Tell All Tuesday - Crazy Economy Edition
As I predicted last week, we haven’t made any new payments to debt this past week, because I’ve already made the monthly payments to our three remaining non-mortgage debts (including snowflakes to the student loan) for September. I have about $170 in survey payouts and blog advertising income that are sitting in our snowflake savings account for October, which is a far cry from my monthly goal of $900, but since my taekwondo income this month was diverted to pay for my certification class, I knew this would happen. October is a three paycheck month for my spouse, so the actual amount we pay to debt over and above our budgeted minimums should be larger than that when it is all said and done. I’ll be putting $1000 from that first of three paychecks (this Friday) into our snowflake savings account, but I may leave it there for all of October just in case and put it towards debt in November. The economy has got me increasingly unsettled and I might want to have $2000 in emergency savings instead of $1000, at least for a while.
On the other hand, having debt is making me increasingly unsettled. Which is why I am leaning towards maybe paying off the car loan after all after the first student loan is knocked out. My spouse’s student loan should be paid off by the end of the year, maybe even November, and I think we could knock out the car loan the month after that (so 3-4 months early, depending). I originally was going to start right in on my own student loan, but the idea of having less minimum payments is an enticing one. Not so that we can stop paying as much to debt per month - we’re still snowballing our original payments, but again, just in case. Bailout, no bailout, the world seems rather unstable right now and I’m not sure what to think.
I appreciated all the opinions and insight left on my post a few days ago about the bailout. I’ve read a lot and I do understand a little more, but at the same time, I’m more confused that ever. Not about what’s happening exactly, but about the long-term ramifications of what is happening today. I was prepared to open my kids’ 529 accounts this week finally, but now I feel kind of on the fence about it. I guess I am more risk adverse than I thought. We’re not doing anything crazy like taking all our money out of our 401K or IRAs or anything like that, but I’m finding it hard to pull the trigger and put more money into the market through 529s. Maybe I’ll feel differently tomorrow.
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September 30th, 2008 at 3:37 pm
Honestly from the math since there is so little left on the car loan paying it off a few months earlier you’re not loosing that much in interest and you would save that much in gas taking your payment to the credit union. I would want to knock it out after the 9% loan is gone and get the satisfaction that 2 debts were gone in a short time period.
We’re having the same problem deciding our mix between liquidity and debt payoff.
September 30th, 2008 at 6:44 pm
A big issue for you might be saving for another car. Since credit is REALLY tight and bound to get worse, if you have any thought you might need another car in the next year or two (most think it’ll be 2010 before things start really looking up), I’d set aside $. A loan is going to be hard to come by. No loans for repairs either!
The other big warning coming down is job security, since making payroll, getting supplies, etc., is dependent on credit. So, again, your plan for paying down debt/not creating new debt is “on the money”.
October 1st, 2008 at 11:20 am
One of the reasons why I like Dave Ramsey’s plan, even though mathematically it isn’t the best way to do things, is that the sooner you get things paid off, the fewer minimum payments you have to make each month. This increases what you can snowball, but it also increases the amount you have to work with each month for other things too, like a car repair or a medical bill. Good luck!
October 10th, 2008 at 9:54 am
the credit crunch is affecting everyone, but this is the way that business is done in the world. There is no way to get around using credit unless we go back to the barter system