1600 as our emergency fund goal. It’s a long story how we got to that number but we are both happy with that goal.
And now the bad news…as to our debt payoff approach, it’s a “snowball hybrid” of sorts. We have decided that we will pay off the second line of credit of $145 this week. That’s just to motivate us to scratch one more off the list. Then we are going to work to knock out the debt with higher payments–not the highest, but not the small $25 minimum payment accounts either. More specifically, we are going to snowball the minimums from the two we’ve paid off (the $60 something first one and the first line of credit= $45 freed up) to the Dad debt. That will pay him off in June. That will then free up $145 in minimums to go to that heinous 24.9% store credit card with the approximate $2000 balance. That card has a $105 minimum payment. By increasing the payment to $250 in June we estimate that one will be paid off in 10 months. Let me take a moment to express just how much that sucks! I was sure those calculations were wrong but that is the beast called “denial” creeping in again. Hello. It’s a 25% interest rate! What would I expect?! Totally stinks.
Next, we discussed tackling the Discover card that sits right around $7,000 @ 18% and with a $140 minimum payment. Using the snowball we’d be paying $390 per month toward that and using a very basic calculation that would result in a 1 year, 10 month payoff timeframe. That’s looking pretty far down the road but that is good to keep all of this very, very real.
On the upside now–digging deep to find an upside–these numbers do not reflect any additional income we can put toward this mess. We aren’t considering an income increase,we aren’t consider any additional money we free up by cutting monthly expenditures and we haven’t taken into consideration the $400 extra per month that we will be putting into the emergency fund for now. I have to keep those numbers at bay in the calculations but I can allow myself to keep them in mind so I don’t go running out into traffic! 🙂 Good thing I’m a pretty upbeat person or I could see me spiraling into a very dark place!
Until next time…