Thursday, September 10, 2015

1,827 Days

Mrs. DisIndebted and I are looking forward to a date in the future. September 10, 2020.

We will be debt free in 1,980 days. That is 5 years and 6 months from today.

Scratch that. We will be debt free in 1,827 days. That is 5 years from today.

We have a 5 1/2 year plan, but we truly believe we can do it in 5 years! Thus, we are looking at September 10, 2020 as our date of total disindebtificationTM!

As I mentioned in my previous post, we currently owe $351,585 in debt. This is $6,814 less than we owed in June. We did this by paying more than the monthly minimum payments on our debt.

Paying only the minimum payments towards our debt has gone on for too long and we will not do it any longer. If we continue paying only the minimum (as we did formerly as Mr. Indebted and Miss Indebted), we would be debt free in 15 years and 4 months. That is WAY too long to continue to toil under the burden of debt. Furthermore, it would cost us an additional $125,786 to service the debt interest over those additional years. No thanks!

How are we going to do it? Very intentionally. One day, one week, one month, one year at a time.

In the next twelve months, we will pay at least $36,000 against our debt. That's $3,000 per month, or $692 per week. This is IN ADDITION to our monthly minimum payments on our debt.

Of course these are average numbers. The reality is we will not be paying exactly $3,000 extra every single month. Some months we will pay more; others less. But the goal at the end of the year is to pay $36,000 or more against our debt, over and above what we are required to pay.

Now the REAL question - HOW are we going to pay an extra $36,000 over the next year? That's a LOT of money!

We take home a nice $8,250 per month. We pay an ugly $2900 total in minimum monthly debt payments. So you're saying, "Sure! Mr. DisIndebted - you should have no problem paying an extra $3,000 a month!" But the $2900 is only the minimum debt payment. Before we started down this road, we had the following monthly expenditures:
  • Housing: $1,105 (rent plus utilities and insurance)
  • Transportation: $825 (two leases plus insurance and fuel)
  • Grocery and Household: $800 (at least $500 groceries)
  • Dining Out: $550
  • Entertainment and Other: $650 
  • Plus I was spending almost $50 a week on lunches with my boss - another $200!
That's an extra $4,130. Added to the $2,900 minimum monthly debt payment, we were spending $7,030. So we had an extra $1,220 in our budget to throw at debt. The worst part is, the extra $1,220 seemed to vanish every month (no doubt in other non-tracked spending areas). Our budgeting was terrible and our tracking method was ineffective.

Up until June 2015, we were living paycheck-to-paycheck, making only minimum payments against the debt, and spending like crazy. When we chose to disindebtify our life, we made some small changes in our lives that have had a BIG impact. Stay tuned and over time Mrs. DisIndebted and I will share with you the ways we "found" cash and are disindebtifying by simplifying our lives.



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