In You Are Not Alone, I wrote about the circumstances that led to me joining the Women In Red message boards in 2009. This was a community started based on a series of articles written by MP Dunleavey for MSN Money. While MP is no longer with MSN or the community, and the community isn’t hosted on MSN anymore, it is still going strong. Sunday will mark my 3 year anniversary of having been a member of the Women in Red Racers– a group dedicated to “racing” down our debt. This is a modified version of what I will be posting there as my anniversary update.

 

One of the most difficult things to do is pull together your entire debt picture and look at it as a whole. It can seem smaller, more manageable, when you’re only looking at minimum payments, or one card here, one loan there. But without the big picture, you can’t put together a big picture plan.

Back in 2009, pulling together all of our debts (except the mortgage) was not something I wanted to do, but it was something I needed to do.

 

Here is what our debt looked like on 12/30/2009

LOC	Starting Balance	APR	Originally Borrowed
Chase CC	$    2,171.85	various
BofA CC	$        432.55	10.90%
LaZBoy CC	$        882.58	0% until 6/10
Care Credit	$    3,196.57	0% until 11/10
USL	$  18,154.75	3.50%	$  16,000.00
GSL	$  42,150.85	6.29%	$  39,000.00
Car	$    4,771.88	2.90%	$  27,536.44
Total	$  71,761.03

 

Almost $72,000 in debt- it was scary, terrifying, even. But it was also a starting point. And every month, when payments were made, I could update the totals and see the progress being made. It was motivation in spreadsheet form.

 

But this post isn’t about where we were. It’s about where we are. We paid off debt. In summer 2010 we added more debt when we did 1 year same as cash financing on the flood remediation/prevention work in the basement. But we kept paying it off.

The GSL payments were made on the 4^th of every month, so I know that on January 4, 2011, we owed just over $47,260. On January 4, 2012, we owed just over $39,250.

 

On my 3 year anniversary, our (non-house) debt looks like this

LOC	Current Balance	Starting Balance	% Paid
Chase CC	$                 –	$    2,171.85	100%
BofA CC	$                 –	$        432.55	100%
LaZBoy CC	$                 –	$        882.58	100%
Care Credit	$                 –	$    3,196.57	100%
Basement	$                 –	$    4,775.30	100%
USL	$  14,261.81	$  18,154.75	21%
GSL	$                 –	$  42,150.85	100%
Car	$                 –	$    4,771.88	100%
Total	$  14,261.81	$  76,536.33	81%

 

On January 4, 2013, we will owe just over $14,260. I like this picture so much better.

Over the last three years, we have paid down over $60,000 in debt. We have averaged paying off more than 25% of our debt per year. We’ve had some “help” in that C was able to collect unemployment benefits for over 2 years, due to working the census in 2010. Also in 2010, I got a new job with a 33% raise. This year, we used money from MIL’s life insurance to pay off the GSL.

 

Looking back at my old posts on the board, I was on a five year pay off plan. I knew we couldn’t maintain the 33% pace we paid off in 2010, not with starting to pay for C’s school out of pocket in January 2011. Of course, looking at it now, there’s a part of me that thinks we should be able to get this paid off this year- get us down to a 4 year plan. But I’m sticking with the 5 year plan- with the intent of making the last USL payment December 2014.

 

Why? As I’ve said before, the student loans from my undergraduate years are at a 3.5% interest rate. That’s pretty cheap money. We’re still paying out of pocket for C to be in school and will be doing so through March 2014. (He’ll graduate in May, but the last tuition payment will be in March.) We’re trying to keep cash reserves around $10,000 to pay for adoption expenses should they come up. (If they don’t, some of that money will be sent to the USL, but a good portion will also be used to buy all those things you need when there’s a new child in the house.) To go along with that, there’s still more work that needs to be done on our home.

I had hoped last summer to replace all of our windows, but that didn’t happen, mostly because we spent a lot of money on the items we needed to pass the home inspection for our foster care license. But that does mean this spring/summer, we really need to get our windows replaced. We’ll look for a one year same as cash kind of deal, but if we can’t find something like that, we want to be able to pay out of pocket.

There’s also some plumbing work that needs to be done in the bathroom- something we’ve been putting off forever, but that we really should get done.

 

On some level, this is proof of that old saying “the more things change, the more they stay the same”. C and I are in a very different financial situation than I was when I joined the WIR boards 3 years ago, and yet, we remain on the same 5 year repayment plan. There’s a part of me that thinks if we should be more aggressive- at least cut one year out. I mean, honestly, if we emptied our cash reserved, the USL could be paid off in April, and then we’d be debt free except for the mortgage. But I’ve come to like having those cash reserves. I like being able to pay for things now so that I don’t have to worry about how I’m going to pay for them in the future.