I’ve begun working on my personal debt payoff plan. I sat down this morning and worked out my budget for the next couple of months. It’s going to be a bit tight due to tax season and rising energy costs (gasoline, natural gas and electricity are all on the rise), but I think that I can handle it. It will probably take me between 16 and 20 months to pay off all the debt together. But, honestly, it might not even take that much, since I’m expecting that within six months or so, my income will be exceptionally higher from some of the projects I’m taking on.

So, I’ve decided to use the debt snowball method, as described in Debt Killers Part II: Snowballing Your Debt to Death. Here’s what my current situation looks like:

• Current Debt Load (excluding car and mortgage): $6900
• Current Minimum Payments: $200
• Current Monthly Interest: $100

So, half of what I’m paying right now is interest. I know that I have one card that is currently on a no-interest plan that will expire in a few months, so that interest amount will go up if I don’t do something about it quickly. I also have a very low interest student loan for $2600. I pay $50 per month on it and about $7 per month is interest, so the principal on that is coming down pretty well each month. I’m not too concerned about the student loan because, even though it’s my largest balance, the interest doesn’t hurt too bad and the on-time payments every month will help my credit score. So, it’s last on my list to pay off.

I’ve decided that I can afford to put $200 towards debt payoff each month, in addition to the minimum payments. So, I’ll be paying $400 per month off of my debt. The cool thing is that as I pay the debt off, more and more of that $400 will be going towards principal and more and more of it will be above and beyond the minimum payment.

I’m going to start with the veterinarian bill. I owe the vet about $90 or so from the cat’s check up a couple of months ago. I’ve made the minimum payments up ’til now and the interest isn’t bad. I’ll be able to pay that bill off completely in October. Then, I have a Lowe’s card that has a balance of about $325 on it (after this month’s interest). I should be able to pay about $150 off of this card in addition to the $15 minimum payment. That will leave the balance at $160 and I should be able to pay that card off completely in November, with a little left over to move on to the next card.

So, I feel good about getting off to a good start on this plan. I think that it’s feasible and it shouldn’t put me in a crunch for cash. I’ll keep the blog updated as I make progress, too.

This entry was posted on Thursday, September 29th, 2005 at 11:39 am and is filed under Debt. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.