The Debt Numbers

I would like to start off by saying that I really never wanted to put this out there, but here goes nothin’.

(Green indicates the bills I’ve paid.)

That is the graphic I created to track each of my debts and what a payoff would look like if I snowballed.

Medical Bill-$600

I have had a horrendous sleep disorder for over 17 years. Last November, after I got health insurance, I had two sleep studies done- an overnight study and a sleep latency study. I thought it would be all good regarding my insurance paying for it, but I was wrong! They classified it as a pre-existing condition, and I have to pay out of pocket. Originally it was a $3000 bill that arrived in May, after I started the blog, but they cut it almost in half and I’ve been paying about $300 a month to pay it off. August was tighter than planned, so I didn’t make a payment in August, but I’ll pay this month and next and it’ll be gone.

Credit Cards 1 and 2-$1450.17 and $1800

One of the cards is in an introductory 0% APR period until next April, while the other is definitely not. I’ve been paying Credit Card 1 well above the minimum so as to keep the interest down, especially since the Medical bill and Credit Card 2 do not accrue interest.

Cosmetic Loan-$3865.31

Yup, I’m vain. I had plastic surgery because it was cheaper than I thought and it was an ego boost I’ve been waiting to pursue for years. I smile every time I see myself profile in photos or videos because my schnoz is gone! This was back in January, before I considered the other things that should have been on high priority to pay off. I justified it by saying to myself that I may not get a chance after I have kids, so I did it. And honestly, I really don’t regret it and of all the bills, it stresses me out the least to think about. I pay slightly higher (read= a few cents) than my minimum payment.

Student Loan-$73572

I am one of the many who use Income Contingent Repayment (ICR) to determine my monthly payments each year. There are some advantages and there are some disadvantages.

Advantages

  • Each monthly payment is determined based on your income. So, if you don’t make much money, your payment will be lower than standard repayment.
  • If you ever come on hard times, having a lower payment can alleviate some stress.
  • If you still have a balance after 25 years, it is discharged (but that remainder is taxable at that point, so if the remainder of your loan is discharged, you have to pay taxes on it as if it were income).

Disadvantage

  • You may pay less than what the monthly interest is, so you may never make a dent into the principal.

Just because you have a determined payment doesn’t mean you have to pay ONLY that much. You can pay more. Right now, I pay the amount calculated based on my income plus a few extra dollars, but that is only paying interest. I have not made a single dent into my principal since I started repaying two years ago. This was a God send deal for me though when I went into repayment and didn’t have a full-time job. I was hardly making ends meet, and having a high student loan payment wasn’t helping matters. I consolidated my loans, applied for ICR and honestly have the peace of mind that if hard times ever hit again, I can revert to a lower payment.

Analysis

The total damage: $81287.48. EEK!

That’s a 20% down payment on a decent house in my area. That’s buying 3 brand spanking new cars. That could finance both of my future kids educations. That’s just way too much money to be indebted.

The Payoff Goal

For right now, I’m only giving a target payoff date for the medical bill, credit cards 1 and 2 and the cosmetic loan. If I continue to pay as I’m paying like it’s portrayed in the grid, we are looking at a May payoff. But, my wedding is in June, so my non-aggressive goal is by my birthday in March so that I can have some financial leeway to help pay for the wedding. BUT, I also want to do some home improvements before we sell the house next summer, so I’d like to have a little bit more extra money lying around if needed.

SOOOOOO…

My goal is to pay those 4 debts all off by Christmas!!!!!!!!!!

Today is September 4 and those 4 debts total $7715.48. Christmas is 3 and a half months away. I make around $2000 a month after taxes.

Oh boy.

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One thought on “The Debt Numbers

  1. Thanks for sharing your story. My wife and I are going through a similar situation. Feel free to follow our journey through debt at passingthroughdebt.blogspot.com

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