(Late) Debt Pay-down update

Okay, so … the last few months have been quite busy, and I didn’t rebuild all my spreadsheets until today (though, of course, I haven’t missed any payments (and actually, I had rebuilt the one which tracks our monthly budgets and savings balances, just not the big one which projects and tracks our debt pay-down)), so this post is coming a bit later than I initially projected. To recap (with actual numbers):

From 1/30/2012 to 1/30/2013, we paid off two credit cards and reduced our overall debt from $60,652.03 (2012) to $46,987.17 (2013), a debt reduction of $13,664.86, partially enabled by decimating our savings and liquidating a few thousand dollars from an old retirement account neither of us had known existed prior to 2011. As of the end of January, we were down to two debt accounts with balances: One credit card and one (consolidated) student loan account.

On 3/15/2013 we closed on a house. (Yay! New house!) Liquidating our savings and that retirement account to improve our debt situation & free up a chunk of cash was, in a large way, motivated by a sudden and unexpected need to buy a house and move out of the place we’d been staying. I moved very quickly (too quickly for the banks and credit reporting agencies, in some ways), going from ‘believing we could stay at the other house until at least our credit cards were paid off’ to ‘owning our own home’ in under 75 days. (I give all thanks for this, and I place the success of this, squarely on God. We couldn’t have done it without Him, and I’m pretty confident it wouldn’t have gone even a little as smoothly or quickly without His help. Throughout the process, rather than being cripplingly overwhelmed by stress and anxiety, I genuinely experienced a peace which transcends understanding, finding my footing always on the solid rock of faith.)

Our projected debt pay-off dates have been significantly altered by this change. Prior to being told we needed to move, we were projecting having our last credit card paid off in the Fall of 2014, and if the same living arrangements were maintained beyond that point, to have the student loans paid off (that is, we would be debt free) by the Fall of 2017 (4  years from 1/2013). (Assuming no significant changes in income or expenses, no bonuses, no overtime, et cetera.) According to the spreadsheets I’ve just put together based on our new financial situation (which still has some significant estimates, since we don’t have a year’s worth of utility bills yet, et cetera), we are now looking more info

at having our last credit card paid off in the Summer of 2016, the student loan paid off around the Summer of 2022 (after 9 years, instead of 4), and the (ostensibly 30-year) mortgage paid off by Spring of 2030 (after 17 years). On just the credit card and student loans, this extension will cost us an estimated $3,500 in additional interest versus our previous projections.

Still, it’s a good situation. We own our own home, and we can afford it, while still paying down our other debts. The move into, and the furnishing and upgrades/repairs to, this home cost quite a bit of money and basically liquidated all the funds we’d squirreled away to pay for expected recurring costs (new tires every few years, oil changes & other auto maintenance, vehicle license taxes every two years, prescription drugs and doctor copays, NaNoWriMo/coffee/writing costs, computer upgrade/replacements, et cetera), and until we’ve built all those funds back up we’re only making the minimum/scheduled payments on our debts, rather than any overpayments. We’ve actually made significant headway on that front, having built up enough to cover everything but the ‘computer replacement’ component of the old savings, and expect to reach that point by October.

Oh, and the new date to go by, for looking at our annual debt pay-down in the future, will be 3/15. As of 3/15/2013, our total outstanding debt was $142,723.88. In the five years from 3/2008 to 3/14/2013, Mandy and I reduced our debts by a total of $45,108.35.

((March 2008, by the way, was when I stopped working a day job and, effectively, stopped contributing financially to the household, except as its financial manager. (Over the same period I’ve put $6k-$7k more into my business than it’s earned, though most of the not-yet-earned-back monies were invested in the first year and a half after I started to do this full time. I suppose I can’t really quit, since I still owe me thousands of dollars…) I guess I’m a better househusband than I am an entrepreneur.))

Show of hands: Who thinks our car will actually last another 17 years, to keep from significantly altering the above projections? Hah! I suppose I’ll probably add a “saving for car replacement” line to our budget … probably either starting the next time Mandy gets a raise, or in 2016 when the credit card is paid off. Yech. Technically, since I already have several savings lines attributed to the car, depending on how maintenance costs go, we might end up with a reasonably good start on that budget, if the car needs to be replaced suddenly. …I’ll be thinking about this…

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