Even though I update our debt status at the end of every month, I figured that it would be handy to have it all in one place where I could look at it and discuss what brought the debt to us in the first place or decisions that we made that had us incur the debt. Even though we have a small amount of creditors, we do have (what I consider to be) a fairly large debt, and H and I have put together a plan and are working through it so that we can be debt free one day again. Obviously, it’s difficult to live without debt, but as long as you are smart about it and focus on paying it off, you can be debt free a few different times in your life, and for different reasons.
Anyway, here’s where we are with our debt (spoiler: most of it is because of the house). I’m listing these in the order of lowest to highest dollar amount, and this will read like a target list of sorts. Once the first on the list is gone, we will move to the second, and so on. Pretty much your standard debt snowball plan here.
- Windows. This is obviously the loan that we took out to replace most of the windows in the upstairs of our house. We got 23 windows replaced upstairs (we still have 8 left), and the installer offered us 0% financing if we were able to pay the loan back in 1 year from the date of installation. We talked it over and figured that while they would not most likely pay for themselves in that time, new windows would be a nice thing to have and would save us a considerable amount of money during the winter, as our old windows were original to this 1924 structure.This honestly could have waited, but we found what we thought was a fair deal on some high quality, very efficient windows and decided to go for it. If we wouldnt have, we most likely would have gotten them replaced next summer, as the inoperability and inefficiency of the old windows was killing me. It pained me when we wrote a check to our gas utility during the winter months.
Total Balance: $6,000
- Student Loan: This debt is pretty much exactly what it sounds like, and belongs to me for my grad school. I used to have other student loans, but have since paid them off and only this one remains. Looking back, I’m not sure grad school was a good choice for me, but that does not really matter now. I borrowed the money, so I can now pay it back.H and I were focusing on this during the summer and were really able to take some good chunks off of it for the summer months, but once the windows got installed, we elected to switch gears and pay those off and move the student loan back down closer to its normal level (though still maying more than the minimum). Once the windows have been paid for, we will be back on this and hopefully will be able to have it knocked out by the end of Q2 next year. Given the way we have been progressing and working as a team financially, we should be just fine.Total Balance: $7,023
- Mortgage: This is for our primary home, the one we live in and have spent the better part of two years fixing up and making our own. We bought when rates were pretty low (and took a 15 year note), but our market never had the run up and subsequent crash that many areas of the country did. We got a house near where I work in an established neighborhood near downtown. When we bought the place, we put down the standard 20% and held back the rest for renovations and upgrades, and ended up spending that (and more) during the house updates last summer. We’ve spent quite a bit of money, but overall I think it looks great and it will be nice to live hear once the projects have all been completed and we can work on projects that are more for fun.Other than finishing the windows job and a spare room upgrade that we are getting into, there’s not really much that urgently needs to be handled around the house, so the amount of money that we spend on the house should go down drastically by the end of 2013, and we can stop spending ~20% of our monthly take home on the house.Total Debt: 114,747
The bad news is that only one of those debts is tied to an asset (maybe two), but the good news is that asset (our house) is surely worth far more than we paid for it just 15 months ago. Once all of the smaller debts are gone (when would I have ever have pictured myself saying something around 7k was “small”) We will focus on the mortgage, and change up our payment amount by paying more than the minimum every month, as well as changing the frequency of the payments (move to bi-weekly). Once those things happen, we should be able to knock the home out quickly then move on to other goals.