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Debt reduction planning Redux

January 26th, 2016 at 02:46 am

A year ago today (as it turns out--this was not planned), I wrote an entry here about planning for debt reduction. While my intentions were good, I didn't make the kind of progress that I had planned. I did reduce debt over the first part of the year, but then increased it back to its starting point (and a little bit beyond). In the end, I more moved debt around than reduced it. I *did* reduce my mortgage by $4,000 (more than double the reduction that would have occurred if I were still plodding along with my original mortgage, and over a thousand ahead of where the refinance would have had me if I had not added in additional payments), so that part is good. But the non-mortgage debt, I ended up mostly moving around, from being mostly on 0% credit card balance transfers, which I kept on moving around from card to card as the 0% rate expired (kicking in a balance transfer fee of 2-4%) to being more on loans...first a personal loan and then a HELOC. The debt increased a bit with some personal investments I made in my health and my career. At the moment, the total is about 35K. I just want to use this post to lay out some targets for reducing this. If I were just following the loan amortization schedules, this would be a several year project, but I can do it in three years. Overall acccording to the amortization schedules, I'd be paying about $400 a month on the non-mortgage debt; in actuality, I pay about a thousand, so Target #1 is getting the non-mortgage debt to 30K by mid-year and to 25K by year end. Mortgage debt at year end should be down to 65K, so that's a total of 90K total debt by the end of 2016. I can cut the non-mortgage debt in half during 2017 and get the mortgage debt down to 61K, for a 2017 ending debt balance of 73.5K. Then in 2018 I can pay off the rest of the non-mortgage debt and get the mortgage down to 56K total debt. At that point I can really accelerate the mortgage payoff to have the mortgage paid off by sometime in 2025, two years before I reach full retirement age. Then I can funnel that money to a final push to accumulate two years' worth of cash for living expenses to have in my accounts before I retire sometime between 2027 and 2030.

One of the things about financial planning is that it is never done--one always has to revisit it as one's personal circumstances and the economy change. But one doesn't achieve one's goals if one doesn't plan for them, so planning is hardly fruitless.

I'll revisit my debt progress...hopefully a decline, even though I am planning some additional long-delayed household expenses this year...as the year progresses.

1 Responses to “Debt reduction planning Redux”

  1. CB in the City Says:

    Yes, it's good to plan, even if the plan doesn't always come to fruition.

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