The past few years I have been on what seems like a never ending cycle of paying off debt then accumulating more, but I am determined to make 2016 different! This is going to be the year that I pay off a minimum of $30,000 in debt! My hubby and I have a goal to be debt free, including our mortgage within 15 years.
It might feel like 15 years is a long time away but considering the amount we owe on our vehicles and house, we will definitely need that 15 years (but having it all paid off in 10 years would be pretty awesome!) Here is a general overview of our current debts and our financial plan for 2016 so that we can accomplish our goal.
Most of my debt comes from vehicle loans for our 2 newish cars and our house that we just purchased a few months ago. We do have a little bit of credit card debt but luckily not too much. My current debts are:
- Credit Cards: $5,579.72
- Car Loans: $62,200.04 (payoff amounts from today)
- House: $206,000 (Just for the principle, doesn’t include interest. If we pay our minimum amount for the next 30 years we will pay around $347,000 total. Scary!)
Our total debt is $273,779.76. That is a little overwhelming so I am just going to ignore the mortgage for now. So, the total debt without the mortgage is $67,779.76. Hopefully by the end of 2017 our only debt will be the house!
I am planning on using the snowball method from Dave Ramsey’s Total Money Makeover book. With the snowball method, you pay off the debt with the lowest balance first and then work your way up to the largest balance.
To pay off $30,000 this year, I will have to pay $2,500 per month towards our debt. My current minimum monthly payments total $1,470.12 (not including the mortgage), which means I need to pay $1,029.88 over the minimum amounts to start with! That amount will change because as I pay off each debt, I won’t have those minimum monthly payments. To meet this goal, my budget is going to be very tight! I am planning on paying off my credit cards first then paying $2,500 per month on one of our cars each month after that.
This is a lot of money going towards debt. Basically my entire pay for the year will be used to pay off debt! Looks like it’s up to Hubby to bring in enough money to live off of and pay the rest of our bills.
Money will be tight this year but it will be worth it! I may have to cook at home more often and not shop online as much 🙁 but this is important to accomplishing our long term goal of being debt free within 15 years.
Do you have a debt payoff plan? What are your financial goals for 2016?