Now that 2007 is almost complete, it is time to look ahead to 2008. Last week I looked at our original 2007 and 2008 midterm debt reduction goals and found that we’ve met our 2007 goals and the original 2008 goals are more than feasible, so it is time to reevaluate our midterm debt reduction goals for 2008.
Our budgeted minimum payment, the original “debt snowball” if you will, is $810.40. Every month so far I have been able to put more than that towards debt reduction, at first around $100 a month in alternative income raised and budget savings, and as time has progressed and the blog has started to earn income, that amount has increased. Blog revenue is somewhat unpredictable at this point so I don’t want to design a budget for debt reduction based on it, but I do want to aim for higher than simply the budgeted minimum being paid to debt every month.
My conservative goals are at least $900/month paid to debt reduction. If I can pay at least $900 a month to debt reduction, which I think is reasonable because we have all but $90 of that worked into our monthly budget, and I have been averaging over $90 in alternative income every month since we started concentrating on snowflaking, I should accomplish:
- Eliminate all credit card debt by April 2009 (snowball calculator says I would have $41 to pay in May)
- Spouse’s student loan under $8000 (snowball calculator says it would be at $8141)
My stretch goal is to pay $1100 to debt each month. That would necessitate averaging about $300 in alternative income over our budget every month, which is more than our average so far but is less than what has happened in recent months. I think this is obtainable if I keep concentrating on alternative revenue sources. It will, as the goal implies, be a stretch. At the end of 2008 we would:
- Eliminate credit card debt by March 2008
- Spouse’s student loan under $5500 (snowball calculator says $5847)
The ultimate stretch goal? Be on track to have all non-mortgage debt eliminated by December 2009. That would necessitate us averaging $1261 to debt every month in 2008 and 2009. It would mean a lot to me to have this whole debt chapter of our lives behind us, or at least, mostly behind us, by the time our first child starts kindergarten in the fall of 2009. Starting in January I am going to make the paid to debt this month number part of our monthly wrapups and see how close we can come to that number. You never know. As time goes on, maybe I’ll be able to shrink that number needed per month even more.