Wednesday, March 28, 2012

Getting the Hell out of Here: Part Two

 "There's not a lot of money in revenge."

Get out of Debt

Before we can even think about trying to sell this house, and especially breaking ground on a new one, Husband and I feel strongly that being mostly debt-free is a must. Now we've been working on this for a few years anyway, but once we decided that we were ready to buckle down and get out of here, it became Priority One.

While I'm not going to give out specific numbers, 'cause that's none of your damned business, here is a basic breakdown of what we owe to various people*:

Mortgage            65% 
Student Loans     20%
Car                      9%
Credit                  4%
Medical               2%  (it's all 'dactyl's fault)

*percentages are approximate, but really quite close

The mortgage doesn't count, because once we sell the house, that will be gone (god, I hope...), so that's not where we're focusing our efforts.

The student loans carry the lowest interest rate of the remaining four debt areas, and are the least damaging to our credit as long as they are paid on time each month, which, of course, they are. We were lucky that I picked up a well-paying, long-term freelance job right before the first payment came due, and that income more than covers the loan payments. So we never really felt the impact in our budget. Let's hope the client continues to like me.

The car was a necessary evil. Husband and I dutifully drove our embarrassingly decrepit Chevy Luminas, loan-free, until mine finally begged for the sweet release of death, at which time we sold it for a reasonable price to my sister-in-law's friend who desperately needed transportation. With a new baby on the way last summer, we simply had to replace one of the vehicles, especially since the air conditioner in my Lumina didn't work. So we bought the Jeep for a good price, and while we don't regret it at all, it is an additional expense each month.

Then there's the credit card. Credit card debt is evil. It is the devil and we learned that the hard way. No, we were never on the brink of financial ruin or anything, but we did get enough over our heads to feel uncomfortable. This is the debt that we are focusing on with the most fervor. We're actually transferring it this week to our Discover card because they got all sad and missed us and offered us 12 months interest-free on balance transfers.

Now, I am not a proponent of credit card jumping, because it can sneak up and bite you in the ass very quickly and with little warning. However, we will actually have the total amount paid off with relative ease in under 12 months, so dropping the interest makes sense in our case. We'll never see the interest. *knock on wood*

So once the credit card debt is paid off next February, we'll able to refocus that money toward the car payment, further decreasing our icky debt.

That's the plan, anyway. Eliminating toxic debt is an important step in our road to Getting the Hell out of Here. Let's hope it all works out that way!


  1. Very admirable! Suze Orman and that yell-y guy would be proud. :D Our debt feels completely insurmountable thanks to law school. We have grown to hate it but accept it like an gout-addled relative who now lives in our basement and isn't going to leave for the next 25 years unless we win the lottery and send them to a coconut island. We're definitely trying hard to get the credit cards zapped while fixing up the house to sell next year, too, though. It's hard, yo. GOOD JOB.

  2. Since paying off my credit card four years ago, I have been hell-bent on never paying another dime of interest on it. Thus far, I've been able to do that. I hope that, once you're paid off, you're able to say the same.

    And assuming your friend Sarah means Jim Cramer by "the yell-y guy", that guy is poison. I watch his show for one reason : to learn where NOT to put my money. I know you're not looking for stock advice, but please accept that from a long-time investor who values where his dollars are.

  3. No, sorry, I guess Cramer is more of the yell-y guy, but I meant Dave Ramsey, who I think is pretty sensical (though I could do without the Bible verses).