Monday, June 8, 2009

Taking Control of Your Money - Part 1 of 3

Well I don't necessarily know how to take control of your money but I know what we are doing to try and take control of ours. I have talked about this sporadically on the blog and I will continue to be kinda vague as to numbers as most of the people who read this actually know us. I will also acknowledge that I believe we are blessed to be relatively healthy and have 2 good paying jobs. Ok, that being said here is where we are:

  • We did the debt snowball thing and it worked marvelously for us.
  • We saved up a good chunk of money to go into retirement since I'm 28 and K is 30
  • We were hesitant of the market mid last year so we didn't jump in (hey we got lucky and were smart with our money)
  • We don't think the market will spring back in 2009 (at least not dramatically) so we took the money we had saved up to start the Roth and paid off K's car
  • This gave us about $350 a month that we no longer had to make in a payment so we decreased liquidity but decreased liability there by increasing what we clear each month
So where we are now is we have what are basically 3 debts: Big mortgage, much smaller 2nd mortgage, and my student loans, plus the monthly expenses that everyone has. Here is where the blog post kicks into action instead of reflection. We want a plan to get rid of these debts or liabilities as I'm prone to calling them. Here is our plan and I really do welcome comment if you think we should consider something else or have a tip to make it easier or better for us.

1. We are making a concerted effort to start saving for retirement with the goal of 10k a year which is the limit for 2 Roth's in 2008 (I am assuming 09 will be similar). I know on the Dave Ramsey system retirement is below debt but we want to start saving now to get that compounding thing working for us.

2. We are making double payments on the 2nd mortgage (our prime target on the snowball as it is the lowest amount). This will get us close but not as fast as I would like. So what we are doing is building back up the reserves a bit (they got kinda low when we paid off the car) and then assuming nothing bad financially happens to us we will kill the 2nd mortgage with a super payment next May.

3. After the 2nd mortgage is gone we are going to fall off of the debt snowball and attack not the smallest debt and slowly attack the big mortgage. What I mean by this is using the making 26 payments a year instead of 24 (thinking twice a month). This will save quite a bit of money and several years on the payoff. (I don't have the numbers here at work as I blog on my lunch but I'll try and update from home tonight).

4. We are planning on leaving the student loan alone. For as long as any other debt is around. This is because I am locked in at 1.625% and I can't borrow money that cheap so if I'll have a debt I'll go with that super cheap rate.

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