My finances are a mess on paper right now. Nothing we can’t recover from and move forward from, but life has been throwing a few curveballs our way in the past month. Most notably my lovely car, which has cost us way too much this year already, now has nice new back brakes and rotors, a new seal on the power steering pump, and a new oxygen sensor for the engine. Add that to the new tires on my spouse’s car and the timing belt my car will get replaced this month (both planned expenses) and our car maintenance budget this month and last month has been totally blown.
Which necessitated my re-allocating the Christmas budget last month temporarily to the cars. But I am still having Christmas, so that money is going to have to come out of the money that I try my hardest to reserve just for debt elimination – my income. We are getting closer and closer to the point that we can pay all our bills and other expenses from my spouse’s income alone, and that is my goal every month. But sometimes, that doesn’t happen. So since I am not sure how much of my “alternative” income (taekwondo, tutoring, and this blog) is going to be able to go towards debt elimination vs Christmas presents, traveling, and other related expenses, I need to hold off on the debt elimination using that money until the end of the month. But I don’t want to wait until the end of the month to pay anything above the minimum on my student loan, so I came up with a compromise.
Our debt snowball – the money we have budgeted every month for debt elimination – is $810.41. Originally that included the minimum payments for both student loans, the car, and $200 towards our credit card. Now that the only non-mortgage debt remaining is my student loan, that entire $810.41 in the budget goes towards that. On top of that payment, we have been able, using my income, to snowflake above and beyond that minimum amount anywhere from $100 to over $1000 depending on the month, for the past year and a half. This month, I am completely unsure what we are going to be able to use towards debt of that income and what will need to go towards Christmas. So even though it will end up advancing my payment due date (and I hate doing that), I am breaking my student loan payment this month into two payments – one now for the budgeted amount of $810.41, and then one after Christmas at the end of the month for any snowflakes I can scrape together.
So that is exactly what I have done so far. I made a payment this morning of $810.41 to my student loan, applying the extra above the $144.50 minimum payment directly to the principal amount. This brought our remaining non-mortgage debt amount to $10032.62. Still five figures, and I could have paid a little extra to drop it under, but with the daily interest calculation thing it would have been symbolic at best. At the end of the month I will hopefully have enough snowflakes to drop it low enough to stay under five figures permanently. Our total non-mortgage debt paid off since June 2007 is now 72.48% (up from 70.4% at last update).
Making two payments in the same month is going to advance my next due date to February instead of January, but that’s okay. I think it won’t make much difference as far as interest accruing on the principal in the long run, and I am hoping to be able to knock this debt out completely as fast as possible. Which may mean the end of 2009, but maybe sooner depending on how things go on the income vs expenses front.