Debt-Free in 3: July Update (yr 2)

Part 20 July Debt-Free in 3

Welcome back to our Debt-Free in 3 series! Sorry, it has been too long without an update. I’m obviously a tad bit tardy for the July update – here’s a refresher of what happened in June.

Alright, now that we’re in sync – not to be confused with any boy bands, not that kind of post – let’s get a recap of our Debt-Free in 3 goals and see where we are …

GOALS RECAP

☑ 1. Payoff medical and tax debts before April, 2016.[SUCCESS]

☑ 2. Enjoy April vacation without going further into debt[(FUN) FAILURE]

▣ 3. Create emergency fund that is not to be touched unless in crisis mode.[WORK IN [VERY SLOW] PROGRESS]

▣ 4.Pay down credit cards to less than 30% of available credit. [WORK IN PROGRESS]
☑ 5. Continue to increase retirement fund 1% annually[ON TARGET]
☑ 6. Save minimum down payment on house by September, 2016 January, 2017. [NEW 401K LOANS]
☑ 7. Buy a house in fall of 2016 Winter 2017 Fall 2016[SUCCESS]
▣ 8. Payoff all current debt by June, 2018.
▣ 9. Substantially increase retirement fund once debt free.
▣ 10. Don’t incur any new debt with the one exception of a mortgage.

BOTTOM LINE:

Since the last recap in March, we have seen the following changes to our bottom line:

  • Revolving Debt (Credit Cards/Bank Line of Credit) increased by $1,790.
  • Closed-End Loans (Student/Auto/401K/Bank/Mortgage) – decreased by $7,230.

The increase in revolving debt is mostly due to the things that we needed to get Herman the House Car on the road. He has a new door – so we no longer have to bungee it closed, side windows – with no cracks, custom awning and a radiator. Herman still isn’t going to win any beauty pageants, but he is now road worthy! (Shhh – we’re getting around to installing some seat belts).

Of course, the good news is that the decrease in closed-end debt is greater than the increase in revolving debt. Not a perfect win, but we’ll take it!

#3 CREATE EMERGENCY FUND

Against conventional financial wisdom, we’re just putting this one on hold. It is just about impossible for me to park a lump sum of money in a liquid account while my other debts are incurring interest.

#4 PAY DOWN CREDIT CARDS

We have gone a little off-kilter on the credit card debt, and we are probably going to see more of the same for the next few months.

#8 PAYOFF ALL CURRENT DEBT BY JUNE, 2018 

 

There are times when you need to take a hard look at your finances and make adjustments to your goals accordingly. When I first setup our goals, “buy a house” was #7. Circumstances and life encouraged us to re-prioritize and we did things out of order.

In retrospect, I’m extremely happy that we did. We would not have found the home where we believe we belong otherwise. AND – the value of the home has already increased in the year that we have lived here.

Which is the long-winded way to say that due to the shift, we should now have all of the “current debt” paid by September, 2018. The “new” debt – replacement vehicle, 401k home loan and mortgage will take a bit longer.

If life goes perfectly according to plan, the remaining debt payoffs will be:

  • Auto Loan – August, 2019
  • 401k Loan – February, 2020
  • Mortgage – December, 2031

Our 3 year deadline is March of 2019. The 401k loan, (which I owe to myself) and the mortgage are both for the house – both of which are exempt from the Debt-Free in 3 journey. The unforeseen new auto loan was the result of totalling the jeep – which I see in somewhat of a gray area and not really part of the plan. But I’m definitely going to do what I can to move up that payoff date to March, 2019 anyway!

What about you – do you have any budget wins to share??

 

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