5. “The Plan” Update

Here are some updates from “The Plan” mentioned in my “I’m Tired of Debt” post.

From Step 2: I checked my bank account and see that we received the withdrawal from our investment savings account in the amount of $6,909. I used that money and paid off the largest student loan balance we had which ended up being $6.913. We used a few dollars from our 2-week House Fund to cover the difference.

From Step 4: We received the check from my 401k loan in the amount of $4,795.21. There was a small processing fee deducted from the balance I withdrew. Once the check clears, I’ll make a payment to the next largest Student Loan to bring down that balance. Looking forward to it!

I think once I get my next paycheck, I’ll update all of the outstanding debt balances to get a glimpse of where we are now. Already feeling a some satisfaction!

the plan

4. Payday!

Payday was actually yesterday but I’m going to handle all of our payments today. As mentioned before, I use a “Bills Budget” to take the thinking out of what needs to be paid from each paycheck. I make all of those payments on Payday and what I’m left with goes to support the Household. From this paycheck, my Bills Budget shows I am to pay $4,166 made up of the bills below:

billsbudget11.23

Our pay after taxes is $6.392.57. It looks like my 401k deductions are still occurring so that extra money isn’t available to pay debt. Also, my Investment Savings notes $415, but I’m taking $315 of that to pay debt. Also, we decided to postpone Gift and Travel savings given I’m expecting. I will remove those from my Bills budget for next payday. Now that bills are paid, we have about $1,800 remaining. I am going to set aside $800 for groceries, gasoline and just living for the next two weeks. The remaining $1,000 is going to pay down Credit Card 1 which has a balance today of $2,617.55.

Alright, bills are paid! Extra debt payment made! I’ll post again before next payday for any interesting updates as well as once the money from steps 2, 4 or 5 of my payoff plan come through. Check out the “I’m Tired of Debt” post for a reminder.

3. I’m Tired of Debt!

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:

savings

So here are the components of “The Plan”:

  1. 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.
  2. 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
  3. Reduce our Investment Savings account contributions by $681.85 each month and apply to debt
  4. 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
  5. 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.
  6. 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!

2. My Family Facts

Sometimes when I read other blogs, I can’t relate as much because I have a hard time finding the family facts. What is the family make up? What is the income, what monthly expenses are there, etc. If I find that helpful, maybe others will too.

In our household is myself, my Husband, both in our mid- 30’s, my Mother, our 2 year old and soon to be new born. Both my Husband and I are working and we are fortunate to have my mother home to take care of our child.

After taxes, we take home $204,000 annually. Our monthly expenses are below. In addition, we get paid bi-weekly so we utilize a “Bills Budget” I created to identify exactly what gets paid from each paycheck based on their due dates and how much money we have to work with. I create this for the full year and it has been a critical in managing our base budget.

monthly expenditures

Another thing that is important to our family is being able to travel, give gifts and have spending money for entertainment. We put aside money from each check for those. Now, I know that may seem like an unnecessary expense, especially when trying to get out of debt, but we are going to try to balance it (for now!).

Our total debt is listed below

debts

In the next post, I’ll write about our plan to get this paid off! I’m sure over time, we may find better ways to do things, but I’ll keep everyone in the loop. If you’re interested in hearing more about the “Bills Budget” just let me know via email at info@financiallyme.com, comment or the Contact page. If you’re enjoy this journey, and think others may too, please share!