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When you fall off the horse, get back in the saddle

May 9th, 2015 at 11:45 pm

Confession here: I fell off the debt reduction horse during the past few crazy, unstable years. My net worth has grown, but whereas I was out of debt in 2009, I accumulated, at a peak, 30K of non-mortgage debt (currently $25,667). For the first time in years, my income is stable and no family crises loom, so it's time to get back in the saddle. First step was getting back to posting income and expenses with YNAB, which I used to do. Nice upgrades to the program during the past 5 years since I last used it. Second step was consolidating the credit card debt with a personal loan-20k, 5 years, 10.9%. I'm tired of juggling 0% balance transfers. And it won't take me 5 years to pay...but I have flexibility with a longer term, just in case. And step 3 was to temporarily cut my retirement savings to 3% in order to add $420 a month to emergency savings. I've been living with too small a buffer, which is why the debt accrued. Increase the buffer, pay down the debt, max out retirement savings once I have more liquidity...and hopefully not only keep the job but eventually get a raise. My net worth is currently 27K higher than it was 6 months ago when I started the job, and hopefully the market and luck are with me and I'll do at least as well in the second six months. Overall debt to equity is currently 20.7%. Aiming to get it lower still.

4 Responses to “When you fall off the horse, get back in the saddle”

  1. My English Castle Says:

    We all have to get back in the saddle sometime. We are too. Wishing you luck!

  2. snafu Says:

    Welcome back and with a stable income and no family drama, you've taken the giant step forward by using YNAB for a clear picture of your finances. Are there any reductions in expenses you would try to free up money to redirect towards debt? Are there any items you no longer use or need that could be sold to add to debt pay down?

    I think nearly 11% interest on your loan unreasonable since savings plans pay less than 1%. Sadly, by reducing your retirement contributions now means you are giving up sorely needed compounding value which is what you'll need to finance your later years.

  3. PatientSaver Says:

    Congrats on the big hike in net worth. That 11% interest rate on the debt also makes me a little uneasy. I haven't researched loan rates so I don't know if that's typical but it does seem high. Can you keep an eye out for a loan with better terms down the road maybe?

  4. Amber Says:

    Wishing you the best of luck. I too fell off the saddle but I'm back on and back to blogging while knocking down my debt. There's no doubt in my mind that you can't do it.

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