Borrower is Slave to the Lender
PaidTwice has a great post up today detailing the emotional aspect of her financial journey, which really resonated with my experience of climbing out of my own debt black hole. She writes that she now feels like she has many more options in her life and she can see the light at the end of the tunnel. I'm in a similar place now, where my monthly expenses and debt repayment don't consume every last penny of each paycheck I earn.
A couple weeks ago I mentioned I'd decided to try out the budgeting software from YNAB.com. I'd been using Dave Ramsey's online budget planning software and while I liked it and it worked well for me, I really wanted something I could install directly on my machine and, more importantly, only pay for once rather than monthly or yearly. I also really wanted to be able to more easily compare budgets from month to month and quickly switch between each month's plan: YNAB's software does that. It's also made it SUPER easy for me to track my spending and see where my money is actually going. I had a good idea of this before, but now I have concrete numbers.
So I've decided to stick with the YNAB software and financial approach and based on my planning thus far, here are the milestones I'm looking to hit along my financial journey in the next 12 months:
September 15, 2008: the money I owe my grandma will be paid off! (Only 3 months to go! I'm sure she'll be as happy as I am! :)
February 15, 2009: my "buffer fund" will be completely funded
March 2009: Begin living each month on the previous month's income
June 2009: The loan I took for my piano will be paid off!!
I made some other calculations as well and assuming my salary increases at the levels and frequency it has and I continue to pay at the levels I currently am, I should be able to be completely out of debt in 3 years. Looking at that in print it seems like such a long way out... I mean, gawd - 3 years? THIRTY SIX MONTHS?
My initial plans had me out of debt by the end of 2010, but because I'm stopping my extra repayments temporarily to build up more of a savings cushion, my repayment plan has to be extended a bit. Yeah, I'll pay a little more interest but the thing is, I hate living on the edge. I've been doing it for SO LONG now - my entire freaking adult life - and it needs to stop, because I truly believe it's putting more strain on me than I probably realize. Yes, I'm SICK SICK SICK of being a slave to my bills, but being in debt that extra 6 months will - I believe - ultimately be less a strain on my emotional and mental health than paying off the debts a teeny bit more quickly.
So my target date for freedom, right now, is June 2011. It's a long haul. I'm sure I could get a second job and pay things off much more quickly but for the sake of my sanity (as well as my physical health) I need to plan for the least aggressive timeline. I do have a variety of ideas and odds and ends opportunities for bringing in extra cash, but I want to consider those more as "bonuses" rather than givens.
So assuming all of the above, here's the rough schedule:
January 2010: Line of credit killed
February 2011: Student Loans killed
June 2011: DEBT FREE!
July 2011: Begin saving aggressively for a new (to me) car
August 14, 2012: Purchase my new car with CASH! (Happy 37th birthday!)
September 2012: Begin saving aggressively for fully-funded emergency fund and down payment on my first home
Any cash windfalls, tax refunds, bonuses and extra earnings will go towards debt repayment or savings or some combination thereof depending upon current needs. (I really wish I could put my economic stimulus check (I still haven't gotten it yet. Grr...) towards savings or debt repayment, but I suspect my Tysabri bill will be arriving shortly so that little windfall is already earmarked. Sigh. (Still, it's better than having to charge that cost!)
So that's where I'm at with the money stuff. But do you know what has me the most excited about all this, though?
Being able to plunk down a wad of cash for my new (slightly used) car.
Getting a new (to me) car that doesn't lose 60% of its value the second I drive it off the lot.
Not having car payments. I don't now, but continuing to not have them... well, that is beauty. (Heck, never having a car payment again!)
Not having MONEY be the limiting factor for what I do, where I go or the decisions I make.
FREEDOM! I can't wait.
Comments
Sounds like an excellent plan and a well thought out goal! I admire your tenacity...
Linda D. in Seattle
Posted by: Linda D. | June 28, 2008 01:52 AM
Morning! Michele sent me!! Yes, I like Dave Ramsey. He has down to earth practical solutions and that is welcomed in a complicated world. A good guy! Stop by anytime!
Posted by: MICHAEL MANNING | July 1, 2008 08:37 AM