The truck is PAID OFF!!!

Well, I went down to the credit union yesterday evening after work and wrote the check that pays off the truck!  I should get the title in a couple of weeks after they process the loan.

In the process of paying the truck off, I learned a few things.  First, I saw the difference that freeing up an additional $200/month can do.  Secondly, I noticed that when I am in “spending mode” (buying things for the house), I am not keeping as close track on our money as I am when I am in “pay it off” mode.  This year, I haven’t been making any extra payments against the credit card debt – we’ve been getting settled in the new house, buying things in preparation for the baby, etc., etc.  Buying a little of this, a little of that, eating out “just this once” because we’re “too tired to cook” can really wreak havoc on one’s finances.

Now we are back in “pay it off” mode.  We’ve pre-paid for the pregnancy, so there is a little more expense right before the baby comes, but not much, and we’ve got about two months to go before those expenses hit, giving me plenty of time to save up for it.  I took the money that was going to the truck every month, and, for a while, intend on putting it against the credit cards.   (You’ll notice that the balance on the credit cards jumped a little over $2,400 in correlation of the truck dropping to zero.)

If some expense begins to overwhelm us, or we have to adjust our debt reduction number a bit because of some unexpected expense, then so be it – currently we should be able to pay the minimum monthly payment against the credit card every week.

Another thing I plan on doing is going back to my goal setting and Thursday updates.  Now that I should be sending more against the credit card than the minimum payment, I should set goals for that, and I think the Thursday updates really helped with that aspect of it.  Of course, with my wife’s job trickling down to nothing here in the next few weeks, and me only working the one job, the days of $500+ weeks are gone, but it should still help motivate.

The cool thing is, I fully own one of the two vehicles we drive now!!

The Weekend Referrals

Today I decided to do something a little different…  I’m taking the top 5 PF blog referrals that I’ve gotten and giving those links to you:

Be sure to check out their sites, and thanks to you guys for the traffic!!

Here they are, in order of visits:

Becoming Debt Free 2009 – A relatively new blog that began in October of 2008

Being Frugal – A wife and mother blogging about her journey to get out of debt

Penny Wise and Pound Foolish – A woman very, very close to achieving the goal of ZERO credit card debt

Debtor in the City – the undercover_vixen trying to eliminate over $70,000 in student loans and credit cards

Money Funk – a simple living/frugality blog about getting away from consumerism

Have a great Monday!

Where the Rubber Meets the Road

Well, today we got our tax return as a pending transaction in the bank.  Just over $7,300!!  The First-Time Homebuyer’s Credit that we took flipped our finances this year – instead of owing about $700, we got a LOT back.

But here’s where the rubber meets the road.  I’ve now got a few things on my Discover card that I wanted to push out a little to pay off.  About $2,000 worth – not a huge deal, but the house has cost a little more than I anticipated, and we’ve been getting some things for the baby that has helped that balance increase.

So, I can either pay for all the baby and house stuff, then get completely out of credit card debt with the remainder, and still have enough left over to really get set in several categories (like our emergency fund), or I can pay off the truck, freeing up $204/month.

Lately, I have been of the mindset to throw everything at the truck, free up the money every month, and then work on the other expenses as I can.  But now that the money is in the bank, I’m not so sure.

Stuck in the same position, what would you do?

Flexibility is Key

My wife and I have a cat.  This cat is just over a year old, but loves to play.  My wife was letting the cat chase a stick with feathers and a bell on the end of it the other day, and brought the stick up close to my chair.  At that same moment, I turned to ask her a question, and the cat was in mid-air within inches of my face!  Through some miraculous act of flexibility, the cat seems to turn in mid-air and avoided hitting me in the face.  She then ran out of the room like a scared rabbit, and calmly started cleaning herself in the the living room, as if nothing in the world had happened.

I was laughing so hard about it that I had trouble staying in the chair, but later got to thinking about it.  The cat has the ability to overcome difficult situations due in no small part to her flexibility.

That’s how I’d like my finances to be – flexible, and able to turn in mid-air.  Right now, my finances aren’t very flexible.  I’ve got a set amount that goes out every month – set expenses that drive what we do, and very much limits our discretionary spending.

So if my goal is flexibility, then, how do I attain that?  Obviously, having money provides flexibility, but, then, so does not having expenses.  In the short-term, having money will provide flexibility, but longer term, not having expenses is what will provide the most flexibility (at least in my mind).  Even if I have a hundred thousand dollars in the bank, if I’m spending $5,000/month, I’m only good for about a year and a half.  If I’m only spending $2,500/month, I’m good for almost 3 and a half years.  But the added benefit is that I get to a year and a half earning (and paying taxes on) half the money required in the $5,000 scenario.

With that said, my goal towards paying off debt is shifting slightly.  Rather than focusing on the credit cards and emergency fund (worthy goals, to be sure), I am going to focus most of my discretionary debt reduction towards paying off the Ranger, because that relieves me of a $200/month payment, and reduces my monthly payment obligation by about 13% (including only debt service – mortgage, student loan, car, credit card, and truck).  That’s a pretty good pay hike, especially these days.