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Debt Reduction Progress

As the new year gets under way, I try to set our goals for the upcoming year. But, as you all know, having two kiddos under three years old can change your plans as often as you change their diapers. And to add to that a new home that needs a little furniture, I can guarantee that our financial goals will have some bumps along the way.

Saving for a Rainy Day

Having an emergency fund is essential to help smooth out the bumps in your budget. The amount of money in your emergency fund is dependent upon you and your situation. Everyone has a different philosophy on the amount. Dave Ramsey says to have a $1000 emergency fund until you are out of debt. Others say to have 3-6 months worth of pay in your emergency fund. One thing for certain, is that you should set aside money in an account that is accessible for emergencies, whether it is $250 or $25,000.

We are currently replenishing our emergency fund back up since we tapped into it last year to purchase our home. Someone might argue that buying a home is not necessarily an “emergency”, but I don’t care, it’s our money!!!! We felt that our priority was to be in a home and it is an investment into our future. So far, we have 2 weeks worth of savings so we are waaay down on our savings goal. We are hoping to get that up to at least 2 months worth in savings. I am still committed to my Weekly Savings Challenge.

Running….. Debt…. Blehh…..

With a new home comes new debt obligations. As much as we didn’t want to incur any more credit card debt, we did. This is the biggest bump in our budget. We know fully that this is no the best idea, and goes against my Running From Debt philosophy, but we have no excuses. We added to our debt and we will pay it off. I plan to work some extra shifts to help bring it down. Hopefully, we bring it down sooner rather than later.

I haven’t been running lately. With the cooler weather, I didn’t want to go out on runs with the kids and risk them getting sick. The wifey has been working evenings and so I become Daddy Daycare in the evenings. It’s okay, I still plan to run more once spring gets here to Southern California, which will be in a couple weeks!

Progress? What Progress?

I am currently working on our budget to help reduce our debt and still have a little fun on the side. So our progress will be a little slower these upcoming months, but we are diligently paying it down. Here is how much we’ve paid off on our major debts:

  • Student Loan Debt: 4.5%
  • Car Loan Debt: 40.5%
  • Mortgage Debt: 5%

Have you had any setbacks on your debt reduction plans? It’s okay to have them, just get back on track and crush your debts!

 




{ 3 comments… add one }

  • Do or Debt February 18, 2013, 1:44 pm

    I’ve had a few visitors this month and even though I tried to budget for it, I ended up spending more than I liked. It’s hard when you have different financial obligations pulling at you in each direction, which makes it hard to stay on a budget. Sounds like you have a plan and are doing well considering the extra debt.
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    • Ron February 18, 2013, 9:07 pm

      I totally understand where you are coming from. No matter how well-planned your budget is for the month, you cannot predict everything. I think having a budget helps out though, and we give ourselves a little wiggle room for unexpected expenses, like my $160 texting-while-driving expense!!!!

  • Gary C February 19, 2013, 3:05 pm

    I hear you on the emergency fund. We had to dip into ours big time.

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