We have officially crossed the $50k barrier and are in the $40's!! Call me Rosie the Riveter!
While we still have a ways to go, this is a huge mental boost. $49,999 isn't really different from $50,000....but it is. Just like turning 40 was different than being 39. They are all just numbers...but the association we attach to them is what makes them a milestone. We still have almost 2 weeks left in the month, so not all of these numbers are June "totals." I just wanted to share the milestone with you.
Retirement Loan: $10,911.79
Love rolling into the next thousand. In August we will cross into the next thousand, which will make this a 4-digit loan. Since this is an auto-debit from G-man's paycheck, there will be one more payment of $221 next week.
Student Loan: $21,451.44
Nothing too exciting here.
Credit Card: $10,870.39
Mysti's Car: $3,777.00
We are below $4k! Not sure why this number in particular excites me. But seeing the 3 instead of a 4 just jazzes me. This number seems to be gaining some momentum, even though I am not doing anything differently.
G-man's Car: $2,760.00
The payment for the month hasn't been made yet (auto debit on the 27th). I am glad we have been able to shorten the life of this loan.
Med/Dental: $0.00
Still zero.
For a grand total of: $49,740.62!!!
As I already said...this isn't the final total for June since there are more payments that will be made in the next 11 days. But I was excited to share this with you. August is my blogiversary, so I probably won't do an update of numbers until then. July is a 3-paycheck month, so I am looking forward to that as well.
We will be somewhere around $43,000 by the end of the year. So maybe 8-9 months away from the 30's! I could easily pull money from EF or the moving account and make this by the end of the year, but I don't want to pull the cash in case we need it (we know we will need the moving account for the the actual move when it happens!).
I feel positive about things moving in the right direction!
Yay!!! That is awesome!! Good work!
ReplyDeleteCongrats! I remember when I had debt how awesome it felt when the numbers went down like that. Just wait until your credit card is paid off and you can do a happy dance.
ReplyDeleteI am just like you I love rolling down to the next digit. Congratulations. I remember when you ere in the 60's. I will have a roll down this month also. Can't wait.
ReplyDeleteHooray!!
ReplyDeleteThe best part is that the retirement loan is really just your own money, so you don't owe that as a debt to anyone, so your debt figure is truly under $40K !
ReplyDeleteThen, cars are secured debts (even if the cars are not worth the amount of the loans, it's hard to think of them as consumer debt) so that's roughly $6K that is for cars. Hopefully you'll still have the cars after paying those off, thus the nature of those loans is that of being tied to an asset.
Student loans are hefty but hopefully the interest rate is not terrible, and once you take those out, what you have left in consumer debt is only around $10K which is not an outrageous amount of consumer debt. Once you break all this down, it looks very manageable and looks like it can be conquered one step at a time.
I think what MYsti has been doing is great, but let's not fool ourselves by separating it out to different debts. car loans ARE consumer debt. I know because I've had them. If they can't make a car payment, the car gets taken away, you don't own "part" of the car. It's not yours until it's completely paid off. I'm not saying this to be negative Nancy, I'm just stating the truth. We also are going to have to take on some car loans after not having any for the past few years, and it is TOUGH to get back in that mindset.
DeleteYep, you're right. I meant to say it is not credit card debt; it has an asset tied to it (whether the asset matches the debt is another story.)
DeleteI was just trying to give a pep talk, mainly to make the point that the retirement loan is not debt that needs to be paid back to others (it's just a drawdown of family assets which will be replaced on a schedule.)
So the debt can be broken down into: Student loan, car loans, and credit card debt. Maybe looking at it in three piles makes it seem more manageable. Attacking one at a time would seem satisfying (example: All car loans paid off, or all credit card debt paid off.)
Debt is debt. Justifying it is what gets people in trouble.
ReplyDeleteThe retirement "loan" is not debt. It's a plan to replace assets that were withdrawn and spent on something (like paying off debt or buying stuff or whatever it was used for - happened to be used for paying off debt in this case.)
ReplyDeleteThe rest of it is, indeed, debt owed to various institutions.
Mysti and her husband have enough assets (in the retirement account and in cash) to pay off all outstanding debts. Therefore, they are net positive. They are not truly "in debt," in the sense of being net negative, as most people are when they describe themselves as being in debt.
Whether or not that's the usual definition of being in debt, they have the resources to pay off all debt. It might be advisable to do it, taking a hit to the retirement account (even with penalties), because a retirement account is really a fancy tax-treatment scheme, and the interest saved by paying off all debts now would probably more than make up for any current tax and penalty assessed on the money liquidated from the retirement accounts.
Then they could start over in building up long-term savings and investments (as in, retirement accounts, for example) but with much-improved cash flow.
We cannot withdraw any money for personal use until the current loan is paid off for 60 days. I understand what you are saying. But that rule is the gov't rule, not mine. That loan has almost 2 years left on it...so that option is moot. No withdrawal of any kind for personal use. We can make a withdrawal for house use (down payment, closing)....and the money is sent directly to the mortgage compnay, lawyer, etc. We have watch how much is coming out of his check in general though...by the time we put the money aside for the mortgage and my car (everything else comes out of my check)...that leaves us with $170 every 2 weeks.
DeleteHere's a way it could be done (we have done this, although on a much smaller scale; the amount we liquidated from the retirement account was around $11K, but I think the same principle may apply:
DeleteGo to a local bank, sit down and apply for a personal loan (you may not have to sit down in person, but this is the idea.) Take out $11,000, and with this money, pay off the retirement loan. The retirement account will now be in perfect standing.
Then withdraw all you can, up to the amount of your needs (which will then be all your debts plus paying back the bank loan, or the $49,740.62 you quoted as your total.) Obviously this is enough to pay back all your debts plus the nearly $11K you just borrowed from the bank to get the retirement account out of hock, so to speak. You are now square with the bank, with the car loans, the credit card, the student loans, and you have a smaller retirement account that more accurately represents your assets and you can build it back up again from there.
Usually you can take most of your retirement account out, provided he is fully vested (has been there for a long time), but you cannot take whatever portion was contributed by his employer. Any portion contributed by him, and gains, can be withdrawn. Your account may not be exactly like ours, but this is my basic understanding of how it works. There will be taxes to pay, since that money went in there pre-tax (but there will always be taxes on it someday, anyway - the tax man cannot be banished, only put off until later) - and there will be a penalty, maybe 10%.
But think of how it would feel to have a much smaller retirement account, and be debt-free. This may be worthwhile so that your cash flow would not be so limited, and so that you aren't charged interest for years into the future.
Yes...that scenario works to clear the accounts. I agree.
DeleteIt also assumes we get the 11k loan to clear the retirement account. That we can take 49k out (I am not sure what the number is that we can....other than we can only take what we have put in).
It also assumes we can rebuild it because now we are losing out on the interest the account gains on that money. And we are not currently contributing to the account.
It is an option...I am just not comfortable with that at the moment.
It also assumes we can just withdraw it...even with penalty. This is not a 401k. If we have to pay it back...it would leave us $15 a paycheck. And I know you see this account as an asset but if we have to pay it back...it is still a debt in my eyes.
Deletewhat year and make are your cars?
ReplyDeleteMine is a 2005 Jeep Liberty, purchased in Nov 2011 below KBB value. G-man's is a 2001 Toyota Camry, purchased Oct 2013 also below KBB.
Delete