Posted in debt, family, finance, Uncategorized

Paying Debt and Saving Money

in a previous post i discussed our plan to begin paying down our debt and plan to be debt from within 5 years. i need to clarify a couple of things with regards to this. We do NOT intend to pay off our mortgage at this point. We do plan on moving, we move every 2-3years and for us we purchase an affordable home and renovate with cash. We are NOT flippers, we simply renovate to what we want to live in. we make sure to stay with in the housing market parameters, so when we sell there is a bit of a profit, im not talking 100s of thousands like the HGTV shows, but 10s of thousands. which we turn around and use to renovate the next house. the reason we choose not to pay off at this time is we would rather have the higher savings available if something happens then to have it tied up in a less liquid asset. secondly i need to specify that we are not AGGRESSIVELY paying off debt from the start, not ALL spare money is put to debt. read on to see why and how we handle it.

baby steps

We have just laid out our plan to snowball our debt, we now have a combination paycheck method, and calendar method, with a budgeting page for each month. to begin with we will be paying down beginning august 2019. our initial investment to get the ball rolling will be $200, and our extra each month will be $200 so in august our first snowball payment will be to student loan NAVIENT, with 4 total loans and the additional money the payment will be $570. This as you can see is significantly higher than our minimum monthly payment of $169, i know technically with the $400 extra it should be $569 but i like round numbers. monthly after this our payments will be $370/month.

now it may not seem like were going to get this all paid off in under 5 years but as i said before using the calendar and paycheck method if things stay just as they are no raises no bonuses, we will begin paying off earlier and earlier, every other paycheck will go to cover min obligations on our debts and expenses, and every other will go to student loans, now not every month has only two paychecks so we will begin paying ahead of due dates and saving interest that way as well as slowly paying off the debts ahead of schedule.

as of now our first NAVIENT loan will be paid off December 2019, a full 38 months ahead of the schedule set out by navient!

SAVINGS

so as i said we are not aggressively paying it down yet. we also plan on building up a rainy day fund. We have some vacation plans, and other large expenses we want to fully fund cash. no credit cards. for this we have a weekly amount we will be putting away that varies week to week For August the amounts are as follows.

  • week 1 $410
  • week 2 $190
  • week 3 $430
  • week 4 $210
  • week 5 $ 460

the plan for this money is paying for school supplies, and community tuition and fees (post coming on the homeschool methods we use), travel, we have a plan to take a couples trip to Austin, TX at the end of September. We also have a cruise booked for the beginning of December, which payment is due mid September. This money will also cover various expenses as birthdays, and gifts. We plan to take the kids on the polar express train, and then have money set aside for house projects as they arise.

if we never took any money out following this plan we would have 10K in savings by 6 months, and 20k/year.

Budget! please check back bc i will be posting on our budget plans and how we plan to cut expenses in order to fund both paying down then debt and our savings, while also, you know, living.

Author:

I am a work at home momma doing the best I can! Some days are pretty messy but others are so wonderfully beautiful I couldn’t ask for more! Our family has embarked on a debt reduction plan, that includes Meh meals and paying higher amounts down on our loans! recently I have become more devoted to spending time in the word of God, and can honestly say without a doubt things are improving every day! The peace and calm that settles on me when I settle in to study or tune in to the Christian station on the radio, has rubbed off on my children as well! I am not a bottomless pit of patience but since turning to God I can say that my patience and understanding of problems has grown in ways I didn’t know possible.

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