Tuesday, November 20, 2007

Major debt paid off!

We just paid off our largest debt! 2 years ago we started with around $25,000 in debt, including a personal loan, student loan, and car loan. As of last night, we have paid the personal debt - the largest chunk - and have shuffled the payments to the remaining ones. We now owe $6,000 on the car and $2,000 on the student loan, putting us on schedule to eliminate it all within the next 4 months.

With this milestone reached we are very excited!


Stephanie said...

Wow! Congratulations!

With student loans totaling more than my gross salary, I'm wondering when I can reach a point like that!

Anonymous said...

Way to go. I'm actually just getting back into debt, but it's "controlled debt" if there is such a thing. We're taking a vacation soon and I just didn't have enough to pay it all up front without selling some CDs that haven't fully matured. But we paid nearly 1/5th up front, will have more than half paid off within the next month, and by the time we head out on the trip it'll be completely paid for, so we won't have a cent to pay once we return. That's why I call it controlled. But it may only make sense in my own head.

Jim said...

I'm more impressed that you're going to pay off 8k of debt in 4 months, that's 2k a month if everything stays on track. What do you intend to do with the extra 2k you used to pay debt in the following months after that?

A major milestone for me would be to pay off the credit cards completely so I can focus those payments on eliminating the student loans quickly. My student loans are not too bad but we will have to focus a lot more energy on my wife’s to get rid of those. I think we would take a big vacation after all that is cleaned up in preparation to pay off the house.

Anonymous said...

Actually, our vacation debt total will be right around 6k, not 8k. We're able to pay off about $1500 per month because we're in a fairly fortuitous situation at the moment. My employer moved us overseas for a few years and is covering our room and board while we're here. So we're basically saving about $1500/month that we'd otherwise use for rent, utilities, vehicle payments, insurance, etc back home.

Typically, that $1500 goes straight into a money market account (goal is a down payment on our first home when we move back to the USA), but we decided to shift the amount towards this trip for a few months. Come January, the savings will head back to our money market again.

I could have easily drawn from the nest egg account to pay for the trip, but since that money is earmarked for our future home, I was nervous about the psychological effect of pulling money out of it for a vacation. This way, I see the remaining debt on my credit card balance and I think, "get rid of that debt quick".

Beyond the Consumer said...

Yes, 2k a month! It sounds like a huge number, but when you think about what everyone spends on credit card payments, car loans, etc...people can pay into the thousands "servicing" their debt fairly easily. Looking at all the money we will have to SAVE rather than pay creditors is pretty staggering (at least for us).

Our regular payments were around $500/mo and we 'found' a lot of money bleeding each month because we weren't keeping track of it all. We also limited our discrectionary income by saving from the 'front end' of our paychecks, and money seemed to just materialize when we started using the readjustment account.

We do have a celebration planned and have big plans for that money after the debt is paid!

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