by Ashley
In case you’re a new reader – welcome! Thanks for stopping by!
To catch you up….
I first started blogging here in March (Intro post here).
At that time, my #1 goal = eradicate credit card debt IMMEDIATELY!
And, not to toot my own horn, but I’ve done a pretty good job (and thanks to YOU for all the invaluable advice along the way! I’ve learned so much already!)
So as a follow-up to this conversation and trying to decide the next course of action for my debt-reduction plan, I wanted to give you a quick follow-up, along with my new goals:
Order of Debt Repayment (now that WF is paid in full, woot woot!):
- Bank of America credit card (goal date = paid by July 2014)
- Sallie Mae 8.5% student loan (goal date = paid by September 2014)
- Sallie Mae 8.25% student loan (goal date = paid by November 2014)
- License fees (goal date = paid by January 2015)
- Carmax (goal date = paid by January 2016)
- Remaining student loans (no goal date yet because I want to reassess in January 2015)
- Medical bills (no goal date yet, see above)
I was originally going to pay the higher interest student debts first, but I can’t do it. I’ve GOT to pay off the credit card debt for my own personal satisfaction and sense of accomplishment.
Next, I will try to get rid of the two high-interest student loans. Getting rid of debts #1-3 will free up $218 in minimum monthly payments (which will be invaluable when my deferment ends on the student loans in February). I’m still a little undecided regarding #4 and #5. I feel like I’d get more personal satisfaction from paying more toward the Carmax loan, but the license has a balance of about $5,500 versus $23,000 for the car, so its a huge difference. We could feasibly pay off the license fees before my student loan deferment ends (in February), but in contrast, there’s NO CHANCE I’ll have the car paid off before deferment ends. Again – I’m trying to free up those minimum monthly payments so they can be applied to the student loans and other remaining debt.
Notice my new “goal dates” for paying off these debts. I have to say as a disclaimer that these are really optimistic dates. Keeping those dates will have us paying about $3,500 toward debt each month (as opposed to the $1500/month we have budgeted). This means we HAVE to keep pulling these big income months like we have the past couple months. This may be possible….I mentioned how “I’m getting a raise” (by teaching additional classes….which started this week so its already “in effect”). Additionally, my husband has hired a new crew of workers so his income will also receive a bump from the work this new crew is able to complete. But at the risk of sounding like a hypocrite (given this morning’s post)…I don’t want to count our chickens before the eggs hatch. I think it will take a few months of my new income + my husband’s new income for us to really know what what we’ll be bringing home each month (in terms of pay). I hope it stays steady with what its been the past couple months, but there’s no guarantee. Only time will tell.
So, yup. Just an update on my new plan of action and goal dates for debt-eradication. I really appreciate all the suggestions and feedback! For example, I had NO IDEA that student loans can’t be consolidated for a lower APR. No point in consolidating then! So those will all be staying separate. I do still plan on trying to refinance the car loan, but I want to wait until my recent huge Wells Fargo payment gets updated with the credit reporting agencies (as I believe it should help give my credit score a little bump).
Hope you all have a great Memorial Day weekend!
Hi, I’m Ashley! Arizonan on paper, Texan at heart. Lover of running, blogging, and all things cheeeeese. Freshly 40, married mother of two, working in academia. Trying to finally (finally!) pay off that ridiculous 6-digit student loan debt!
Looks like a sound plan to me. Being a foreigner I cannot even understand the magnitude of student loans. I guess that is a necessary evil in the US. I may have missed this but do you have an EF set aside? Wiping off credit card debt is great but I wouldn’t want to incur further credit card debt in case of an emergency.
I know it is difficult to handle debt with a fluctuating income so, I made sure I had a small floating buffer while I was paying down debt.
+1 on a buffer of sorts. Life has this strange habit of getting in the way when you least expect it.
How do you guys plan on pulling in a larger income on a regular basis? You keep saying “this surplus isn’t normal!”, how are you going to make it normal??
Kristina – great question! I actually think I might write a post about this to explain in more detail. Basically, our “normal” ($5,000/month bring-home) was calculated from the past year….at which time I was working much less and husband’s employment was not as steady (and factored into the year were 2 months where he didn’t work at all due to illness). To try to boost our income I have taken on additional work and my husband (the owner of a small wood-flooring business) has just taken on an additional crew. As the owner of the company, my husband makes profit from work they complete, in addition to his own. In other words, we’ve both just secured “raises” for ourselves.
That being said, summer is always the busiest time for husband’s business, so his employment is likely to go down a bit over winter (the slow time). And I work on a contract basis so technically, my employment is not guaranteed and can end at any time.
Sooooo, this has become a novel but I guess I really just don’t know what our “new” normal is going to be and so I have no way of knowing if we’ll be able to continue pulling this larger income in the future. That’s also why I said that my goal dates are very optimistic (because our income fluctuates and can certainly go down). We’ll see…
We do have actually a sizable EF (“sizable” compared to Dave Ramsey’s advice of $1000). I wrote about it in one of my first posts here: https://www.bloggingawaydebt.com/2014/03/ashleys-nitty-gritty-debt-details/
In that post it said we have $11,750 but then I used a chunk toward debt (I don’t have the numbers in front of me, but $1500ish??) So we should still have about $10,000. Some readers suggested putting more toward debt from the EF, but I’ve been reluctant to do so, based on the variable income and my husband’s mystery illness (end of 2013).
It is a large sum of money but with your expenses and unpredictable income I think you are smart to hold on to it.
D?tto to what Hannah said. That is a good chunk of money just in case. Great job!
Good job Ashley! Sounds like a great plan. Once the last credit card balance is paid off, be sure to celebrate that before moving on to the next debt. That is a huge accomplishment.
The only other item I’d recommend is to get started on your husband’s teeth. Once you get a plan on the cost, just take things one at a time and pay as you go. Even if he only goes once a month, you’ll be on your way towards getting his teeth fixed. This is also important so that he doesn’t get some huge infection.
I am really proud of you. You are doing great.
Ugh! Why!? : )
We actually had a talk about his dental work and he actually seemed in agreement that something needs to be done (this is progress since he HATES going to doctors/dentists). I tried to frame it from the perspective that he needs to be healthy for his kids (instead of it just being ME nagging him, lol). No appointments have been made yet or anything, but I do believe this will start being addressed relatively soon.
Oh yes I forgot about that.Dental health is SO important!
Like it. Definitely approve of counting the student loans in your priorities. Congratulations on paying off WF!
Love it. Setting an ambitious goal often pays off and if it does not work out exactly as planned you will likely further along in progress toward your goal. You are on fire girl – I am thrilled for you!
love your ambition and excitement! congrats on paying off WF!