Two months ago, my husband and I came up with a plan to pay off $210,392 worth of debt, within the next six years. This amount consists of car loans, credit cards, mortgage, student loans, and a 401K loan. Now, we could probably pay this off much sooner by drastically changing our lifestyle (e.g. rent out the guest room, stop retirement investments, cancel all family trips and kids’ activities…), but we’re not going that route. After all, my main reason for wanting to be debt free and reach financial independence is to enable me to have options and live comfortably.
So, what’s the plan?
First, we made a list in excel of everything we owe, including (1) the balance (2) interest rate and (3) minimum payment amount. Next, we sorted the items in the order that we plan to pay them off. Then we input the monthly payment amounts and highlighted the milestone payoff dates. After one loan is paid off, we’ll add that monthly payment to increase the monthly payment of the next loan on the list, until everything is paid off. Also, we’ll apply a portion of any bonuses or extra income to our debts, in order to speed up the process.
Instead of paying off the loans with the highest balance or highest interest rate first, we are opting to pay them off based the repayment terms (i.e. the biggest headache). Therefore, the 401K loan will be the first to go bye, bye. Also, in an effort to keep us motivated, I have a copy of the prioritized debt list hanging on the bathroom mirror. I’ll keep you posted on our progress as time goes on.
So tell me…have you made the decision to get of debt?
If so, how do you plan to achieve this goal?
In order to help you get started, I’ve attached a copy of the template that I use. https://theproactiveplanner.com/wp-content/uploads/2019/05/Debt-Repayment-Template.zip
Let’s hold each other accountable! 😊
“A goal without a plan is just a wish.”
― Antoine de Saint-Exupéry
