Update Thursday: Socking It Away Edition

It’s been several weeks since I’ve posted an actual update, but for those of you looking at the bar graphs on the side, you’ll notice that there’s been little change in January.

However, there is more to the story than just the charts…  I have over $5k socked away in my checking account, I’m just keeping it there for the house closing and the moving expenses that will inevitably come up during that process.  We’ve already had a few expenses this month that would have slowed our progress anyway, coupled with the fact that my wife’s income has slowed a bit due to the weather and holidays this month.  We still have enough in the bank that I could completely wipe out the credit card – I’m just waiting for a few things to happen before I aggressively pay it down.

Still, month-to-date, I’ve paid nearly $400 off the credit card, and plan on putting at least that much against it each month, still getting it paid off by the time the baby comes.

The Inauguration wasn’t the only change…

I don’t want to bore you with the lack of progress I’ve made against my debt by doing an update – basically, everything has just been stored up in my checking account as we prepare to move on to the next stage of our life.

The pregnancy has a good chunk of change stored away for it, and, hopefully, the extra I’m saving up won’t be needed.  If it is, then that’s what the fund is for.  I don’t know that I’ve ever had as much cash in the bank as I have right now.  I’m not counting very much towards my emergency fund until after the baby is born, just in case the money is needed.  Once the baby is born and all the essentials are taken care of, then I’ll probably move the money to a MMA or something to separate it from my everyday finances.

Our lease is ending on February 28th.  This makes our second year at these apartments, which isn’t a bad deal, but there are several problems that keep recurring that aren’t taken care of, even though we’ve mentioned the problems.  So we are moving.  The question was:  where?  I decided that if my wife is pregnant, we might as well go for a bigger place while we are at it.  Upgrading the apartment size and quality was the least I felt we should do.  Spending more money per month on rent, while slowing our debt progress, is definitely doable, especially considering the amount of progress we have made.  Budgeting the amount for a nicer, larger apartment put us about even with a decent house payment.  This led me, once again, down the path of buying a house.  Sure, we’d end up spending a little more each month, but it would be ours.

So that’s what we’ve decided.  We are buying a house.  The house has been located, and the interest rate has been locked (5.25%).

I understand that buying a house while in debt is unacceptable to most PF bloggers, but I also feel that there was more to the equation than simply finances.  It was time to begin thinking a little further into the future, and not be so focused on the present that I end up aggressively paying down debt vs. doing what I feel is best for my family.  Don’t get me wrong – a majority of the time, the aggressiveness I’ve shown in paying down debt has been the best thing for our family.  I just feel that the priorities have shifted a bit with the pregnancy, and I’m adjusting our lives to re-align around those priorities.

I know that in this single blog entry, I’ll lose most Dave Ramsey fans – and I know that this is not something that he would do – in fact, he would rail against it.  That’s ok – my purpose of this blog is first of all to have a history of what has happened in my debt-reducing life, and this is part of it.  Of course, I’ll have to add another row on my debt reduction scheme, but, in the end, I feel that my family is better served by this than by spending about the same amount of money on an apartment and having nothing to show for it.  (The mortgage will actually be less than I what I could get an apartment for – the taxes and insurance put me about $100/month more expensive than the apartment  With the tax deductions and exemptions that I’ll get, it might end up being about the same.)

So that’s the big news of the past few weeks.  We have another two and a half weeks until we close, and at that point, we will really have a lot to do.

50%!!!!

Today, we hit 50% of our debt paid off…  took us 739 days to get to this point, but we did it!  Sending the final $300 to get us to that point was well worth it!

We have significantly slowed our progress for the time being – choosing to work on building up our accounts and get a better emergency fund in place, but even that hasn’t been as fast as I would like – I got used to my second job’s income, which isn’t there any more, and my wife went back to work this week on Wednesday, after being off for two and a half weeks, so we’ve been operating on a single income this year.

Pay attention to your statements!

Back in April, I found a better deal for my truck, so I started the process of moving my loan to the bank with the better deal.  The credit union asked if they could match or at least get close to the same rate if I would consider staying.  I said that would be fine, and we signed an addendum to my loan dropping the rate from 7.99% to 5.89%…  After I signed it, things got busy, and I never actually looked at my monthly statement.  Until I had a week and a half off, and started to catch up on filing (I’m the world’s worst procrastinator when it comes to filing, I know).  I noticed on the statement that the annual percentage rate was still showing 7.99%.  So I headed down to the credit union where I had the loan with the signed addendum and my statements.  Sure enough, the rate never got changed.  They said they would make the change, and also research it out to credit my account for the difference in interest.  The difference came to just over $120!

Be sure to keep an eye on your interest rates and pay attention to your statements.  Chances are it was simply an oversight on their part, but if I hadn’t caught it, I could have paid off the truck on the wrong interest rate and paid an extra four or five hundred dollars over the life of the loan!

End of Year 2008, Goal Setting 2009 Report

Well, it’s the beginning of 2009, so, to commemorate that, I’ve decided to set down exactly what we accomplished in 2008.

During the course of the year, the credit cards were our biggest focus.  We eliminated all the credit cards, with only one exception.  Here are our numbers:

Credit Card Debt:  $2,281.00
Truck Loan:  $8,217.62
Student Loan:  $13,953.26
Car Loan:  $15,299.68

Our total debt, in two years, has dropped from $77,962 down to $39,752.  That means that we’ve made just over $14,000 worth of progress against our debt in 2 years, so just a little over $1,000 per month.

Here are our goals for 2009:

1.  Pay off the final credit card
2.  Build an emergency fund of $10,000
3.  Move
4.  Have a baby
5.  Get a will in place
6.  Get term-life insurance in place

Right now, those are our objectives, although, not necessarily in that order.  There is also the possibility of consolidating the remaining loans into a single loan at a better interest rate/payment (although, the Student Loan is the only one left with an interest rate over 6.0%)

It is definitely going to be an interesting year, with the combination of the economy and the personal life changes…