Saturday, July 14, 2007

Completely Debt Free in Less than Five Years???

I have been reading the Idiot's Guide to Beating Debt. The Complete Idiot's Guide to Beating Debt, 2E (The Complete Idiot's Guide) I really hate that title. Anyway, it is a pretty good book. My main concern was that it wouldn't really have any new information in it, but it does. Not all of it is so great. After the time I spent on my previous post telling you things to do to avoid spending and their suggestions is "go fly a kite" eh... let's just say they didn't put a lot of time into ALL of the sections of the book.

But, who cares about the book... more about me! :) I was reading the section about setting goals, etc. And I decided to actually prioritize my own goals. I wrote the following-

Pay off all Debt.
Save 3 months worth of salary- roughly 12,000
Start saving for a down payment on a car (you know a new used car... cuz I'll never buy new)

Well, then I started thinking... what is a goal without a plan of action. Heck, businesses do it even for simple stupid things. I should do it for my own financial future. I could not BELIEVE what I found out. My original plan looked like this.

Pay minimums on all debt except for credit card 1. Pay $150 on that card. (yeah, can you believe that is over the minimum, lol)

When card 1 is paid go on to card 2 now paying $310 on the debt.

Move onto car pay $610 per month.

Move onto student loan paying $750 per month.

Then I decided I wanted to know how long it would take. Well, for the first two debts it would take about 3 years. When I started figuring out for the next debt, I got a number higher than what I owed that would be paid after 3 years.... that is because while in the process of paying my first two debts my car will already be paid off.. duh, I only have three more years on it!!!! So all that will be left is my student loan and after the first two, I will have that paid off in 17 months!!!! Now these are very rough figures, but WOW.... I mean my student loan is a TEN year loan... I can have it paid off in less than FIVE???

I was shocked. And, that is without considering that I might have extra money to pay toward my debts at some point in time. I plan to put part of my tax return and extra money from conferences or teaching summer school toward it, so hopefully it will be sooner than 5 years!!

I am excited about the prospect of that. I find it hard to believe that I bought a car for $18000 and it will have taken 6 years when it is finally paid off, but I currently have $40000 and I can do that in 5 years???? Crazy what paying more than the minimum can do!

However you know with all good news something decides to break! Our air conditioner finally went kaput and the best estimate so far is that it will cost $5500 to replace it- however the new unit will reduce our costs for electricity. Supposedly we get $500 from the electric company for switching it out also. I am not really sure what we are going to do. My dad is coming to look at it now and see if he can at least get it running again. My husband's dad may help out a little with the cost. But, my credit card is $1000 away from it's limit so I can't use that. And basically we don't have room for another monthly payment.

Where's an emergency fund when you need one? Oh, yeah, we spent it all on stupid crap. But, not anymore!!!!!

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