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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