Last year, all the goals I set were based on debt elimination and how much per month we could pay to debt. Even though last year was full of financial challenges, it also had many financial blessings. When I set the goals, I wasn’t formally employed. But soon after, I started tutoring chemistry online, and then a few months later, I started teaching taekwondo at night – first three nights a week and now 5 nights a week. So the goals I set in December 2007 for 2008, that I thought at the time were a stretch based on 2007, ended up being easier than I imagined to hit.
My goal was to pay at least $1100 per month to debt, which would cause:
- Eliminate credit card debt by March 2008
- Spouse’s student loan under $5500 (snowball calculator says $5847)
I more than met both these goals – our credit card debt was paid off in February, and my spouse’s student loan was paid off completely in October, and then paid off our remaining car loan in November. The only non-mortgage debt we have left is my student loan, which has a balance of slightly over $10000 and a $145 minimum monthly payment.
Our financial goals this year are slightly more varied than debt elimination. Circumstances dictate that we prepare for the inevitable demise of my primary vehicle. Our responsibilities dictate that we become more prepared for emergencies. And we are going to try as hard as we can to do it all without adding new debt. We’ve decided on three major goals (that even in our current financial situation, are a stretch) :
- Pay off student loan
- Save $10000 for new (to us) car
- Save a $2500 emergency fund
Our plan is to save the $2500 emergency fund first. I’m not sure what our starting point is yet – once the car is back here at home and the broken tree is dealt with ($200, they are coming early next week) I’ll look at our checking and figure out how much can be moved to savings. Our emergency fund has $300 in it right now and I think, if the car behaves, we can get it up to $1000 again rather quickly. Once we save the other $1500+ (hopefully, by February) we move on to phase 2.
Phase 2 is saving for the car and paying off student loan simultaneously. For six months, we hope to pay $300 to the student loan and save $1500 towards a new vehicle. Anything we have for snowflaking above that $1800 total goes towards the new vehicle saving. This $1800 goal per month will include our budgeted minimum debt payments of $810.41. This will be a stretch to meet every month and will necessitate us spending as little as possible and saving everything we can. Which is how, frankly, I operate best.
(I got Walgreens and CVS gift cards for Christmas to let me continue to play my Drugstore Games so I can shop. My goal is to make the $50 on each of them last all of 2008. )
After 6 months of this payment schedule, we are entering phase 3 and flip-flopping them. $1500 per month to my student loan and $300 towards a new car, with any available overage going to my student loan. At the end of twelve months, if we hit both these every month, we’ll have paid off my student loan and saved at least $10800 towards a new car. If we could start this in January then it would be done by the end of 2009, but since it will most likely be at least February if not March we start, it will go into 2010.
If the Saturn behaves that long.
My ultimate goal is to have the student loan completely paid off in 2009, and save $15000 to a new (to us) car as well. I’d like this car to not just be a stopover car but be a 10-15 year car, which $15000 to $20000 will accomplish. That timeline’s not impossible – my GEO Tracker was still going strong at almost 14 years old when we replaced it for practicality reasons (I was having a baby and the back seats were not car seat friendly, or even safe after years of weather abuse from my convertible days). The Corolla we have is still going strong at 13 years old.
But if the Saturn bites the dust before we can save for a new used car, we’ll probably go with something older and cheaper that won’t last us as long as I’d hope, but will be more reliable than said Saturn. And avoid a loan as much as possible, or at least make it as small as possible.
And then the priorities shift to paying off said loan quickly and efficiently.
Here’s to 2009!