Debt Plan/Life Plan

[LiquidMercury]

Thought this might be beneficial for myself (and maybe others). I wanted to lay out my debt plan for review and keep myself accountable on sticking to it.

Just purchased my first house, took a hit on my savings since I used the majority of it for a downpayment.


Mortgage - 2000/month
~302,000

CC Debt
1500 @ 12.99%
6400 @ 0% until April 2015
5000 @ 0% until Jan 2017

Car
12,320 @ 6% (300/month payment - I pay 400/month right now)

Savings
4735

Income
4900/month take home

2014 Goals:
1500 and 6400 CC debts paid off by EOY
Emergency Fund up to 12,000
Ring fund to 5000+ by EOY
Take a vacation to the Caribbean (7-10 days)

2015 Goals
Debt free outside of mortgage
4 additional mortgage payments

Potential Game Changers
Positive
Higher paying job
Lady friend moves in and contributes

Negative
**** happens

Monthly Intent
Pay 750/month minimumto CC debt
Save 250/month until interest CC debt paid off, bump to 750 a month after

Decisions:
Pay off car quicker, or pay off 0% interest CC debt quicker.
Additional mortgage payments


So that's the plan, I'll be tracking updates as things happen and am always open to suggestions. Thanks everybody!

[LiquidMercury]

The only reason I'm considering paying off the 0% CC quicker is that it simply irritates me more than the car payment even though it's "free" debt. Another issue is that my E-fund is only ~2 months and it's nice to have CC space if something truly became an issue.

Also for positive game changers, I should know this weekend whether or not my lady friend is moving in (and we're moving forward in life etc.) or not. Next week I should have a written offer from a new company. Whether or not I take it obviously depends upon the offer but if it is what I think it might be then it's likely I'll take it.

[EarlyRetirementJoy]

From your first post under Negative - one thing you can almost guarantee is that **** will happen.

Are you willing to entertain that you simply cannot afford a Caribbean vacation while you are $25,220 in debt, not including your home, with less than one month's savings in the bank?

Seriously, that money should go to retiring your debt ASAP. Then building up your emergency savings, then getting your savings to 15% of your gross income.

I think a Dave Ramsey intervention might be helpful as well, starting with his "Total Money Makeover" which you can obtain for free from your local library. It's the best thing you will ever do for yourself, truly.

[breathemusic]

Congrats on getting a plan together and being ready to stick to it!

I actually like your plan the way it is as long as you don't intent to spend money on that vacation until after you've reached that CC debt goal and have gotten most of the way to your EF goal (and that's assuming you're paying for the vacation out right and not putting it on a card).

[Bob B.]

LiquidMercury -

You might find the Blog side of this site a better atmosphere for regular postings to keep yourself accountable regarding your finances. I know I did.

[LiquidMercury]

From your first post under Negative - one thing you can almost guarantee is that **** will happen.

Are you willing to entertain that you simply cannot afford a Caribbean vacation while you are $25,220 in debt, not including your home, with less than one month's savings in the bank?

Seriously, that money should go to retiring your debt ASAP. Then building up your emergency savings, then getting your savings to 15% of your gross income.

I think a Dave Ramsey intervention might be helpful as well, starting with his "Total Money Makeover" which you can obtain for free from your local library. It's the best thing you will ever do for yourself, truly.

I do contribute 15% to my 401k that is not included in my take home obviously.

The only reason I consider a vacation is that I haven't had one in 5 years, it only costs me whatever I spend in food over the course of a week as I have free flights and a free hotel. Since I have to eat either way that week, I figure might as well do it on a beach.

That being said, I agree that I could probably cut on food and pay off my debt quicker.

[LiquidMercury]

Also other relevant information that I probably should have included in my original post.

1. I have almost zero living expenses, I travel 5-6 days a week for work.
2. I contribute 15% to my 401k
3. My house is brand new (finished building Dec 2013) so shouldn't have any repairs. Also I have a 1 year warranty on the house top to bottom, 20 years on the roof, 5 years on major appliances.
4. Credit score 824 (I'm sure it's down slightly due to closing on a house and additional CC debt). I get another free report in 3 months so I'll check then.
5. Car has low miles, and again I don't drive it except for pleasure on weekends.
6. Utilities are under 400 a month, sometimes under 300.

[LiquidMercury]

LiquidMercury -

You might find the Blog side of this site a better atmosphere for regular postings to keep yourself accountable regarding your finances. I know I did.

Thanks! Do you suggest I simply delete this post and create another there?

[LiquidMercury]

Few other questions:

Regarding emergency fund, what is an appropriate level?

I'm aiming for 6 months expenses. Should I be going for something like 6 months income?

[agarlits]

Few other questions:

Regarding emergency fund, what is an appropriate level?

I'm aiming for 6 months expenses. Should I be going for something like 6 months income?

With expenses as low as yours and with what you make you should go for a year of expenses. This should not be hard for you to attain and once completed it will free up that extra money for wealth building.

[LiquidMercury]

With expenses as low as yours and with what you make you should go for a year of expenses. This should not be hard for you to attain and once completed it will free up that extra money for wealth building.

Oh wow, that might take a good bit of time! Somewhat daunting to think about.

Would it be better to focus on getting to 6 months expenses and than going on overdrive on my debt?

[agarlits]

Oh wow, that might take a good bit of time! Somewhat daunting to think about.

Would it be better to focus on getting to 6 months expenses and than going on overdrive on my debt?

You can start with 6 months, eliminate your debt and then bump it up to a years worth of expenses. Going this route will help by not only freeing up the amount that you have to push towards your EF but it also lowers the total amount that you will need in your EF since you not longer have debt to pay on each month.

[scfr]

The only reason I consider a vacation is that I haven't had one in 5 years, it only costs me whatever I spend in food over the course of a week as I have free flights and a free hotel. Since I have to eat either way that week, I figure might as well do it on a beach.

I'm sure you know this, but "free" tickets really aren't free. My husband is currently traveling on a "free" ticket overseas and spent $52.90 in fees for his ticket. It's a fantastic deal and a pretty nominal cost and 100% worth it since it is for his business, but it's still not truly free.

There also may be other expenses like transportation to & from the airport and/or airport parking, transportation costs at destination (taxi or rental car or public transport fees), gratuities, etc. Even with bare bones spending on your vacation just be honest & realistic about what you will spend when deciding whether or not you can afford it.

[corn18]

I'm sure you know this, but "free" tickets really aren't free. My husband is currently traveling on a "free" ticket overseas and spent $52.90 in fees for his ticket. It's a fantastic deal and a pretty nominal cost and 100% worth it since it is for his business, but it's still not truly free.

There also may be other expenses like transportation to & from the airport and/or airport parking, transportation costs at destination (taxi or rental car or public transport fees), gratuities, etc. Even with bare bones spending on your vacation just be honest & realistic about what you will spend when deciding whether or not you can afford it.

True dat. I had free plane tickets, rental car and hotels for my 10 day vacation last year with my family (4). Cost me $5,000. Maybe not typical, and not applicable to the OP, but was frustrating. Gas, food, fees, parking, souvenirs, tours, animal sitting all added up. The free condo in Panama CIty 2 years ago cost me $3,500 for the same reasons.

I think we could do a really cheap vacation on points if my family liked to just sit on the beach. They don't. I do.

Tom

[Bob B.]

Thanks! Do you suggest I simply delete this post and create another there?

Not at all. Lots of value in forums. Diferent type of value in blogs.