I took a few months off from my Debt Diaries series, but now I’m back! I lost steam and motivation for a bit, but now I’m ready to get back on track with better managing our finances.
As before, I will update once a month with the progress we made in the previous month, but I’m getting REALLY REAL here this time, and I’m listing every penny of debt we owe… even our “good” debt. I’m also going to track our savings account / emergency fund, and show what we save / spend each month from it. I feel a little vulnerable in sharing all this, but I consider us to be your typical middle class working family, and if I can motivate even one person in our journey, then it’s worth it.
So here we go… here’s where our debt stood going into April. In May, I will show you the progress we made during the month of April.
Consumer Debt
Here’s what I consider to be our “consumer” debt or “bad” debt, and what we’re focusing the most on paying off. Our number one priorities right now are the Visa card and the personal loan.
Personal Loan: $14,906.67
This is a personal loan we took out through our bank to consolidate our debt over the winter. We had high interest Amazon and Paypal cards that we wanted to wipe out with a lower interest repayment. We also added our Visa onto here and our OTHER personal loan from last summer when Jerry traveled to CA for his father’s funeral. The interest is around 11%, which is higher than we’d hoped, but in the long run, is saving us money, making the monthly payments more manageable, and making life easier with one payment instead of four. We initially took out $15,000 with a monthly minimum payment of around $233. It’s a 10 year loan, but we are hoping to pay it off MUCH sooner.
Visa Card: $1,032.05
This is one of the cards we paid off with our personal loan, but then we got a small balance again, thanks mostly to unexpected car repairs two weeks in a row. The interest is between 9 and 10%, and we’re hoping to just knock this off in the next few months.
My Jeep: $5,601.07
This is set to be paid off in April 2020 with monthly payments of $233. It will most likely get paid off at that time. I don’t foresee us paying any extra on this unless we get the above two debts paid off before this one is up… which is highly unlikely. Luckily, my interest rate is very low and is somewhere around 3%.
Jerry’s Jeep: $6,085.11
This is set to be paid off in August 2021, with monthly payments of $171. This one is in Jerry’s name so the interest is a bit high. This one is also not likely to be paid off early, unless the other loans are paid off before this one is.
Total Consumer Debt: $27,624.90
“Good” Debt
These are debts that, in my opinion, are unfortunately part of life. While I would love to be 100% debt free someday, it might be awhile because of these suckers right here. For the time being, we are not focused on getting these paid down super quickly, nor do we pay any extra. Our focus is on the consumer debt first, and then we will go from there. However, we do pay a lot of money towards these two each month, so I still want to track our progress with them. Here’s where we’re at right now.
Mortgage: $74,241.85
Our monthly payment includes our actual mortgage, our homeowner’s insurance, and our taxes all rolled into one. We’re building some equity finally, which is great, but it kills me that almost all of our payment still goes to interest instead of principal. The principal amount increases the slightest bit each month, which gives me hope. For now, we are not paying extra on the mortgage because our interest is fairly low (around 5%), AND we hope to move in a few years. Once we’re in our forever home, this will likely change and we’ll start paying extra again (like we used to).
Student Loan: $51,289.72
The bane of my existence, right here. Student loans are the worst. A small amount of these came from undergrad, but the majority were from my Masters degree, which is the reason they are so high. I am also not paying above my monthly minimum payment of $400 on these, either. I’m on the Income Based Repayment Plan, which is typically 25 years, but I’m also enrolled in Public Service Loan forgiveness since I work as a public librarian. What that means is that at the end of 10 years of on-time payments, my balance will be forgiven… hence why I’m not paying any extra. I’m slated to be done at the end of 2026. I started working FT in September 2016, and that’s when I became eligible for the PSL program. It’s sickening how little of my $400 actually go towards the principal balance. Up until very recently, my balance was actually INCREASING every month, despite making payments. Now, they go down a bit each month.
Total “Good” Debt: $125,531.57
Grand Total — All Debt
$153,156.47
Savings
I’m including only our emergency fund for the time being, though we generally keep other sinking funds for recurring expenses. Those aren’t prioritized right now since we’re preparing for my maternity leave in the fall and just want to throw everything into the emergency fund. It’s embarrassingly low at the moment since we started from scratch a few months back. Please note we also have several retirement funds, but we’re just talking about on-hand cash here.
Emergency Fund: $400.20
Alright, everyone! That’s what I’ve got for now. The grand total is a pretty scary number, but the total for the consumer debt isn’t so bad, and that’s our main focus for now. What do you think?
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