Debt Reduction and Savings Statement – April, May, June, July 2010

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Wow.  Has it really been 4 months since I last brought you kind people up-to-speed on our debt reduction and savings progress?  How sad.  I’m sure you have had other things to focus your time and attention on, but let me offer my apologies all the same.

I’m pretty excited about this months update, scratch that, I’m always excited to publish these updates.  Why?  Chiefly because it means that I have less debt and more savings than I did the previous month.  W00t!

Our goal progress for April, May, June, July 2010

Each month I post these Monthly Debt Reduction & Savings Statements so I can continually compare our current debt against our starting debt from back in January, 2009 – when my wife & I began our Debt Free Adventure – and summarize our progress toward debt free living.

Check out our debt reduction charts in the right sidebar.  I like graphs.

Based on our financial goals for 2010, what follows below is the progress we made over the past four months.

1.  Lending Club debt goal

Paid offIf you’re interested in borrowing through Lending Club, read my advice on debt consolidation and check out my Lending Club review to help you decide if a similar path would benefit your debt situation.

2.  2nd mortgage debt goal

Our 2nd mortgage is the next target in our plan to get out of debt.  Alongside debt reduction, I always choose to save money too.  We stepped up our payment amounts on this loan by quite a bit, although perhaps not as high as you might expect.  Rather than throw all available monies at this loan, we decided to build our Emergency Fund up to cover 2 months worth of expenses.  I wanted to do 1 month, my wife wanted to do 3, so we compromised by settling on 2.  This means we used a lot of extra cash flow each month to get our Emergency Fund up to $6,000.  More on this below.  For the last few months we were putting an extra $300 toward the principal each month, but will bump this up to around $800 extra/month come October 2010.

Debt reduction on our 2nd mortgage during this period = $815.67.

3.  Emergency fund savings goal

As previously mentioned, we decided to save 2 months worth of expenses in our Emergency Fund.  The total goal is now $6,000 and at the time of writing we have $5,575 saved and will reach our goal with our August contribution.  Over the last few months we have continued to fund our EF via our Capital One 360 automatic savings plan to the tune of $700 each month.  No, this is not the preferred Dave Ramsey method, but it is the best decision for our current situation.  Take advice from experts but never lose light of the fact that personal finance is personal and should be treated as such… as Mr. Ramsey agrees.

EF savings progress during this period = $2,815.70Interest earned = $15.70. W00t!

4.  Side income growth goal

Due to lack of posts, DFA traffic has dipped and earnings have done the same.  For April and May DFA covered the mortgage payments, but June and July came up short.  This is okay, although I wish I could have kept the momentum going unabated… I just had too many balls in the air.  My new job (follow @justasknet on Twitter) has demanded more of my time than my last job, and of course will always come before side projects… until that day when I no longer require a day job.

Income diversification has also been put on hold for the time being; which is also fine for now.

Other savings

Our other savings accounts include:

  • Vacation Fund is now being funded with $200 each month – this is where we choose to splurge.  Interest earned = $1.31.
  • Next Auto Fund is receiving $500/month going forward, but received $350 for the past few months.  A lot of people disagree with our decision to save for our next automobiles while still in debt, but they do not walk in our shoes so let them save their critiques for their own decisions.  We  plan to build this fund up to $10,000 so we can both purchase our next vehicle for cash – we are capping this at $5,000 each.  Both our vehicles are 8 – 10 years old and we choose not to finance ever again… which means we must be prepared.  We currently have around $2,500 saved.  Interest earned = $5.42.

As mentioned so often in times past here on DFA… we believe in saving while repaying debt.

Thoughts

I love paying off debt and I love saving money, and over the last four months we’ve been doing a hell of a lot of both.  It feels good man… it feels really good.  I don’t have a whole lot more to say, and I’ve already spent an ample amount of time writing this post so I’ll take this opportunity to close.

Cheers, and please leave your thoughts in the comments.



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1 Jolyn@Budgets are the New Black

We’re looking toward the end of the life for one of our vehicles: a Toyota w/140,000 miles. Toyota’s can go forever, if you take care of them and maintain them like we have. After a while of replacing parts, you practically have a brand-new car! Like a typical guy, my husband is constantly eyeing his “next vehicle”, but for the first time we are on board about not acquiring new debt. We don’t have a car fund started yet, either — too many balls in the air for our finances right now. (We’re currently trying to sell a house.) (And getting ready to move cross-country.)

Great job on your goals. Keep up the good work!

2 Matt Jabs

Awesome, so they’re both paid off?

I understand not being able to start the “Next Auto Fund” yet, but make sure you do it as soon as possible so you don’t have to finance again! :)

3 Khaleef @ KNS Financial

I’m glad to see that someone else out there believes in saving while paying off debt. I agree with your plan to save for new cars and a vacation as well.

I once took the other extreme – directing every extra $1 to debt repayment and not saving – and then I lost my job and had to rely on debt to fund basic living expenses.

Looks like you’re making good progress to me!

4 Matt Jabs

Exactly Khaleef… many argue the legitimacy of how much we save while still repaying debt, but every way I look at it, it looks good.

5 myfinancialobjectives

Nice recap. I like the idea of boosting your emergency fund as you never can be too careful. khaleef, That’s exactly why I’m not allocating every extra $ towards debt repayment, as much as I would like too. This also means contributing 12% of my salary towards my 401K.

I like how you have all of your different funds organized. I find that this really helps me keep track of how I am progressing financially.

I bet you are looking forward to when you can actually earn something from your savings! I know I am!:)

6 Matt Jabs

I long for the day when I get to cash my paycheck… and not have to pay one stinkin’ dime toward interest on debt! :)

Keep up the good work…

7 Nicole

I really enjoy reading about your struggles and successes. More so with this last post. I agree we each have our own situation and need to use the building blocks to get started but need to fine tune it to our own needs. Thanks for sharing your thoughts with us. Good luck with the new job.

8 Matt Jabs

Thanks Nicole, I really like sharing… so I guess it works out. :)

9 Peter

He’s alive! He hasn’t been kidnapped! Sounds like you are enjoying the new job – and at least keeping busy!

I say as long as you’re paying off debt, who cares if you take a little longer to save? I say go for it! Good to hear from you again!

10 Matt Jabs

Thanks Pete, glad to know you’re still stopping by. Congrats on the new baby boy… I’m so happy for you!

11 Financial bondage

Just keep plugging away at that debt. Someday it will be gone.

12 Matt Jabs

Seems far off now, but if we keep this pace up we should be completely debt free, including our mortgage paid off, within 5 years.

13 Fred @ One Project Closer

Hi Matt, welcome back!

Well I must say this looks like pretty good progress. I’m sure getting the Lending Club debt behind you is awfully relieving. With your emergency fund stashed away, I’m sure that second mortgage will start to melt off.

We’ve been paying an extra 50% on our mortgage payment for the last 6 months. Wow! What a difference it makes in principal balance. The extra 50% is paying down like 3X the principal included in a regular payment. People don’t realize just how much interest you are paying at the outset of a loan. It’s almost criminal.

14 Matt Jabs

It was HUGE Fred… we were so glad to kick that debt to the curb.

Yeah, the extra principal payments are incredible. Like you said, people don’t realize how much interest they’re paying at the onset, and how much of a difference extra principal payments make. Nice work on yours… we plan on having the 2nd mortgage (currently at $39k) paid off by the end of 2011. Man will that feel great!

Cheers man, thanks for stopping by.

15 Jenna

Thanks for keeping us updated. What are your plans for the next four months?

16 Debt Cancellation

Got to have that emergency fund set up. So often this is missed in financial planning. You should have at least 3 months stashed away.

17 Debt Vigilante

Great job! You seem making a lot of progress in a short amount of time. Right now, I am getting close to $1000/month paid off in debt. No kids and no house as of yet though. My student loans have to go before we buy a house, but I am making it. Keep up the good work and stay encouraged.

18 Jared

Personal finance is personal for sure. We’re in a similar situation. We paid off the car, but now we’re focusing on the emergency fund. My wife would have an infinite emergency fund, but we settled on a couple of months for now before knocking off the rest of our debt. Great to know we’re in the same boat.

19 Len Penzo

Keep up the good work, Matt! I’m just checking in to say hi and make sure the newspapers aren’t piling up in front of your blog’s virtual driveway. ;-)

All the best,

Len
Len Penzo dot Com

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