A quick recap and note on our 2009 goals
Although our personal finance miracle did not come to light the way we had envisioned it, we are so blessed and are making excellent progress on debt repayment and savings.
We repaid nearly $9,000 in debt, saved nearly $6,300 (amongst all savings accounts), and build a decent side hustle income. All in all things went fantastically.
Barring some sort of enormously expensive and unforeseen event… we will make tremendous progress on our debt repayment in 2010. Here is the breakdown of what we hope to accomplish.
Remaining Debt going into 2010
The 5 debts we have remaining now are:
- Lending Club at $6,544.29
- 2nd Mortgage at $39,917.39
- Student Loan 1 at $31,426.92
- Student Loan 2 at $34,470.73
- 1st Mortgage at $119,392.58
This is the order of repayment. It is a blended method that I devised by crunching the numbers between both the debt snowball method and the highest interest first method.
Financial Goal 1: 2010 Lending Club Debt Goal
Unless this is your first visit to Debt Free Adventure, you are probably aware of the fact that we consolidated our high interest debt through Lending Club and are set to save $500+ by doing so. If you are interested in doing something similar for your situation read my advice on debt consolidation and my Lending Club review.
At the onset of 2010 our Lending Club debt sits at a balance of $6,544.29. Goal numero uno is to pay this off ASAP. It is looking as though we will be able to pay this off by March and can then shift our focus to goal number two… paying down our 2nd mortgage.
Financial Goal 2: 2010 2nd Mortgage Debt Goal
We are making our 2nd mortgage financial debt goal number two because the interest on it is much higher than the interest on either of our student loans and after crunching the numbers… paying this debt off next is our best route.
We hope to reduce the 2nd mortgage by at least $20,000 so when 2011 hits we have this debt reduced by more than half.
If you read back through our Monthly Debt Reduction and Savings Statements you will see that we have been paying double principal payments on this debt for most of 2009. The principal amount was only around $25, so doubling it was a no brainer.
Financial Goal 3: Emergency Fund Goal for 2010
You may be familiar with my 75/25 Method of Debt Repayment and Emergency Fund Savings. It basically says to put 75% of your cash flow toward debt reduction and 25% toward savings. We go back and forth on always pay yourself at least something and switching into gazelle intensity mode. The answer to that is never a simple black and white answer, so rather than trying to make it so we do what is right for our situation as it changes.
For our current situation $3,000 is equivalent to one months expenses and is enough of a support cushion for us. We will finally be capping our EF savings at this amount, and barring any huge financial changes, will keep it there until all our non-1st mortgage debt is paid off.
Our emergency fund currently sits at $2,449 so we are close to reaching this goal and are allotting $100/month until it hits $3,000, which should happen in July.
Financial Goal 4: Side Hustle Goal for 2010
My side hustle is currently earning us around $1,000/month and is growing steadily each month. My goal for the end of 2010 is to have this earning $5,000/month.
My wife also has an idea for her own side hustle and our goal for that is to simply get it off the ground and operational in 2010. I may or may not be exposing what this is but will be reporting any income it brings in.
We are very excited to by paying off our Lending Club loan soon and feel very good about having a 1 month expenses cushion. Sure we would rather have more of a cushion, but that will come to pass later once we have all other non-1st mortgage debt repaid. We have caught the vision of income diversification and are trying to develop income from our passions and gifts. We are looking at 2010 as the year to bring our entrepreneurial visions to the forefront so we have solid income to fall back on if either of us lose our jobs (after all, we do live in Michigan!)
If our side hustles do develop into more substantial earnings, then our debt reduction goals will be surpasses as we put the majority of any side income toward existing debt.