As I mentioned in our great confession post, my husband and I have quite a bit of debt to pay off, specifically $55,879.43, which is down from our confession high of $56.908.71 (just 7 weeks ago). Of that debt, $36,518.78 is student loan debt. The rest is credit card debt. Honestly, just a few years ago I wouldn’t have really worried about the student loan debt and would have only tackled the credit card debt. However, we would like to have a significant chunk to put down on a house in a few years, and I don’t want to purchase a house if we have other debt. Here is our plan for paying it down quickly:
–Work extra jobs. I have increased my freelance writing and virtual assistant work so that I will be consistently making over $1000 a month. My ultimate goal is $2,000 to $3,000 a month between blog advertising, freelance writing, virtual assistant work and eBooks that I sell on Mom’s Plans, but that goal is still out of reach. I also want to enjoy having my two girls (both under 3) home with me before they go to preschool, so I don’t want to make myself too busy with work. Yes, I want to pay off debt, but I want to enjoy my children’s few years at home with me all day too.
My husband will be moving into a post-doc position next month, and we both agree that he should not take extra jobs. He will work at the post-doc during the day, and at night he will work on publishing articles, which is necessary to get a research job at a medical school, which is his ultimate goal.
–Look into debt consolidation. My husband has several student loans out, each with different terms. We need to begin paying on the first two in January; the second two begin in July. We will look into debt consolidation so his loans will only require one payment a month. We don’t plan to roll mine into his because mine is nearing completion and a large amount of the monthly payment is now going on principal instead of interest.
–Snowflake money on the debts. Any extra money we make by doing such things as saving using a coupon or filling out a rebate form, or using a discounted gift card will go toward our debt.
–Pay off the debts smallest to largest. We do plan to pay off our debts smallest to largest, but we will be doing that in categories. For instance, we owe $6,647.27 on our business credit card and $12,713.46 on our personal credit card. My student loan is at $6,785.27, so if I were strictly following Dave Ramsey’s plan, that would be my second debt to pay off after the business credit card. However, I am not comfortable with that because I don’t like having outstanding credit card balances in the current economic climate. I don’t want to have to worry about interest rates on my credit cards climbing. I know the student loan rates are fixed, so I will pay those off after the credit cards.
We know we have a long road ahead of us, but we also know that it is possible to live our lives debt free. Our plan is to be out of debt or close to out of debt by the time my husband takes his first real job after his post-doc in about two to three years.
How does this plan look to those of you who have paid off your own debt? What other suggestions do you have?