As we get closer to my husband’s start date for his new job, I’ve been getting ready to deal with the finances once again. More specifically paying off the debt and saving more money–something I’ve had to essentially put off while he was out of work.
Now I have almost $20,000 more to work with and I’m really excited about it!
First, here’s a rundown of what we owe:
- Hubby’s truck loan: $3, 311.07 (we actually have this paid through June)
- Credit card: $4,708.21 (yes, we only have one!)
- Heloc: $46,579.21
- Mortgage: $106,982.24
- TOTAL = $161,580.73
I am also going to have student loans added to this, but they will be deferred until about November 2011. So I will not be adding them until then. As you’ll soon see in my plan, they are already included, though I don’t know the amount as yet. I will also be consolidating them right after I graduate.
Our net worth is currently $163,361.08 with $56,895.43 of it in combined retirement accounts. The new 401k will be added after the probation period in three months. I’m hoping to save 10% from his paychecks so with the 5% match we’ll be saving 15%! We’ll have to see in three months how that will work out, but my goal is to not go below 7-8%.
Even though we’ll be making $20,000 more than his last job, I know we won’t actually see all of that money. I based my plan on $15,000 extra a year, or $1250 per month, until I actually see the checks and can make a more precise plan.
The Plan (subject to change based on actual paychecks):
- I’ll be splitting the extra in half so $625/month or $7500/year per half. Half will go directly into savings and the other half will go towards paying extra debt.
- I will continue to use the old paycheck amount (with a small increase) to pay the bills as I normally did and then use this as extra. For example, at one time I was paying $300 on the Heloc. When the rates came down I continued to pay the $300, but I’d pay an evened out amount to the heloc (if payment was $105.89, then I’d pay $110) and use the rest ($190) to pay down the truck loan (in addition to its regular payment). I’ll continue to do that, but also add this extra money to paying the debt off.
- I still have extra money from hubby being out of work that I normally would not keep in the account I have it in. As soon as he gets his first paycheck, I’ll be taking that entire amount I have left and pay off the truck loan! Then I can change the auto insurance on his truck to match my car (paid off prior to buying the truck), which will save us more money!
- I’ll then start my plan with the debt & savings money on his 2nd check (the first will only be for 2 days). Half will go directly to the emergency fund and half will go towards the credit card until the card is paid off.
- After the credit card is paid in full, then I’ll switch to the Heloc and pay down as much as I can until my student loans begin. Then I’ll switch to them until they are paid off before going back to the Heloc.
- Eventually I would LOVE to have the mortgage also paid in full!
In addition to this I am still hoping to be able to purchase the lot next door to us. Crossing fingers it will still be available and at a reasonable price when we are ready to purchase. Eventually I would like to expand the house, but that will be a long time from now. The first step would be getting the lot before someone buys it and builds a duplex! Yikes!
During the first three months, we’ll also be living pretty much as we have while hubby was not working…bare minimum with minor splurges. That way we can save even more in case something doesn’t work out with the job. I’d like it if we were in a better position than we were in before if he lost his job again!
Does anyone else have a plan to pay off debt and/or save more money?
