At the end of December last year, I set 5 goals for 2012. Two of them were fitness related; three were business/financial. One of the goals felt like a cop-out – it was a very vague “pay off debt” goal – I literally listed “amount TBD” in my written goal.
This past week, I sat down, looked at where we were January 1, where we are now, and where I really want us to be by December 31. I looked at where I actually thought we realistically could be too. Then I set a number, based on what I think is realistic. I’m also going to set a stretch goal, but so long as I reach the first part of the goal, I’m happy. So what is that goal?
Well, as of January 1, 2012, our total outstanding on all our debts was $111,766.03. Yes, that is less than the February 1, 2012 starting amount I have been using on my monthly updates, because we accrued some new debt in January. As of right now, we currently owe: $117,662.47
|Debt||Balance||Interest Rate||Payment||Due Date|
|Line of credit||39,698.05||6.25%||~225.00||Monthly|
Yes, that is $6,000 more than as of January 1, although we have the $3,000 available to pay the appliance loan – it will be paid off June 1. So my new, concrete goal for 2012 is to get our debt balance down to $100,000 by December 31. Paying off $17,000+ in debt in 7 months is ambitious, but I think we can do it – and here’s how I plan to execute it.
- We have $3,000 saved to pay off the appliance loan. The only reason the loan isn’t paid as of today is most of the money is in transit from one institution to another – we will have it by May 31.
- We pay $432.65 automatically every month on our SUV loan. This will total $3,028.55 by December 31.
- Each month I stay at my current company, my MBA debt automatically reduced by $605.34. So long as I stay, that is another $4,237.38 by December 31.
- I put $150 bi-weekly into a savings plan. This year that money will be used to pay off the RRSP loan. There is $150 in there right now (that is the money that was being used for the appliance loan); I will be putting in another $2,400 by December 31. That gives us $2,550 for debt repayment.
- We are planning on renting out a room in our house. We hope to have it rented by September, earlier would be better. We expect to get $400-$450 per month. Although we will have to pay some taxes on it, we will also have some tax deductions. I expect to be able to put $350 per month towards debt. $1,400 total minimum.
That comes to a total of $14,215.93 paid off. This does not include any small amounts we will pay off the mortgage, and it does not include paying off the Mastercard (we have some money put away to pay off half of that). I also get 2 extra paycheques per year, adding about $800 per cheque to our available funds to repay debt. As well, my statutory deductions decrease starting in July, giving us an extra couple of hundred a month for debt repayment.
We need to come up with an extra $3,446.54 to reach our goal (as well as not incur any new debt at all!). I’m already talking to a couple of people about doing some freelance work and staff writing; as well, once we return from Wisconsin in July, I will be looking for a part time job (if the freelance work and staff writing don’t pan out). My primary job work schedule is weird, so finding someone willing to work around it may be tough, but I’m going to try.
That’s our plan. We have a goal, and we’re working towards it. I’ll continue to post monthly updates long the way.