The New Plan: 2013

As we draw closer to the end of the year, I think it is time to evaluate ourselves on our progress and think about how we can do even better moving forward. There were certainly some things that went well this year, but there were other areas where we failed almost completely. Here are the areas where I think we could improve the most:

1) Consistency of Savings
2) No New Credit Card Debt
3) Improved Payment Plan

First of all, Jason and I have already come a long way in the teamwork department. To begin with, this debt payoff plan was a product of my own wishful thinking, whereas Jason was mostly indifferent to my intentions. In fact, I believe he resented my pet project for a while because he felt unfairly targeted for mistakes he made in his past. Alas, my intention was not to paint him as the bad guy, but to demonstrate how some common misconceptions of debt can lead to much larger problems long-term, and specifically to explain some of the numbers we are dealing with here.

This year, I decided that Jason needs to be a bigger part of the conversation. We sat down together with all of the numbers and looked at everything together. We discussed major purchases in terms of wants and needs, and we made decisions about what our primary goal is. So here we are, looking forward to 2013, and hoping to stick to this newly renovated plan.

1) In the savings department, I would say we failed miserably for the year of 2012. I believe we started this mission near the end of May or beginning of April, and set a goal of roughly $300/month for savings. It is now the end of November and we have only $5 in savings. In all fairness, our car broke down and cost ~$2500 to repair, which drained everything we did have saved AND took all of the money that normally would have gone to an extra loan payment. This series of events was pretty demoralizing after so many months of great progress, which led to us not picking up where we left off. (Go ahead, take away all my gold stars. :( )  It has also presented us with another problem as we wind up the year. We need to have the money for closing costs on the house ready at the beginning of the year, and there is just no way that we are going to be able to save up enough in time, so we are pretty much left with just our tax returns to hopefully carry that weight. BUT, it's never too late to get started, so we are already making progress on this goal again, and even if we don't have as much as I had originally planned, we will have some.

2) Credit card debt became a problem for us around the same time the car broke down. Since all of our cash was going into the car, we were dependent on the credit card for everyday expenses for a while, and even raised the limit to $400 to get by. I also ended up buying a new computer on a separate card (which is actually in my own name and serving to raise my credit score before we attempt to qualify for the mortgage). On the plus side I did pay off the entire balance on the $400 card today, which was nearly maxed, and it is going into the safe to be locked away for a few months. My new card is also locked away and is being paid off $100 at a time, and should be completely paid off by the middle of January. We plan on using these cards once a month for small purchases to keep the accounts open and building credit history, but also paying them off every month so that they are not carrying any large balance. We accidentally made the mistake of not using the jewelry store credit card for too long, and they closed our account for us which was effectively a negative mark on Jason's credit report for having an account that was open for too short of a time. Woops.

3) Further research has given me additional insight into the loan paydown process. I plan to share this new method of speeding up your payoffs in my next post, so I won't ramble about it here, but I will say that this new method works with or without a bonus payment, and may be a viable solution for people who just can't squeeze any more out of their regular monthly budget to pay extra on a loan. It really is simple, and it comes down to making bi-weekly payments instead of monthly payments, but I will go into further detail later.


So these are the three areas that we think we can do better in, and make the biggest difference. I also plan on being more consistent with my blog again now that things are back in order around here. On another note,  since the car broke down and we spent a small fortune on fixing it, and then we quit making our bonus payments on the loans, we actually did use that money to get all of our Christmas shopping out of the way, so from here on out, our budget is actually back to normal, and we don't have to set anything else aside for holidays!

Alas, our primary goal remains to pay off all of our debt, and to qualify for the mortgage near the beginning of the year, and now we are ready to give it another shot!


Happy Holidays!!!