Friday, January 9, 2009

Debt Busters 2009

Thrifty Florida Mama is hosting Debt Busters 2009, for those trying to reduce and/or get out of debt this year. I've joined.

Before we got married last March, my husband and I attended Dave Ramsey's Financial Peace University. We were already pretty much on the same page financially speaking, but taking this course really helped us to be able to articulate our goals and see where we had differences. Neither one of us like to be in debt. He had paid his truck off in October 2007. I was able to pay my car off in December 2008! I've kept my credit card paid off each month for the past several years, so I was fortunate not to have any of that kind of debt. He brought a small amount of credit card debt into the marriage, as well as a house with a mortgage. I brought a house with mortgage and student loan debt. We're living in "my" house, and this summer plan to put his on the market. Because his mortgage has very little left due, we'll be able to pay it off with the sale, and put a substantial chunk into a retirement account.

So, this year, here are our stats starting off, not including the mortgages:

M's credit card: $1600
My student loan debt: $103,073.83 (yes, you are reading that right! let's just say I have too many degrees and leave it at that!)

Goals for this year:
1. Pay off M's credit card by April (Note: we have separate financial accounts, and he won't let me just pay this off, or i'd have done it last year)
2. Pay at least $1500 each month on my student loans
3. Continue paying an extra amount on my secondary mortgage each month
4. Sell M's house, pay off his mortgage, and put remainder in retirement account

Additionally, I plan to continue funding our savings, but this amount varies month-to-month depending on what's "extra" in our budget. I know Dave Ramsey's baby steps are to pay off all non-mortgage debt before building up your emergency fund over the initial $1000 and before adding to retirement funds, but based on several factors, we have decided to balance debt-payoff with savings.

M owns his own small construction business, but draws a regular salary from it. I'm self-employed, and so have a variable monthly income. I also work in a field that is currently experiencing a downturn, so my "job security" is questionable. Since I've been self-employed for several years now, I would not qualify for unemployment benefits if my job is lost.

As the year progresses, if things look more stable in terms of job security, I will pay more on my student loans. Unfortunately, even with such large payments, most of what I'm paying is still interest. Ideally I can pay the entire blasted amount off by 2015.

I'm confident that by being cautious with spending and by trusting God for his provision for us, we can meet these goals.

No comments: