Since I already introduced myself in my previous post (thank you to those who read it), I'm going to jump right into my current financial situation. I know a lot of people here are familiar with Dave Ramsey's baby steps, so I'll format our progress with them in mind.
Baby step 1: $1,000 emergency fund
We completed this step in May 2010. In addition, we started some sinking fund savings accounts for gifts, irregular bills, and auto/home repairs.
Baby step 2: Pay off debt by snowballing
We originally began paying down debt by starting with the lowest balance. However, I found my motivation level increased by arranging them by interest rate instead (excluding mortgage debt for now).
Current debt: balance -- min. payment -- interest rate
Auto loan: $4,477.22 -- $272.99 -- 6.29%
Credit card: $12,358.42 -- $175.00 -- 3.86%
Student loan: $7,719.61 -- $128.00 -- 3.25%
2nd mortgage: $31,783.48 -- $245.08 -- 8.00%
1st mortgage: $129,638.37 -- $944.59 -- 5.50%
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Since we started paying down our debts last May, we have paid off $16,047.98 (including a credit card and medical bill that are now paid in full). If our income does not change (for better or worse) in the near future, our projected consumer debt-free date should be March or April of 2013.
So there it is. My plan is to tackle the monthly budget in my next post. I'll feel ecstatic for any tips or suggestions on how to accelerate this whole process and start building our net worth.
April 2011 financial snapshot
April 19th, 2011 at 04:49 pm
April 19th, 2011 at 05:35 pm 1303234559
Some people need to see little debts drop off, and others prefer to see the big interest rates drop off.
Good Luck!
April 19th, 2011 at 07:48 pm 1303242505
April 21st, 2011 at 02:38 am 1303353520
April 22nd, 2011 at 05:07 am 1303448878
Good luck with your program! I'm a Dave Ramsey fan, though I can't listen to him much without getting mad at the world, the books seem to make a lot of sense to me.
April 22nd, 2011 at 11:24 am 1303471440
Definitely the auto loan. When we started paying down debt last year, the Envoy's balance was close to $12,000. If we keep focusing on throwing extra cash at it, I hope to have it paid off this September.
The credit card is locked in at that rate as long as we're current on payments. Back when the credit card companies were jacking rates up, I called them up and had them close the account. So far, the rate hasn't changed *fingers crossed*.
Dave Ramsey is the reason my wife and I started turning around our finances. The book is phenomenal for motivation, more so than his radio program. I'm not a complete believer in everything he teaches, though, which I may blog about in the future.
Thanks for commenting!