Total Money Makeover Update: April 2008

It’s been four months since Chris and I began our slightly modified Total Money Makeover plan, and despite our lack of what author Dave Ramsey dubs “gazelle intensity,” we’ve made some decent progress toward eliminating out non-mortgage debt. If you count the $4200 home equity line of credit we knocked out from September 2007-January 2008 for our new air conditioner, we have paid off $17,830 in non-primary mortgage debt so far.

I say that we aren’t gazelle intense because we haven’t done most of the things that Ramsey’s less fortunate listeners often have to do in order to dig themselves out of debt:

– Work a second or third part-time job
– Sell off leveraged big ticket items
– Cut off ALL entertainment and travel
– Eat a lot of rice and beans

Because our debt was largely comprised of low-interest rate student, auto, and home loans, not credit card balances, and we are fortunate enough to have a dual income household that brings in enough to cover basic living expenses, retirement funding, a reasonable amount of entertainment spending, and debt payments on those loans without ever being at risk of falling behind, we have been able to throw a lot of money at our debt snowball without changing our lifestyle very much. Granted, I have had tightwad impulses since early childhood, and Chris has been pretty responsible with his finances since an ex-girlfriend set him straight years ago, so you could say that the only thing holding us back from paying my car and his student loan off early was complacency. It was easy to just keep on making those minimum payments according to the bank’s schedule, especially since we were doing all the right things in terms of retirement savings and budgeting.

We also had no big ticket toys like boats or over-priced new cars to sell off, but we’ve done pretty well just by doing the following:

– Temporarily reduced retirement savings to just 4% of our gross income (down from 15% for Chris and 20% for me)
– Cut back on movie theater outings and used the 12 free Blockbuster rental coupons I earned via e-Rewards instead
– Cut back on dining out
– Chris started making his own sandwiches for lunch at least 2-3 days per week and brews his own coffee at home instead of buying some on the road
– Reduced untracked spending on hobbies, clothing, electronics, games, and other non-essentials.
– Put any bonus income (tax refunds, sales commissions, mileage bonuses, gifts, etc.) toward the snowball

Here’s where we failed to be gazelles: Some of the extra things that we did spend on probably could save us several months on the debt snowball, but we made the choice to budget for these items and deal with the extra 2 months it would cost us.

– Chris built a new desktop computer system with $1200 from our 2007 tax refund.
– I set aside $800 for the Pink Dumbbells/John Stone Fitness Bahamas cruise in August.
– I threw in $400 for a new mattress and box spring set in February. (The old mattress was sagging badly and made my back hurt every day. I consider this preventive health care. Chris’s mother threw in another $300 toward this as a gift.)
– Chris paid for the roundtrip airfare for us to visit his father in Alabama (~$400) and for his friends’ out of town wedding in June (another $400).
– Chris spent $350 or so on the materials needed to re-pave our small walled courtyard.

Reducing our retirement contributions for 2008 has probably made the biggest difference in our progress, followed by our unspoken agreement to control impulse spending on both lattes and gazingus pins. Although we both budget around $50/month for fun money, neither of us has spent much of our allowances. We’ve decided to really take advantage of the forgotten entertainment and hobby materials we have on hand instead of accumulating more. Chris has been geeking out with D&D and cards (World of Warcraft collectible card game, not poker) at his friends’ houses instead of going out and spending money on movies and dining out. I’ve been outfitting myself and Chris with home-sewn clothes made strictly from my existing stash of fabric, patterns, notions, and oversized free t-shirts. We both check out books and audio books from the library instead of purchasing them from

I haven’t bought a Wii yet, and Chris hasn’t acquired a new car stereo system. No new fitness gear has appeared in the house since I the Cardio Coach New Year’s deal in January.

And you know what? We haven’t been bored at all.

$31,782 more until financial freedom!

Baby Step
1. $1000 to start emergency fund
Contributed a combination of wedding gift money, personal savings, and bonus commissions to a shared savings account earning 3.75% APY
2. Pay off all debt (except the home) using a Debt Snowball
2008 Debt Snowball

2009 Debt Snowball
  • Maggie Visa
Made two $300 payments to clear the balance, then retired card to safe.
  • Discover (Leftover wedding expenses)
Paid balance in full in January 2008; card still actively used for gasoline ONLY. Balance paid in full each month going forward.
  • Chris Visa
Paid balance in full in January 2008. Card retired to safe.
  • Amex (travel, Ikea couches…)
Paid statement balance in full in January 2008. Card still actively used for recurring utility bills, but will be paid in full each month going forward.
  • HELOC (new A/C in 6/07)
Chris and I both cut off federal income tax withholding from 9/07 – 12/07 after calculating that we were both overpaying. The excess money in our paychecks was used to make aggressive $1000 payments on the HELOC every month.
  • Maggie Car Loan
Remaining amount: $559. Paid extra $1500 from 2007 tax refund and $500 from personal checking account on 4/17/08. Paying one more payment of $559 in May 2008. I already made a large extra payment of $1500 on the car soon after the initial purchase.
  • Chris Student Loan
Remaining amount: $6550. Chris was able to contribute an additional $2100 on top of his originally-budgeted payments these past few months, which might allow us to pay off the student loan a month earlier depending on when we receive our economic stimulus check for $1200. Combined payments of $1970-$2420/month until the loan is paid off around 6/2008; under the original loan terms and payments of only $220/month, it would be another 5 years before we would be clear!
  • 2nd Mortgage
Putting this one on hold until after the $10,000 emergency savings account and 2008 Roth IRAs are fully funded. Regular minimum payments of $205 through 1/2009, then payments of $2006 from 2/2009 until 2/2010
3. 3 to 6 months of expenses in savings
3 deposits of $2774/month and one deposit of $820
4. Invest 15% of household income into Roth IRAs and pre-tax retirement accounts
of gross income
2/1/09 (ongoing)
Fully retroactively fund both household Roth IRAs for 2008 at $5000/each from 10/08-1/09. Reinstate monthly Roth IRA contributions for 2009 @ $454.55/month each from 2/2009-12/2009. Increase 401(k) contribution to 5% (currently at 4%). Regular monthly Roth contributions of $466.66 each starting 1/2010.
5. College funding for children
…Er…No kids yet. Need to see if an education savings account can be started without actual offspring.
6. Pay off home early
Research refinance into 15 year fixed rate mortgage and/or set up extra principal only payments of $1400/month to pay off home within 6 years.
7. Build wealth by investing

2 thoughts on “Total Money Makeover Update: April 2008

  1. Maggie, I’ll pay you $250 an hour to worship your muscles. That will sure help you a lot.

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