Friday, September 26, 2008

Tips for Paying Down Debt

Soooo…the dreaded HELOC. Hate it. According to my survey, some of you also have a HELOC. I hope you hate yours as much as I hate mine.

The mature date on my loan is June 14, 2017. I can’t imagine hating something this much for that long. I’m hoping the actual ending date for this thing is closer to June 14, 2009. It’s definitely going to happen, if not before then.

Since February, we have made 47 payments toward our loan. FORTY SEVEN! Only 8 of those were our “regular” monthly payments that mostly went to interest. So even though this loan is kicking our butts, we are working like crazy to kick its butt.

Where do all of our extra payments come from? Here are some examples:

We changed our deductions on our paychecks, such as federal withholding, automatic withdrawals for extra retirement savings and lowering my 401K amount. Each time we get paid, I figure the difference of the new paycheck amount vs the old paycheck amount. The difference is immediately submitted as a principal payment toward our loan.

Can return money always goes toward the loan. Remember my $4.00 principal payment? Oh yes I do make $4.00 principal payments.

Pool Boy works his ass off. He gets probably 3-4 paychecks per week from his various jobs, plus additional income from his side business. Some of those checks are deposited into our Christmas bank account (yes we have a separate bank account for that) but all other checks go directly to the loan. NOTE – If you are going to get out of debt at a rapid pace, you are going to have to get extra jobs temporarily!

Selling stuff on Craigslist, or eBay. This isn’t happening as much as it used to because we don’t have very much left to sell. But back when we first got focused on getting out of debt, this is how we got our plan jumpstarted.

Interest on our savings account. I know, I know, hardcore Dave followers. I’m breaking his “rules” and I know this totally does not make sense when you run the numbers. We have not taken our savings down to the $1000 amount. Pool Boy won’t be without large savings, and I’ve had to pick my battles. So we have a decent bank account that now makes 6% interest. Anyway, the interest we make on this account gets paid to the loan.

And of course, our monthly income. We spend as little as possible each month so we have money left over at the end of the month to send to debt. We NEVER pay just our monthly payment because that would get us nowhere.

Anyone want to share where they get extra money from?

Yesterday's Spending = zero!!