Last week I shared with you that we’re starting to aggressively eliminate 100% of our debt. Admittedly by we, I mean I. My husband is not exactly a numbers guy, but he understands that by hanging onto our debt in favor of “living in the now” we’re costing ourselves much more money in the long run – about 3 times as much!
We know how much debt we have- nearly $165,000 between the two houses. Our first house is over half paid off, but our current home barely has a dent put in it. If we don’t pay extra on it, we’ll be 60 by the time it’s paid off and have any significant extra money to spend! Nope, not gonna happen, it’s gotta go sooner.
Up until now, we’ve been lackadaisical about putting extra money onto the principals. We’ve put an extra $10 a month to the first house for years (cuts off a payment every other year) and occasionally will put an extra few hundred on it. But for the most part we wait to see what extra money we have after the bills are paid. We should be setting a goal and making sure we meet it– no matter what “living in the now” we have to give up.
Amazon Code part 2: 8LAX2X claimed!
We’ve actually already done this. We began saving for our first home purchase as soon as we were a 2 income family. Soon after, my husband was diagnosed with cancer and was in surgery within 12 hours of the diagnosis. Even with insurance the medical bills from the surgery and chemotherapy blindsided us. We learned right away that it was crucial to have some money set aside for the unexpected. When our son was born we had 7 months to prepare for labor & delivery costs, but we weren’t expecting to pay for eye surgery when he was not quite 6 months old. Our insurance wasn’t a provider for one of the few surgeons nationwide that would perform the surgery on infants. They eventually reached an agreement, but it nearly wiped our savings out. Once again we were thankful for that emergency fund. Chances are good that we’d have lost our home if we hadn’t had an emergency fund the 2nd time around.
If we didn’t already have an emergency fund, right now we’d be putting any and all spare change/money towards building that up. Adding debt on a 14% interest (or higher) credit card is not something we want to be dealing with while trying to get out of debt.
Since we’ve already completed the 2nd step, we’re moving on to step 3: determining how much income we have and making sure that our tax withholding is accurate. We’ve had to pay taxes a couple of years and I’d rather prevent that. I’d also rather not be paying in a lot more than necessary each pay period. We adjusted our withholding last year, but I’ll be checking it again with this IRS tax withholding calculator to allow us to put as much as possible on the mortgages each month.
To sum it up:
Step 1 – We figured out exactly how much debt we had, the interest rates and how much it was going to cost us to hold onto that debt.
Step 2 – We built an emergency fund of at least 1 month’s expenses.
Step 3 – This week we’re looking at how much income we have and making sure our tax withholding is still correct.
If my husband thought step 1 was a wake up call, he’s going to be shocked when we move on to step 4 next week 
Check back this afternoon for a reader submitted debt story and check back next Thursday for Step 4!
If you’d like to submit your getting out of debt story, you can e-mail it to me. If you have a website, feel free to share it in your bio
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