One thing that I’ve come to realize in the last few months is that I am more than a little overwhelemed by my financial situation, and the number of moving parts. I keep constantly reevaluating what I am doing, what I should be doing, what the best way to get this all paid off really is. I’ve decided that I need to stop looking at the big, overall debt picture for a little bit, and try and focus on one thing at a time.
So, what are my overall, high level goals?
- Pay off all Credit Card Debt
- Pay off all School Loan Debt
- Save money for the future/a house – $25,000
Pay off all Credit Card Debt
This is certainly the most concrete of my goals. I just finished paying off my J. Crew card, and am now, finally, store-card free. This leaves me with an interesting dilema – do I attack the smallest debt first, or the one with the worst interest rate? I’ve decided to do sort of a combination of both. My Goals are as follows:
- Pay off Chase Card – $1238.10 @ 29.99%
- Pay off Target – apprx $500 @ 18.99%
- Pay off Bank of America – $1953.56 @ 29.99%
- Pay off Capital One – $3449.88 @3.99%
- Pay off American Express – $7033.87 @11.99%
- Pay off Citi – $15208 @16.99%
- Pay off USBank – $21698.08 half at 0%, half at 10.99
I am hoping that once I have a few of these taken care of, without having created more debt to replace them, that I will get some offers for cards with 0% rates, and I can start the money movement game again, to save myself some interest. I keep trying to find the “quick fix”, the easy solution that will get me out of debt – and it just isn’t there. I need to be patient, and vigilant, and realize that it took me a long time to accumulate all this debt, and its going to take me a long time to pay it all off. I’m currently projecting that the USBank debt will be cleared sometime in the middle of 2012.
Pay off all School Loan Debt
I have 2 main sources of student loan debt – somewhere around $65,000 worth of federal loans, consolidated at 6.99%, and approximately $25,000 worth of private education loans, currently unconsolidated and at variable interest rates ranging from 7 – 11%. I can take 60 months of voluntary forebearance on the federal loans, and 24 months on the private loans. I put the federal loans into forebearance for a year last month, and my plan is to keep them there until 2012. I plan not to put the private loans into forebearance, and am currently paying around $176 a month for them. My plan is that after my credit card debt is retired, I attack the private loans, and have them paid off within less than a year – so, early in 2013. I also have one smaller federal loan that somehow didn’t make it into the consolidation. This loan is only at 5% interest, and its only for a few thousand dollars. I am currently paying $40/month towards this loan, which auto deducts out of my checking account every month. By the time I start attacking the private loans, I should have that smaller loan almost paid off anyway – if not, I will throw the extra money at it first, just to simplify my life a little bit.
Save $25,000
This is where things get…tricky. BF and I have had a lot of conversations about our relationship, and the future, and what our plans are. Right now, I would expect that he will propose sometime in the next year. Give us a year to plan the wedding, and that puts it sometime in the (hopefully) fall of 2010. We’ve just gone through watching his parents struggle to pay for his sister’s wedding, and we both agree that that isn’t something we would want to burden either sets of parents with. We are hoping that both sides will contribute some monetary amount towards the festivities, and that we will pay for the majority of it ourselves. We are also in total agreement that this doesn’t need to be the blow-out of the century, and that smaller is better. We desperately want to be able to afford a house sometime in the next 2-3 years.
I get paid twice a month, on the 15th and the 30th. I currently have an auto-deduct of $10/pay period from my checking to my ING savings. I’ve also anticipated what a very minimal raise (3% a year) for the next few years will get me, and rather than adding that new income into my budget, have allocated it all to go straight to savings. Now, clearly, this isn’t going to get me $25,000 in the next 3 years, but it is a sizeable start. I’ve also made up my mind that I must get a part-time job, and that if I sock away $125 extra a week, I will be able to meet this goal. Its hard to know if that is the right thing to do – to save money when you are in debt. I’ve got to assume, though, that a couple with a significant downpayment, plus $10,000 in debt, is a more attractive loan candidate than a debt-free one with no money saved.
So, my goals here are:
- Get a part-time job
- Save $125 a week extra in my ING savings
- Have $25,000 in my wedding/house fund by 12/31/2011
Writing all this out is a bit scary, to say the least. But, at least I know where I stand, and what my plans for the future are. I have to escape this omnipresent feeling that the future is coming, and realize that the future is here, now – and I can do something about it!
