Preparing to Pay Down Debt – What Our Debt Looks Like

The rich rules over the poor, And the borrower becomes the lender’s slave. (Proverbs 22:7 NASB)

I passed along three versions of our budget for my husband to review and asked for his comments. While he was reviewing, I got updated payment information on his student loans, since I was working from figures in our 2010 budget (the last one I did). Interest rates have changed and we found some extra money to work with! Great news!

As for the versions of the budget, the first is the budget I blogged about the other day. The second version takes into account the $5,000 per year reimbursement we get for dependent care. The third takes into account the reimbursement, but also has us investing in our 401(k)’s again. At our previous positions, we had invested in our 401(k)’s, but since we moved here almost two years ago, we haven’t taken advantage of that benefit. I’m leaning toward the third version of the budget. None of the versions take into account the truck payment my in-laws are covering for at least 18 more months (so we have time to figure that out). All three versions have categories that I think are pretty light, no room for savings, and no room for extra money to help us pay our debts down more quickly.

On the plus side, we have three student loans that are less than $2,000 a piece, so if we can manage to sell some things or get an awesome bonus, we can knock out at least one of those debts and get a good snowball going. Last year I was promoted but the company had no budget for a raise, so my manager finagled a bonus for me and told me he hoped that raises would be in the budget next year and that I’d get the raise then. I’m prepared to follow up on that at my performance review in a few months.

But as for the student loan debt, here are the ugly facts of our current state:

  1. Just over $100,000 total still left, even after 10 years of my repayment and 7 years of Brian’s repayment. My loans are approximately 25% of that figure. (If you can’t do math, that means my husband is on the hook for about 75k).
  2. We have a total of twelve loans to pay off.
  3. The highest interest rate for now is 4.5%, but we’ve definitely seen as high as 8 and 9% rates in the past.
  4. The largest payment that goes to a company is $336.16. That’s Brian’s bill. My four loans together don’t run that much per month.
  5. The smallest payment is around $25 a month. It’s mine and I’m ashamed I haven’t just paid the silly loan off already.
  6. If we never come up with any money to use for a snowball and just pay off the first loan “naturally” in 2016, we can use that payment as our snowball and pay off all loans by 2022. My oldest will be 12. Sigh. (If you are new here, I’d really love to stay home with my two daughters – 3 months and 3 years – but can’t afford it. I could afford to be a stay-at-home mom if we did not have any student loan debt).

None of the above takes into account adding in car payments to our debt cycle, and I don’t even want to consider our mortgage as part of our debt. I’m going to be Scarlett O’Hara (…and think about that tomorrow. See Gone With the Wind if I’ve lost y’all).

So you might be reading this and thinking what a total downer. But you know what? I’m actually excited. Like, so excited I can’t sleep at night. I have some poorly formed plans in my head for ways to make extra money, which will bring those debts right down. I really think we can pay everything off in less than 5 years (truck included, if need be).

I’m not sure what the future holds for this blog as I head back to work full-time on Friday, but I do plan to keep posting some updates. Thank you to everyone who has been encouraging over the past month of this blog. I never really expected anyone to find this little slice of the internet and somehow I actually have followers now, which is odd and exciting and comforting all wrapped up in one. I need the accountability. That’s why I’m here, after all.

Besides a garage sale, what ideas have earned you extra money for little effort?

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7 thoughts on “Preparing to Pay Down Debt – What Our Debt Looks Like

  1. I would go after the debt with a 25.00 mo payment with a vengeance. Pay it off by the end of June. One less bill coming in the door, 25.00 more dollars to put on the next smallest debt, and AND you save the interest which gives you more money to go after the big debts.
    You need a weekly budget and meet on it every Saturday night. We are now debt free and still touch base on our weekly budget every Wed and Sat. Otherwise we would overspend.
    For me, meal planning is where I save money and create more money for savings towards our goals. http://healthfulsaver.com/2013/04/09/meal-planning-as-good-as-a-part-time-job/
    A great source of knowledge are the blogs Grandmas Frugal days and frugal Makes Cents.

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    • Thank you for the tip about the blogs, I will definitely check them out! I wish I could pay off the debt by the end of June, but there is no extra money in our budget to get that done. I already slashed our grocery bill by half of what I typically spend and I have no idea if I can rise to the challenge. I’m hoping for the end of the year, after the raise hopefully comes through! We are also going to start meeting weekly on our budget (which is done per paycheck, so every two weeks). I think it’s the only way to keep us accountable.

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  2. Way to go Ms. Optimist, I love it!! I will be thinking of you Friday and praying for an awesome first day back to work! Looking forward to hearing all about it!

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  3. Pingback: Budget ADHD | Indebted and In Debt

  4. I’m so glad you are excited and that is what is going to fuel you on to see this through…and you will! You will! I am looking for ways to make extra income, too…pass them on when you find them. 😉 I need a massive yard sale, so that’s on the horizon. And I appreciate the other persons tips on meal planning. Also on my to-do list. Thinking of you as you go back to work Friday and praying peace for you. Looking forward to following along on this journey with you…;)

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    • I’m think yard sale, too, but with a newborn and a full time job… It ain’t happening soon. Maybe by the end of summer. I’ll let you know if any other bright ideas come my way. Thanks for stopping by 🙂

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