You know when you have been working hard on one thing and while you make some progress, it just feels like you’re spinning your wheels?
Yeah, debt eradication seems to be like that.
When you start with over $80,000 in consumer and student loan debt, it just seems like it will never be different: you will always be paying down debt. Forever.
The same yearly goal, forever.
So, yeah, “New Year, New Goals,” but, really, it’s “New Year, Same Goals BUT SHINIER AND BETTER AND MAYBE A WEE BIT EXTREME.”
H & I have determined two levels of goals this year and the first one is pretty much non-negotiable. I mean, it’s going to take some work, and we may not meet it, but it is THE GOAL:
GOAL 1: Pay Off $26,378.59 by the middle of February 2017
Why February 2017? Because I turn 37 (holy shit) that month/year, and I do NOT want to have four student loans hanging over my (our) head(s) when I’m effing thirty-seven years old.
You know what you should be doing when you’re 37? Saving for retirement – hardcore. Saving for your kid’s college education. Giving to charities – multiple charities. Not to mention traveling without going into debt. Buying a car with money you saved up. Maybe even going into debt – for a house!
You know what you shouldn’t be doing? You shouldn’t be paying down effing student loans. Obviously this is my opinion, and everyone is in a different place, but we’re not talking paying down loans on pharmacy or law school (i.e., we’re not in businesses that generate a large amount of income, and our incomes are not likely to increase very much – if at all, by the time we retire!). So, yeah. I’d like to have at least H’s loans gone (they’re the ones at 6.88% interest).
- $391 regular payments per month (14 months) = $5474
- $26,378.59 – $5474 = $20,904.59 / 12 = $1742.03 additional payments per month (2 months are designated for savings*), so:
Budgeted monthly amount to Debt Eradication (in addition to minimum payments): $1504
Snowflake amount required to make up the difference: $239
GOAL 2 – “STRETCH GOAL”: Pay off $13,525.24 by February 2017
Okay, this is more than a “stretch,” but I don’t know what you call it. “Completely Unattainable Goal Unless We Win the Lottery”? Takes an awful long time to type….
As you read above, I’m pretty pissed that I’ll be heading in to my 37th year with student loan debt if we do nothing to enhance our current Debt Eradication. (Admittedly, it’s not all my debt, but it might as well be, right? “For richer, for poorer.”) So, I started to dream big and things got a little wild.
What would it take to be student-loan-debt-free by the time I turn 37?
Well, here are some details:
- $114 regular monthly payments (14 months) = $1596
- $13,525.24 – $1596 = $11,929.24 / 12 (2 months we are saving our extra budgeted payment)* = $995
- Total additional payment needed each month (for 12 months) to meet both goals: $2737
- Budgeted monthly amount to Debt Eradication (in addition to minimum payments): $1504
- Snowflake amount required to make up the difference: $1233
Uh, yikes. And probably not really possible. But there is hope!
We are considering using some of our savings to pay off the last bit of debt we may have prior to the February 2017 deadline – though we would then save all of our money for the next year to re-build that House Fund / Emergency Fund. The fund contains about $9,000 (which is designated as our House Fund) and about $3,000 as an Emergency Fund. Which leads me to:
* You may be wondering why the calculations above sometimes reflect 14 months and sometimes 12. Well, we will of course continue to pay our minimums each of the 14 months through February, 2017. However, for January and February 2016, we are putting aside the $1504 that we’ll normally budget for Debt Eradication to pad our Emergency Fund.
H’s job is a bit uncertain at the moment, but we should know where we stand by March (fingers crossed). We want to be prepared with a solid savings fund, and I can’t lie – I really like having over $10,000 in a savings account (where we get 1% interest, which is like nothing compared to some years ago, but hey, it’s better than a lot of folks get right now at their own banks)! Even if it turns out that H is solid in his job, I’m not sure how eager I’ll be to dump all of that in our fight against debt. However, as the deadline draws closer, I may get more and more desperate to see that debt gone. We shall see!
I have some ideas for some other mini-goals that will help us reach at least our first goal, including consigning, continuing with Swagbucks (<– affiliate link, but try it, let me know, and I’ll give you some tips!), and maximizing our 2015 tax refund.
What are your financial goals for 2016? Is anyone else looking beyond 2016 like we are?