After writing my first post, I was feeling excited to begin our "elimination of debt" journey. We took our first step forward this weekend by determining if we could take our financial planner’s advice and actually move to living on only one of our incomes and using the second income solely for debt. After a few varied budget mock ups, we have devised a plan.
We are able to cover our monthly bills: rent, groceries, entertainment, gas, cell phones, and savings under one income. The second income is covering our minimum monthly student loan payments, credit card payments, and the extra will be used toward decreasing our debt. We have looked at the flow of our income, as it relates to the preset bill payment days, and though March will be a little tight we have been able to adjust our spending pattern to adapt to our paycheck cycle.
Now it was time to finally look at the hard numbers...what a sobering moment:
Overall Debt (Credit Card and Student Loans): appx $180,000
Estimated Time to Payoff (based on current income): 7 Years, 6 Months
Adding up all of our debt to see the total balance has already made me question if we can actually become debt free or if we are just setting ourselves up for failure. I am trying to stay optimistic and I am hoping that once we get going it will become second nature and we will just keep pushing forward.
I have not been able to figure out how to add long-term interest to my calculation, so I know our debt amount will increase over the course of this process; however, I also have faith that our income will increase over the years (hopefully we will find a lost inheritance!) and we will be able to put more towards our debt- so hopefully, they will balance one another out.
Nick and I have already started talking about second jobs, but having done that for three years I am hesitant to go back. However if you live in the DC area and need help with IKEA furniture, I am more than happy to help! For friends, I work for pizza and beer but given the current situation I think I may need to renegotiate :)
To end on a positive note, our new budget actually has us putting $50 in saving each month, as a direct deposit, so hopefully this will provided us an opportunity to celebrate our little victories along the way. Our first goal is to pay off my Credit Card. I will keep you posted on how we are doing and any fun new ways we learn to save money.