Q3 2017 Debt Repayment Plan

I cannot believe that it’s time to plan for the third quarter of 2017. For reasons that might deserve their own post, we like to plan out our finances on a quarterly basis. After much debating (maybe more than I expected) we have a set plan for our money for the next quarter.

I talked about this recently, but one of the goals that has evolved since I began writing in this space was the aim to truly live on only income, and our smaller one at that.

In order to bring this goal into fruition we need to eliminate about $30,000 of consumer debt from our life (along with, primarily, the associated monthly payments.) To that end, we spent Q2 getting rid of our credit card debt, which totaled in at approximately $11,000.

Now we are tackling our car loan, which was just over $19,000 when we began. Although I’m not a total Dave Ramsey devotee I do agree that what he describes as the “snowball method” is the best (and easiest) way to eliminate consumer debt. We therefore ignored the interest rates on our credit cards and simply paid them off from smallest balance to largest. I want to add that we paid this off in less than six months, so the difference paid overall was pretty nominal in my opinion. I’m not sure that I would be sold on using this method for something where the interest would cost a lot more.

That was a long backstory to explain that now we are looking to eliminate our car loan, which is sitting at approximately $16,000 as I’m drafting this post at the end of June.

Adding the minimum payments from our now-zeroed credit cards to the minimum payment on our loan is a total of $850. That’s our new “minimum payment” on the car loan. Fudging the math a bit, that payment means that we would get the balance down to $13,500  by the end of Q3 with that payment alone.

Sadly it is mathematically impossible for us to pay off the remaining $13,500 over the next quarter without some unexpected windfall of money. And given that neither of us work in corporate jobs that come with shiny bonuses, those windfalls just don’t happen in our world. However, I think that we can put ourselves in a really great position to get the car loan eliminated before the end of the year.

I am super excited about that prospect. Even though we have quite a bit of student loan debt, which is something that I will turn my attention to once we have paid off the car, it feels super amazing to be knocking down the consumer debt because the monthly payments were a lot higher relative to the balance.

So the plan for this quarter is rather simple: simply put as much money as possible toward paying off our car loan.  Additionally, as we normally do at the end of the summer, we’ll be putting away something between $750 and $1000 for all of our holiday-related expenses.   That too will get its own post in short order.

Finally, I just want to mention that one of the ways that we are able to pay off debt so quickly is by living well below our means. We frugalize (is that a word) most aspects of our lifestyle in order to spend our money exactly how we want.  Apart from our monthly allowance/blow money, we simply don’t purchase anything that is considered a “want.”  It means I haven’t had a takeaway coffee in weeks and that we haven’t tried a few new restaurants that are on our radar…but really, it isn’t too big of a sacrifice for us.  We recognize the fortunate position that we’re in: having all of our needs and a great many of our wants covered while still establishing a firmer financial foundation.

 

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