Hello all!
It's been a good couple of weeks for me. First of all, the Leons card is paid off! YAY! One down a couple more to go.
Second, the mess with the insurance company has been straightened out after many phone calls and copies of bank statements. The insurance company has refunded the policy fees, and says payment is on the way for the NSF fees as well.
The money from the tax refund has been paid to my student loan, so the balance left to pay is $3,025.53. Now that the Leon's card is paid off, I will be moving an extra $100.00 a month over to a monthly payment on the student loan.
Now comes my next dilemma;
I am half-expecting two large payments in a few months. One should be around $1000 and the other is roughly $2000. I have around $3000 owing to the orthodontist and around $3000 owing to the student loan. How should I allocate these payments?
On one hand, paying off the orthodontist will free up a direct debit out of my account every month. That would give me more "wiggle room" each month if money gets tight. The student loan is not a set amount or a direct debit so I don't have to worry about bouncing a payment.
On the other hand, the student loan has interest on it, albeit a small amount. I know if I play by the rules, the student loan should be paid off first. However, I do like the security of not having a set payment in the month unlike the orthodontist.
I will have to ponder this one for a bit. Good night all!
Debt Reduction Plan
Estimated Debt Free Day is December 31, 2009
Updated Debt Reduction
As of March
3 comments:
hi, nice blog. i wanted to know where i can go to put graphs in my blog (like you have at the top of yours) that show my progress of getting out of debt.
thanks.
Hey Kevin,
I don't know if there is an easier way, but I ended up creating my graph in excel and then saved it as a jpeg. I opened it up and cropped the sides (to get rid of the excess wasted space) then uploaded that image to put on my blog. It would take it as a .jpg or a .bmp I believe.
There may be an easier way, but I'm really a blog newbie so I did what I could.
With your "which debt to pay" question, I'd say you need to weigh the psychological benefit of not having the regular debit (for the orthodontist) vs. the financial benefit of reducing the interest-bearing debt.
It's interesting that you feel greater freedom from being able to determine how much of your student debt gets paid off. When my wife and I looked at mortgages when we bought our first house, we considered that we would be financially able to make extra mortgage payments. Instead of counting on our own ability to make the extra payments, we instead opted for a 15-year loan. We saw it as a way to force ourselves to make the extra payments, rather than hoping that we'd have the discipline to not spend that amount.
Think of the monthly orthodontist debit like a bill--you know how much it's going to cost you and how often. You can plan your budget around it. It kinda takes care of itself. I'd advise you to take care of the student loan first--not only does it accrue interest, but it's an easy thing to "put off", since there's nothing forcing you to make the payments. For me at least, it's better to remove the temptation up front.
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