PocketCoinage

After my most recent posting about Bad v. Good Debt, I got all fired up about paying off my student loans as quickly as possible.  I mean, I only wasted $1,520.48 in interest alone!  Before this posting, I really did not run the numbers to realize how much money I was losing.  I told myself there had to be a way I can reduce the payoff time to less than two years.  Currently, I am on target to pay off the loan in about four years.  However, four years is not going to cut it with my vision for the future.  I needed to put the numbers down on paper and see the results.

So last night I sat down to work on an updated budget spreadsheet that worked with my varying paycheck.  I found out that by slightly modifying where each dollar goes (house fund, emergency fund, etc.), I am able to boost my school payment from $440 to $700 every month.

How did I increase my monthly payment by $260?  I was able to:

• Judge my base take home pay and budget based on that
• Slightly cut back on how much money each item receives
• Cut back on a few unnecessary items (wants)
• Use the extra money in my pay exclusively for debt reduction

This alone should bring it down to around 24 months.  However, I’m going to take this a step further in an attempt to knock it out sooner.  Since I save bi-weekly, this creates an extra “payment” every year.  For example, I put away money for the mortgage every pay period.  By the end of the year, I will have an extra payment to use for pure principal.  For a short period of time, I’m going to be using this extra mortgage payment to knock out my student loan debt.  I’m also going to allocate some money from my tax return to reduce this debt.  By going this route, I am on target to pay off my student loans by December 2012 (15 months).  Who knows, if I come across some money, it may be less than 15 months!  Unfortunately, once all is said and done, I will end up losing another $800 in interest.

As we begin a new year, many people are making commitments to change themselves or to do more for others.  Unfortunately, many of those commitments will be soon forgotten.

To start this year, I’m creating a few goals for myself – something I’ve never done.  I usually have different aspirations throughout the year and try to meet them without the time constraints.  Sometimes good things take longer than anticipated; do not lose sight of your goals!  I keep reminding myself that and push along.

• Spend more (much more) time with family and friends
  • It’s the people around you that make life fulfilling.  I want to have more breakfasts with my grandma, more dinners with my parents, and more fun with my girlfriend and friends.  Work and the house consumed me last year.
• Have $20,000 in an emergency fund
  • When owning a home, you never know what might need replacing.  A new furnace could cost around $10,000 depending on the one you choose (or need).  I’m currently halfway there!  I will try some other methods of getting there besides my bi-weekly contributions; not sure what those methods will be yet.
• Complete a few home improvement projects
  • Expand the vegetable and flower gardens
  • Build a deck
  • Complete the 4-season porch
• Make my home more efficient
  • The United States Government currently has a tax credit for 30% off the cost of making your home more efficient (up to $1,500 back).  To take full advantage of this credit, you need to spend $5,000.
    • I will re-insulate the attic and crawl space.
    • I may upgrade the hot water heater to a tank-less one.
    • I may upgrade my heater and/or central air unit.

• Become an entrepreneur
  • I feel the freedom of running my own business would be well worth the effort put in.  This “good thing” will take some time to start up.

I’m sure I will have more goals to add to my list throughout the year.  Let’s see how many I will reach (or add)!

What are your goals for 2010?  Were you able to keep any of your goals from 2009?  How did you do it?