Writing our 2012 financial goals was surprisingly easy for my husband and I this year. We are the most “on the same page” as we've ever been, both of us with our heads down running as fast as we can towards being debt-free. As I showed you a few days ago, our 2011 financial goals mostly failed, but only because we changed halfway through the year from being reactive to proactive. This year is all about power. WE have the power to pay off our debt. WE have the power to increase how much we pay off by living even more frugally and by me earning extra money wherever I can. WE have power over our money, not the other way around (as we've lived for the past 18 years).
I am so excited about 2012.
Last night, we reviewed all of our debts and wrote out these financial goals. This Friday, we have another date planned to go through our monthly budget with all the changes (electric & water have gone up, his transportation subsidy was drastically reduced, some of our medical costs have increased, etc.). We'll budget our monthly income and put a name on every penny, so that everything else goes towards the debt. Here's the plan:
1) Pay off our second mortgage by February 20th.
This is the momentum that pushed the whole debt-free train forward. Once this is paid off, we will no longer be upside-down on our house, and we can refinance (see below). This is where we've pushed all our extra money in the last four months of 2011, and we are so close to paying it off.
2) Refinance our mortgage by the end of March.
Our current mortgage is at 7.375%, which is horrendous, but we have not been able to re-fi. With #1 complete, we finally can! With current rates at 3-4%, we'll see a significant savings, plus we plan to re-fi to a 15-year fixed loan. This will make our monthly mortgage payment a few hundred dollars more than we're paying now, which we can easily afford once #1 is done.
3) Continue the Debt Payoff towards our three remaining debts–HVAC, student loans, and van–and pay off by the end of December.
We've prioritized these three debts based on their interest rate (not based on the amount, as suggested by Dave Ramsey). The only reason there's any van loan left to pay off is because it's been sitting there at 0% and not due until mid-2013, so we've just ignored it. We just took on the HVAC loan a few weeks ago, and it's also at 0%, though temporarily. We want that paid off before it shoots up to 24%, and the remaining student loan is at 2.25%. We can do this!
That's it–three simple (but not easy) goals. We actually know what we're doing for 2013 already because once all the debt is gone we'll go back to the 7 Baby Steps. It feels so good to have a plan, and it feels even better to be working as a team. Even our kids are on board; they know there's no big vacation this year, and they understand that we'll all be rewarded in the future with discretionary income once again. Here's to a successful 2012!
What are your 2012 Financial Goals?
Image from .oskar at Flickr