Okay, after much thought and reflection, I have decided to update my goals. As I learn more about this blog stuff, I will create a side panel showing goals and progress. Unfortunately, I do not know, as of yet, how to do that. Anywho, here are my “short-term” and “long-term” goals and current financial positions…

Cash:
Emergency Fund Savings: 1000 dollars
Allocated Savings (annual bills): 1000 dollars
Checking Accounts: Approx. 1000 dollars
Total available Monies: 3000 dollars

403b Retirement Savings: 13000 dollars

Total of All Debt: 11510.22 dollars

My short term goals are as follows:
Pay off debt, using approx. 1700 dollars a month. This should pay all of my debts off, 2 autos and 1 ccard, by the 10-10-2005. I feel that this is totally doable. I have “take-home” of about 4000 dollars a month, so 1700 dollars should be relatively easy to come up with. The wife and I were never on a budget before, so even though we had enough for bills and minimums, our money just kinda slipped through the old fingers. Now we have a MUCH better handle on things. 1700 is actually a conservative estimate. We do have 2 kids under 6, so I always like to leave enough in the checking and savings to cover medical needs and various other “kid” things.

Short Term “Savings” Goals:
We now have 3 autos…

• Paid for 10 year old pick-up truck
• 2001 Honda for me
• 2000 Mini-van for the family

I would love if we could just drive these autos for the next 5-6 years, then purchase late-model used vehicles to replace them. I would need about 20,000 dollars TOTAL to replace these cars with newer, late-model versions, in say 2009 or 2010. We paid 7600 for our 2000 van this past summer and it is in great, great shape. So, here are our short term “savings” goals:

Fully-Funded Emergency Fund: 10,000 dollars
Fully-Funded Auto Replacement Fund: 20, 000 dollars

So, using the above amount of 1700, now not needed for debt payments, but used for savings, we could save this amount in roughly…30000/1700 = 18 months. Please note that I have not calculated gaining any money via interest rate hikes, etc. I am talking about how much money I could save if I just stuck the money under my mattress…So in 2 years from now, I could be debt-free, with 30000 dollars in the bank, and be ready to make some serious, serious retirement account contributions. More later…
ncnblog

Filed under: Goals
Share: add to tip'd - digg this - stumble it - save to del.icio.us

• 2 Comments

Here is a summary of my current debt situation…

• Auto 1: 2,656.33
• Auto 2: 3,255.23
• Credit Card: 5,598.66

Total Debt: 11510.22 dollars

I am trying to pay off all my debts by 10-10-2005, just 7 months from now. I will need to dedicate roughly 1700 dollars a month towards debt payments. I am excited about the idea of having no debt by October, and almost certainly by December. We live in a house provided to us by my job, so no rent or mortgage. My goals, after saving up my emergency fund and funding retirement accounts, are to save enough money to replace our cars every 5-6 years, send our 2 children to college (ages 1 and 5, right now), retire well, and buy a nice home to grow old in.

Filed under: Debt Story
Share: add to tip'd - digg this - stumble it - save to del.icio.us

• 3 Comments

So Cool, the incredible Neville, from Neville’s Financial Blog, was the first to post a comment. Awesome.

A quick rationale behind paying off debt by smallest to largest balance, and not largest to smallest interest rate. It is pretty simple…It gets you motivated. When you see that first small debt gone, and then you see that next debt gone, it motivates you to keep going. I know that the “math” side of the brain says, “pay off the higher percentage first.” And some people will be perfectly capable of getting out of debt this way. But tons and tons will just give up because they don’t see any “progress.” This is less about the “nerdy” part of paying off debt, and more about the “emotional” side of debt repayment. Seeing that first debt, no matter how small, get killed off, is awesome. It motivates you to keep going and going. It’s like getting in shape. If you say to yourself, “I am going to lose 50 pounds by next year,” then you are apt to lose focus, and fail. But, if you say, ” I am going to walk 1 mile today and eat less than x number of calories TODAY,” then you have the real chance of succeeding. I have found, in the last 2 years of focusing on debt reduction, that getting out of debt is far less about the “addition and subtraction” and much, much more about the emotional reaction the mind has to seeing a debt go bye, bye.
Thanks,
ncnblog

Filed under: Debt Reduction
Share: add to tip'd - digg this - stumble it - save to del.icio.us

• 0 Comments

Hi All, this is my first post to my new blog. I will update this blog with information about my journey to get out of debt, stay out of debt, and stockpile tons and tons of cash. I am following the “baby steps” program suggested by Dave Ramsey. If you would like info about him or his 3 hour daily talk show, click here… www.daveramsey.com …I LOVE Dave’s stuff. My wife and I are on step 2. There are a total of 7 steps. I will outline the first 3 today, and go over a little about them for you.

Step 1… Create a “baby” emergency fund of 1000 dollars. Put this 1000 dollars in a savings account or a money market account. You need to be able to get to this money if you have an emergency. I have my emergency fund with ingdirect.com. Right now they are offering 3 percent on their savings accounts, much more than any local bank is offering. You can also receive a 25 dollar sign up bonus for opening an account with them. Email me at contact for a referral. You will get 25 bucks, I’ll get 10, you’ll be on your way to saving some money, I’ll be one little bit closer to being debt free. Win, win, win, win.

Quick note…Be sure you are CURRENT with all of your bills and payments before you save up the 1000 dollars.

Step 2…This is the step I am on. List your debts smallest to largest, by amount owed, not by interest rate. Pay minimums on all of the debts, and pay AS MUCH AS YOU CAN on the smallest debt. Once you pay off the smallest, keep paying that same amount on the next smallest. Then once you have two debts paid off, pay those 2 amounts on the third debt. Here is an example

Card 1 Balance 100
Card 2 Balance 250
Card 3 Balance 500

So, suppose you had 100 dollars to pay towards ALL of your debt for the month of January. Suppose all cards had the same minimums, say 10 bucks. Now, that means you will pay 10 bucks to Card 1, 10 bucks to Card 2, and 10 bucks to Card 3. Now, you still have 70 bucks left over to pay on debt. Pay all of this on card 1. (Let’s assume, for the sake of ease, that there are no finance charges) Now, your balances for February look like this.

Card 1 Balance= 100-10-70 = 20
Card 2 Balance= 250-10 = 240
Card 3 Balance= 500-10= 490

So, for February, you pay your 10 dollar minimums again, leaving you another 70 dollars for debt repayment. You put 10 more dollars towards Card 1, creating a zero balance. Yay! This card is paid off. Now, you STILL have 60 dollars for debt reduction. DON’T STOP NOW! Put this 60 dollars towards card 2. This is called the DEBT SNOWBALL. Here are your results at the end of February.

Card 1 Balance= 20-10-10 = ZERO
Card 2 Balance= 240-10-60 = 170
Card 3 Balance=500-10 = 490

Keep doing this, using up the entire 100 dollars you have for debt repayment each month. By the way, as you pay off debts, you will might find that you have more and more money each month to payoff more and more debts.

You can see the reason for step 1: The Emergency Fund. If you don’t have the 1000 dollar cushion, then anytime a tire goes flat, or a window gets broken, you will have to run back to Mr. Credit Card for a bail-out. BUT, if you have the Emergency Fund, these unexpected things can be taken care of.

Step 3: After you are out of debt, everything except your mortgage, then you are ready to create a fully-funded emergency fund of 3-6 months expenses. I am on step 2 right now, but when it is time for step 3, I will shoot for an emergency fund of about 10,000 dollars.

I hope you have enjoyed this first post, hope to hear from many of you soon. Thanks,
NCN

Filed under: Debt Story
Share: add to tip'd - digg this - stumble it - save to del.icio.us

• 5 Comments