Monthly Debt Reduction & Savings Statement – December 2009

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Each month I will be posting these Monthly Debt Reduction & Savings Statements. I do this so I can continually compare our debt amounts against Our Starting Debt Amounts from back in January, 2009 – when my wife & I began our Debt Free Adventure – and to summarize our progress toward debt free living.  Like charts/graphs better? Look in the sidebar for those.

Our current goals for 2009

As the sun sets over 2009 and yet another decade of life… we take a final look at our yearly goals and make another call to prayer for a Personal Finance Miracle.

  1. Pay off our Lending Club loan by the end of 2009 (which consolidated our credit card and auto loan debt – started as $11,080 in August, 2009.)
  2. Save $6,000 toward an Emergency Fund by the end of 2009.

All other goals have already been met, or at least consolidated into the LC loan.

Our current debt progress

A little recap in case this is the first MDRSS you have read, back in August we joined and borrowed from Lending Club to consolidate our high interest debt under a single payment at a lower rate.  I only suggest that you do this if the rate you can get from Lending Club is lower than all the rates of the loans you are looking to consolidate.  We were quite successful in that respect, and will save at least $500+ over the life of the loan by consolidating through Lending Club.

  • Lending Club – The loan started at $11,080 (principal + loan origination fee) back in August, was reduced to $8,314.46 in November, and after our December payment we now owe $6,544.29.

For the month of December we reduce our loan principal by $1,770.17 which feels great!

Our current savings progress

When we started saving we set out to amass at least one month’s living expenses before focusing 100% on debt repayment.  Last month we reached that amount and decided to stop contributing… but halting contributions only lasted for one month.  Why?  There is just something about saving nothing that I disagree with.  As you may already know I came up the 75/25 method of debt reduction and emergency fund savings as a personal alternative to Dave Ramsey’s $1,000 EF plan (I’m not knocking Dave’s plan, I’m just doing what works for us… as I’m sure Dave would encourage and as I have discussed at length in other posts.)

Long story short, we started saving $100 into 3 different funds again.  Some will agree with this and some will not… oh well.  🙂

  • Emergency Fund – Our contribution of $100 (+ $2.50 interest) brought our total emergency fund savings to $2,449.
  • New Auto Fund – Unless we run into an emergency our EF cannot cover this savings fund will indeed go toward our next vehicle purchase.  We contributed $100 and brought the total up to $477.  It may not sound like a lot, but it will continue to grow and will serve us well in when we need a new vehicle.  This is another deviation from the Dave Ramsey plan that we see as necessary.
  • Vacation Fund – If all goes well we will be able to use this fund for just that… a much needed vacation.  We continue to fund it and will hopefully be able to use it for its designated purpose.  We contributed $100 bringing the total up to $606.  This is of course our 3rd deviation from the DR FPU plan that we view as necessary for our personal situation.

The thing about the different savings accounts is that they are always there if we ever do need them above and beyond our $2,449 emergency fund account.  Altogether we are saving only $300/month combined and splitting it amongst these 3 different savings accounts.  Doing this makes me feel good about always paying myself at least something, yet allows me to focus a vast majority of my available monthly funds to debt reduction.


I will take this opportunity to refocus attention on the Personal Finance Miracle my wife and I are praying for and ask you again to pray with us.

As the mathematics work we fell $10,095.29 short of our 2009 debt repayment and savings goals and have asked the Lord to provide us with a miracle in an effort to bring attention and glory to His excellent name.  Read more about our Personal Finance Miracle for details and let us know what you think in the comments!

– photo credit to rajeevnair1981

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1 Financial Samurai

Hey Matt, progress is all that matters.

One tiny request, which I feel strongly about…. please change the name of your “New Auto Fund” to “Second Hand Jalopy, Spend No More Than 1/10th Your Gross Income On a Car Fund”!!

Unless you are making $240,000+, there’s no business spending $24,000 on the average price of a new automobile. It’s an absolute waste of money, and a personal finance killer.

Stand strong my man! Go the 1/10th route, and you’ll be so happy you did!

Best, Sam

2 Matt Jabs

Ha! $24,000… It’ll be a stretch to spend $10,000. A more accurate number for my next automobile will be around $6,000. 🙂

3 Financial Samurai

Excellent my man! Maybe it’s just semantics then, cuz there’s no such thing as a new automobile for less than $10,000! 🙂

We can go drag racing in your $6,000 automobile vs. my $1,500 automobile (dealer’s trade-in value those thiefs!)!

4 Matt Jabs

Ha ha – I guess I should’ve made “New Auto Fund” more clear. It means “new to me.” 🙂 Truth is I will spend as little as possible, as long as I still get a reliable automobile that will last me at least a year but hopefully 3+.

5 Kate

I think it is a great idea to have more than one savings account. Also, making sure you have more than $1000 is key. Car repairs and other emergencies can get costly very quickly. I have one savings account at a credit union I contribute $150 to each pay period. I have a second acct linked to my bank account I try to put $100 in each pay period. That money doesn’t always stay there, but I can use it as a padding if I have overspent or had a surprise expense.

6 Matt Jabs

Definitely Kate! Right now I have 8 separate savings funds set up… all for unique purposes. For more info, check out our ING Direct savings plan.

7 Ann

We are still saving also. We put $25.00 per week into a vacation fund (planning for 1.5 years from now) and $25.00 per week in a Christmas Club. I used to do these clubs all the time, but have not for the past two years & boy was it tough staying on budget during the holidays. Usually don’t spend as much as we save (about $1200.00) and whatever is left is swept into general savings (or I suppose now whatever is left at the end of next year will go towards whichever debt we are working on at that time). The vacation will (hopefully!) coincide with paying off CC debt & we will be able to enjoy a family vacation with CASH only!

Also, we have $1000.00 in ER, but would like more and so starting in January we will add $10.00 a week to that fund.

8 Matt Jabs

Nice work Ann… doesn’t it feel great to have extra money saved then sweep the leftovers wherever you wish?

For us it was important to have more than $1,000 in EF. We built ours up to 1k only to have a transmission go out ($1,600), then shortly after that we had another large expense upwards of $4 – 5k. So now we just continue to save… as we repay debt. It just makes me feel good that I’m always paying myself first – and it makes my wife feel more secure.

Meanwhile we’re also crushing out debt!

9 RainyDaySaver

Personally, we don’t use more than one savings account, but do sort savings out into CDs for better interest rates/returns. You have to do what’s best for you.

10 Matt Jabs

Exactly… as long as we are always open to new suggestions we have to do whatever works for each of our unique situations.

11 Peter

At our house we are now debt free, but during our debt reduction we went with a $2000 emergency fund (a bit more than Dave Ramsey suggests), and it turned out to be almost exactly what we needed. During that time we ended up having a medical emergency that ended up costing us $1800 – almost what was in our EF. We quickly paid off the debt and rebuilt our emergency fund.

Personally I don’t think there are that many emergencies that will end up being more than $1000-2000, unless you have inadequate insurance coverage in some areas.. Then you could be in trouble.

Keep up the good work!

12 Matt Jabs

Your still owe on your house right?

Our magic number EF number will be one months worth of expenses, which at this point rests at a generous estimate of $3,000. Once we get there we will stop funding EF but will still continue to fund other accounts – always keeping a huge majority going toward debt reduction.

13 Mrs. Money

I think those are great goals! I just sat down and figured out our 2010 financial goals the other day. I think I was a bit lofty on the 2009 ones. 😉

14 Matt Jabs

Better to go high than to go low! We have to give ourselves something to shoot for! 🙂

15 Ryan @ Planting Dollars

Hey Matt,

Best of luck with your 2010 goals – what would you like to eventually use your travel fund towards?

16 Matt Jabs

Our vacation fund will likely be spread across several vacations. My wife and I are ultimately frugal so we even enjoy taking frugal vacations. That’s not to say that we do not like to treat ourselves every once in awhile, but to us there is more value in getting say 4 frugal vacations vs. 1 lavish vacation.

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