I am tired of debt and have a renewed focus to clear it up. We sat down and made a plan, using money from various savings vehicles we have to get started. Here is what we have saved up:
So here are the components of “The Plan”:
- Pause our 401k contributions. Take those dollars and apply them to paying off our debt. I contribute about $200 per check to my 401k. Once I receive a paycheck without the contribution, I’ll see how much we can apply to debt.
- Withdraw $6,909 from Investment Savings account and pay off one of the Student Loans. That Student Loan has a minimum payment of $71.92 that we will apply each month to debt
- Reduce our Investment Savings account contributions by $681.85 each month and apply to debt
- Borrow $4,847.27 from 401k and apply to one of the Student Loans that has a balance of $5,419.37. I’ll end up paying back that 401k loan at 6% interest to myself over the next 5 years
- Sell stocks which should yield about $4,000. Use those funds to pay off the balance of the $5,419.37 Student Loan ($572.10). That Student Loan has a minimum payment of $56.44 that we will apply each month to debt. Use $2,663 to pay off another Student Loan. That Student Loan has a minimum payment of $28.75 that we will apply each month to debt. Finally, I’ll take the last $765 and apply it to the last Student Loan of the account.
- Each pay period, we will apply the minimum payments no longer due to a debt account until it is paid off
I’ll give updates with each pay check, every two weeks, in a post called Payday!