Monthly Debt Reduction & Savings Statement for Aug, Sept, & Oct 2009 – The Question Edition

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photo credit to Marco Bellucci
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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.

I skipped a few months updates… so here is our up-to-date Debt Reduction & Savings Statement for August, September, and October, 2009.

The deadline for our year end financial goals is fast approaching yet we’re not quite half way there.  The question is…

Will we make it?

Although we are not on track to hit our year end goals due to a few HUGE unforeseen financial bingo’s… we continue to plod along still faithful that the Lord will provide.  He may see fit to bless us with a way to reach the goals, or He may not.  I know He can if it is in his plan, so either way, blessed be the name of the Lord!

Before I get into the goals and progress I wanted to briefly mention a few things:

  • we have entered into “gazelle intensity.”  For those of you who are not Dave Ramsey geeks, that means that we are running away from our debt with the intensity that a gazelle runs away from a cheetah!  In laymen terms we will halt saving and focus solely on debt repayment.
  • our hand written budget is finally rock solid, yet will always remain a living document.  How to budget post forthcoming.
  • we are using a blended effort of spending journals and the envelope system to monitor spending and keep it within the budgeted amounts.  How to on the envelope system also forthcoming.

And now… on to the progress!

Our Current Goals

  1. Pay off our credit card debt by the end of 2009 (which started as $9,197 in January, 2009) Consolidated into Lending Club loan!
  2. Pay off our auto loan by the end of 2009 (which started as $6,036 in January, 2009) Consolidated into Lending Club loan!
  3. Pay off the remaining small amount on my wife’s credit card (was sitting at $632 in August, 2009) DONE!
  4. Pay off our Lending Club loan by the end of 2009 (which consolidated our credit card and auto loan debt – started as $11,000 in August, 2009)
  5. Save $6,000 toward an Emergency Fund by the end of 2009
  6. Pay an extra $50 in principal payments on both our student loans so as to pay them off early. **Update** We have decided against doing this until our Lending Club and Emergency Fund goals are met.
  7. Pay double principal payments each month on both our mortgages (we have a 75/25 loan) in an effort to pay them off in only 15 years as opposed to another 28. **Update** We are paying double principal on our 2nd mortgage, but not our first.  We will not start doing so with our first mortgage until we pay off our high interest debt.

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.

  • Credit Cards – GONE!  The $632 we owed on my wife’s last card has been demolished!  The previous balances were consolidated into the Lending Club loan.
  • Auto Loan – GONE!  Consolidated into the Lending Club loan.
  • Lending Club – We have reduced this loan from $11,080 (principal + loan origination fee.)  We now owe $8,965.88.
  • 2nd Mortgage – We continued to pay double principal payments on our 2nd mortgage because it is only and extra $25.  Yeah that’s right… when you have a 2nd 30 year mortgage, you pay virtually ALL interest for a lot of years before you knock down any noticeable intereset.  If you are interested in getting mad at your debt, check out:  How much Interest are YOU Paying? Get Mad at Debt!
  • Student Loans – We are still paying normal monthly payments only.
  • 1st Mortgage – We are still paying the normal monthly payments here too, and will be until everything else paid off.

For the the months of August, September, and October of 2009, our high interest consumer debt was reduced by $2,666.36, from $11,632.24down to $8,965.88.

Our Current Savings Progress

Savings contributions once again remained consistent over the last 3 months thanks to continued use of the awesome Capital One 360 automatic savings plan.  With that said, we have decided to lay aside the Balanced 75/25 Method of debt repayment/savings contributions and have halted contributions to our Emergency Fund for now, until we pay off our Lending Club loan.  We decided that the amounts currently saved provide us ample security for our present situation and have turned on the gazelle intensity method Dave Ramsey teaches.  We also halted contributions to both our Auto and Vacation Funds until the Lending Club loan is gone.  In case you’re wondering… I am normally a firm believer in contributing to my savings EVERY month no matter what, but I am trying it Dave’s way while attending his Financial Peace University.  I will most likely be posting about the FPU class soon too.

  • Emergency Fund - Although we are halting contributions for now, over the past few months we were able to boost our EF by $1,056.23 from $1,290.12 up to a balance to $2,346.35.
  • Auto Fund & Vacation Fund – both increased by $151.08 putting them both at a total of $376.93.
  • Side Hustle Fund – my side hustles earned my $1,277 this month bringing the total of this fund to $1,607.  At this point I am still putting all monies earned from my side hustles into this fund as a way to track the income.  I am not putting it toward debt repayment at this time, but may be soon… depending on how much I earn.  I only want to use this money to pay off debt if it is earning over and above the costs to maintain side hustle operations.  I am also looking to reinvest this back into the business.

The total amount saved for August, September, and October was $1,028.37 which brings our total cash savings to $3,100.21 for now.

Thoughts…

Our finances are finally running like the well-oiled machine we have been molding them into.  As I recently wrote about on FiveCentNickel.com, there is much financial peace in planning!  Once your plan is in place it’s just a matter of time, patience, and fortitude.  All extra money is still going toward the Lending Club loan until it is demolished.  Once it is we will start crushing our 2nd mortgage, then student loans, then build up our Emergency Fund to 6 months living expenses, then finally begin investing while simultaneously slaying our 1st mortgage.

If you desire to track our progress, you can do so directly by following the MDRSS (Monthly Debt Reduction & Savings Statement) tag series.

Like this article?  Here are 3 free ways to join the community and follow the progressSign up for email updates, Subscribe to my RSS feed, And/or follow me on Twitter.

DFA is passionately dedicated to helping people break the bondage of debt and work toward financial freedom using biblical principles.



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1 Robert Espe

Good luck with your end of the year goal. I would like to offer an idea to help you make it.

You mention a vacation fund. You might consider liquidating it until all debt but your primary mortgage is gone.

2 Matt Jabs

Thanks for the advice Robert, but unfortunately the vacation Fund, along with the New Auto Fund, only have $376.93 in them or else I definitely would. I will leave these amounts where they are to encourage me to hurry up and eliminate debt so I can resume contributions ASAP!

3 Financial Samurai

Matt – eliminating 5 out of 7 of your Current Goals is great! Whatcha mean “will you make it?” Of course you will!

On your 2nd mortgage, isn’t it at a lower rate than your first? I ask b/c in my “Going Broke to Win Big: HELOC Edition” article, I talk about using my 2nd (100k HELOC at 3.25%, to pay off 100K of principal at 5.25%) to save money and about 5 years off my repayment schedule.

Ever thought of that?

FS

4 Matt Jabs

Thanks for the encouragement… I am excited to get any of the goals accomplished but am SOOO driven to see them all come to fruition!

Our 2nd mortgage has an 8.8% interest rate, so we are in a different boat. This loan will be the next one I attack after the Lending Club loan goes bye bye. :-)

5 Jason @ RedeemingRiches

Looks like you guys have done a great job so far! Keep it up buddy. The end is in sight. I appreciate you posting stuff like this – I think it really motivates to see others making sacrifices and doing whatever it takes to accomplish their goals.

6 Financial Samurai

Eh Matt, your bank is taking you to the cleaners on the 2nd mortgage. Call them up ASAP and ask for a rate mod! Prime is right now at 3.25%, so they are making at LEAST a 5.5% margin on you. That’s highway robbery.

Stand up and fight the borg!

7 Matt Jabs

Well, they have 2nd dibs on the house if it goes into foreclosure. The bank that holds the 1st mortgage gets the house and the bank holding the 2nd gets what is left over, so it’s a bit of an unsecured/trust loan. That is why the rate is higher.

That said… I will call them up and see what I can work. Thanks.

8 karyn

Congratulations on your accomplished goals. It’s motivating for me to see that it can be done with perseverance – especially since you just started in January!

9 Andrew @ Earn Give Save

Congratulations! You are crushing it, and it sounds like your attitude is going to keep you from ever getting discouraged. Freedom is within sight!

10 MD @ Studenomics

Man I love your attitude! I really need to start keeping track of my finance on my blog.

5 outta 7 goals accomplished, that’s impressive Matt. Can’t wait to check out your next series of goals.

11 ArdenLynn

I missed something. You are counting consolidated debts as “paid”? I don’t really think of something as paid off if I had to borrow the money to do it.

12 Matt Jabs

No, I’m not “counting” it as PAID in the sense that I no longer owe the money, but just crossed them out because that individual account has been paid off. The amounts are still very much alive in the Lending Club loan.

Thank you for making that distinction.

13 Laura@mtp

You are doing so well Matt; inspirational

14 BG

Matt, thanks for the update — I love reading these posts.

I’m confused about the “side-hustle” fund: an extra $860 is a nice boost. But I don’t understand why you are not applying that money to something (investment, debt repayment, business growth, etc). Is that amount included in your emergency fund balance?

I’m reminded of Luke 19:11-26.

Take care.

15 Matt Jabs

Hey BG,
The “Side Hustle” is an account that is strictly income from my online writing sources. I keep it all in a separate account for now, as a way to keep it separate until I open a business account. Right now the money is being saved for taxes on the earnings, to go back into future business endeavors (like a new Wordpress Theme, or a new Flip UltraHD), and some of it may end up going toward debt repayment before the end of the year.

16 aiqji

I’m confused about the everquest online adventures tunar But I don’t understand why you are not applying that money to something (investment, debt repayment, business

17 Matt Jabs

The money constitutes earnings from my websites and will go toward taxes on the earnings, hosting fees, reinvestment into the sites, and most likely toward some of our debt.

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