Changing Strategy

iVillage Member
Registered: 04-14-2003
Changing Strategy
6
Thu, 01-13-2005 - 11:46am

Last night, while looking at our debt load and the amount that I pay per month for debt, I came to a revelation. I had set up Microsoft money not to pay the minimums, but a certain amount per month for each debt. I thought that it would be better to pay a nice chunk for every debt, instead of minimums on all but one. Well, I am tired of looking at our unsecured debt just trickling down, instead of draining. So, I have changed the set-up to what most everyone here is doing. Paying minimums on everything, and targeting one debt at a time. I am not following the MS Money method of paying off the bills with the higher interest rate first. If I did that, then my unsecured debts would linger forever and I think that looks worse than having a mortgage at 6%. So, I have targeted the CC that we used to pay off our motorhome. It was a promotional 3.9% for the length of the balance, but I can have it paid off in September by following my new way of thinking. After that, MS Money wants me to pay off our Line of Credit mortgage because the interest rate is the highest, but I have until 2013 to pay off the balance before the balloon is due, and I can write off that interest, so I will be targeting our new windows which can be paid off in 7 months following the strategy. After I pay off the windows, then I can send in huge chunks to the second which will actually be paid off a lot sooner than 2013. Our only other debts after that are our first mortgage, my school loan (about $3000) and my van. I am so much more optimistic about this new way of thinking. I think that it will be a confidence booster to rid ourselves of debt this way and although this strategy is not new to some of you, I am finally coming around to this way of thinking.

Thanks to everyone for support, ideas and encouragement. I feel so much better and now the light at the end of the tunnel is a little brighter.

Windy

iVillage Member
Registered: 06-04-2004
Thu, 01-13-2005 - 12:04pm

Good for you! Isn't it amazing how much better you can feel about all of it when you have a real plan? Check out the snowflaking board and join in if it interests you, it is a huge help to me and motivates me to snowflake more each month than the month before and I love to see the progress that we are all making. Plus it's fun to pay off those debts, I know that sounds strange, but it really is! Congratulations on your plan!

~leanne

~leanne

deciding to be happy doesn't mean that everything is perfect, but that you had decided to look beyond the imp

Avatar for mymartes
iVillage Member
Registered: 03-26-2003
Thu, 01-13-2005 - 12:52pm

Good luck to you. Sounds like you have a good plan.

MYM

Avatar for cl_phocid
iVillage Member
Registered: 03-26-2003
Thu, 01-13-2005 - 1:44pm

Way to go Windy - I really think you will be much more inspired by your progress with this methodology.

All my best,
Danni

iVillage Member
Registered: 06-18-2004
Thu, 01-13-2005 - 2:25pm

Don't forget, student loan interest is tax deductible too. Depending on how much that is, since they are usually low rates, it can save some money come tax time.

Kellie

Sounds like a good plan to me. Let us know when you get that first debt paid off so we can celebrate with you.

iVillage Member
Registered: 05-30-2003
Thu, 01-13-2005 - 2:49pm

Watch out! Here comes your snowball!

Sounds like this will be a good plan. I like the 'quick' wins too. Although they don't seem to come quickly enough sometimes, lol!

Lisa

iVillage Member
Registered: 04-14-2003
Thu, 01-13-2005 - 4:52pm

Don't forget, student loan interest is tax deductible too. Depending on how much that is, since they are usually low rates, it can save some money come tax time.

I pay so little interest for these loans, that it really wouldn't matter. However, my husband is finishing up his masters, so about the time I finish paying my loan, his will be due. It never ends...

Windy