Student Loan Update

We've paid down our loans some this month. I can see why I put this off some. It will be a slow but steady process. We did not pay off as much as I planned because we did not get our stimulus deposit from the government. When it arrives, we'll have an additional $1800 to put towards the student loans (big dent)! Maybe we should lobby for another stimulus check. If sending a family of four $1800 is good for the economy, imagine how much we'd accomplish doubling it!!!

Ken's loan: Paid $254 in principle
Tamra's loan: Paid $137 in principle
Total Paid of $700: $391 Principle and $309 Interest

Why only $700? We've been adding to our savings accounts. With a baby on the way, we need extra money on hand. It actually does not cost much to add to our savings. The money will be applied to the student loans if nothing comes up and I actually earn .03% more on my savings account than I pay in student loan interest (pay 3.25% earn 3.28% at IGoBanking).

Next Step: Savings and Shredding Credit Cards

In continuation of the post I started earlier about our journey out of consumer debt, our next step was to establish a savings account and then agree that we would no longer add to our debt. That meant eventually shredding all the credit cards.

We opened a savings account at ING. It pays well and we're so happy there we also have an interest bearing checking account. Now, it's funny to think that Tamra and I, after not having a savings account, were not comfortable with Dave Ramsey's recommendation of $1000 in the bank as a short-term emergency fund while you get out of debt. We finally agreed on $1500 and put it in the bank. We accumlated the $1500 very quickly by selling, through Amazon Marketplace and Ebay, everything we could get our hands on. I also cancelled all are magazine subsrciptions and put the checks towards the emergency fund as well.

Once we put our $1500 in the bank, it was time to shred the credit cards. We shredded all the cards, except one at first. Tamra's first card had a picture of the University of Florida on it and she was attached to it (even though it had $0 balance because of the high rate). When we shreded the cards, except the UF card, I really never would have thought we would have had all that credit card debt paid off by February of the next year. Also, Tamra got over closing and shredding the UF card the following month!!!

Net Worth Tracking Website

I found a neat website to track your net worth. They'll send you an email every month to update your information. If you're shy, you can keep your profile private. I added the badge to the right hand column of my blog. It's nice to track the effects of our decisions (whether positive, negative, or neutral).

The graph goes from December of 2006 when we discovered Dave Ramsey's book, The Total Money Makeover. I also entered in February 2007 data from when we paid off the credit cards which freed us from consumer debt. Lately, I've been feeling like we've lost focus and that we haven't been getting anywhere, but it looks like we have, so that was nice to see.

More detailed net worth information is available if you click through the graph or my name across the top. That will give an idea of the categories they have for you to fill in. Clicking their logo at the bottom takes you to their home page.

Doing Student Loans Gazelle Style

We are going to get gazelle intense with the student loans. They've been on hold for awhile because we owed $1800 in taxes, unexpectedly. To help offset that, we decided we'd have another kid (he he). Unfortunately, having another kid meant we had to write a $9,000 plus check for a one year old Chrysler Town and Country, so we will not break even for quite a while.

The good news is that in a few weeks, we should get our economic stimulus rebate and then we can throw it at my student loan. That should mean about two thousand dollars in reduced principle next month! These loans total just over $550 per month in minimum payments on the shortest repayment plan and we have about a grand per month budgeted for them. From this point on, most everything extra will go their way as well (which will hopefully add up to a lot).

So here is our goal: to pay off my student loan, over $20,000, by fall of 2009!

And for archival, here is what the progress bars looked like when we first started:

2008 Payoff Progress:

0.23%

$214

$92,000

First Ken's Loan:

0.65%

$145

$22,300

Then Tamra's Loan:

0.1%

$69

$69,700

Becoming Debt Free - First Step - Admission

Well, at first it started seeming like the credit card bills kept on coming. My wife and I had a toddler and a baby on the way. One evening, I reluctantly decided to add them up! My wife was standing by the fridge and I asked her if she wanted to guess how much we owed on the credit cards. She doesn't like guessing games, but I sure wasn't going to blurt this number out. After telling her to guess higher a few times, she finally guessed close enough for me to tell her and then we both shared the shock.

That evening I used Google to find out how to get out of debt and I discovered Dave Ramsey and his baby steps. After learning about his show on XM Radio, I decided to start listening and I also added my name to the waiting list for his book at our local library. My wife and I also decided to stop the hemorrhaging of money by deciding not to eat out, renew magazines, visit our parents in Florida for Christmas annually, and no more buying anything. I also canceled the magazine subscriptions I had to get the checks for the unused portion of the subscriptions.

Tamra and I were both freaked out by what we discovered that night. But, in hindsight, I see it as a beginning to a very enlightening journey. After taking responsibility for where we were financially and admitting we had to do something about debt, it was time to start our journey out of debt and towards success.

(to be continued)

A Year (a life?) Without Credit Cards

Well, it has been well over a year since we have used a credit card. Unfortunately, I don't know the exact date we shredded the credit cards, but we freed ourself from consumer debt six months later on February 22nd, 2007, by making the last and final consumer debt payment we will ever make to payoff a chase credit card. The only debt we have left to payoff are our student loans. Tamra and I have vowed to never have consumer debt again. It's one of our "No Matter What's".

We have to thank Dave Ramsey and his book, The Total Money Makeover, for sharing the wisdom of living debt free along with a plan to become debt free that works. Living below our means has changed our life and we are planning a debt free life for us and our girls. We do plan on getting a small mortgage on a house that we can payoff in five years or less while we payoff our student loans. We hope that we will be able to help our girls start a debt free life by setting a good example, planning to help them pay for college and maybe even help them with a starter home.

Over the next few weeks, I'll share how we did it. But for now, I would recommend renting Dave Ramsey's book at the library. It's a quick read (it's motivating) and this book has the potential to change you life, too! You just have to do it!!!