I'm overdue with an update on our 2011 Financial Goals because a lot has been happening. We'd been off-track earlier in the year between our FEMA fiasco and the repeated threats of a government shutdown. In September, I was feeling very discouraged, so I re-read Dave Ramsey's Total Money Makeover and used an online calculator to lay out a plan showing exactly how to get our debt paid off to reach our goals. That renewed our energy, and now we're firmly back in the Debt Snowball phase of the 7 Baby Steps. We're definitely feeling the pinch going into these last months of the year, but we're determined and focused, with a light at the end of the tunnel that makes it worth it. We told the kids we would have a small celebration in February once our biggest debt is paid off.
With all that in mind, here's where we stand on the goals we made at the beginning of the year:
1) Pay off one whole debt
While Dave's plan suggests paying the smallest debt first, we're ignoring this on purpose. It's a small amount sitting there at 0%, so we're going to complete #4 below first, then pay this off in the following month.
2) Increase our Emergency Fund
We did this, and now have 5 months of living expenses socked away, but it's upside down from the order of the 7 Baby Steps. We feel we need to keep it on hand in case there actually is a government shutdown (the next possible date is November 18), but if we applied it to debt we'd be almost done!
3) Contribute to a retirement plan
We're currently doing the minimum at my husband's government plan and will increase this next year once our debt is gone. With a solid plan in place, we can turn our debt repayment dollars into retirement savings sooner.
4) Pay down our second mortgage
This is our BIG GOAL. With all the cuts we've made, money I'm bringing in, etc. we're paying every penny we can towards this, and it should be paid off by February. Then, we'll be able to re-fi our regular mortgage and apply everything over that to any leftover debt. Things will move a lot faster then, which is why we're pushing so hard right now!
5) Pay for two family vacations (using the “extra” 2 bi-weekly paychecks)
Occasionally I wonder if it was a mistake to take these trips when we could have paid the money towards our debt. No, it was not a mistake. We needed to see our family at the family reunion, and we needed our first family vacation. That set us up for reaching our goal next year, because we can't plan the next trip until we're done with the Debt Snowball, and that is very motivating. In my own defense, I budgeted the two “extra” paychecks for the year for these two family trips, and we managed to come in $1400 under budget overall. That overage went straight towards debt repayment.