Monday, February 6, 2017

A Change in Targets

Rearranging the debt snowball

Come up with $4,000 and then $10,000 worth of debt will "magically" go away.  Hmm, doesn't that sound like a good deal?  Let me share...

We have a car with an outstanding balance of just a smidge over $10K.   With this balance drags a $281 payment . Lately though, I've been rounding it up to $300.  DH feels we could get $7,000 for the car.  I think we would be lucky to get $6,000 for it.  No matter which figure we hypothetically use, the bottom line is that we are still upside with it.  

While we do like the car, we don't actually need it.  Good thing, since it can't make it down our road in the Winter.  I even decreased the insurance on it given that it sits all Winter.  Whether we use my Dh's figure, mine or even a slightly lower or higher one, unloading this car would greatly decrease our overall debt and also therefore increase our debt snowball.  

Given that we don't currently have an extra $3,000+ to throw at it, we have decided to bump this debt to the top of our list and make it our next target to be snowballed.  Getting rid of this car would also save us on insurance and yearly auto tags.  I'm all for following Dave Ramsey's advice of smallest to largest, but this just makes sense.  

Last December the hospital offered us a 30% discount off our balance if we paid it in full.  Coming up with the money was a bit of a struggle, but by doing so, we ultimately saved $780 and dumped the $150 monthly payment arrangement we had with them.  I'm viewing this car in a similar way.  How fast can we can we come up with this money?  Hard to predict but with this goal in mind, I'm again ready for the challenge.  We still need to finish beefing up our baby emergency fund (bringing it up to $2,000) and then the gloves are coming off to get rid of this car and the payment it is dragging along with it.  

Since I'm old enough to realize that even the best laid out plans can change, I'll simply say that this is our current plan for now.  Along with finishing up our BEF, we still need to get through tax season.  January and February are always the busiest time for our CPA so I've given myself until March to get our tax info off to him.  

Yesterday did end up being a financially productive day.  I managed to work 4 hours at my office job and listed 5 items on eBay.  It also ended up being a good day for my business, although until we get through tax season, we aren't taking a draw from it.  I also handled a large envelope of sales tax info being sent off to multiple states.  Unfortunately that also meant writing almost $200 worth of checks out of our business account, but that's the cost of doing business.  On a side note, hiring a bookkeeper was one of the best things I have ever done!  Definitely been well worth it.  

Getting back to our debt snowball, does this change make sense to you?  For those of you following the Dave Ramsey plan, have you ever rearranged your debt order?  Would love to hear your thoughts.


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