I like to do calculations of how much worse off I’d be if I wasn’t agressively paying off my mortgage. It’s really motivating to know I’ll only pay $11,000 interest on my mortgage compared to the $300,000+ if I paid it off the normal way over 30 years.

We’re on track to paying the whole thing off in 3 years. Oh yeah!

And Karen is truly correct about the book “Your Money or Your Life”…

This is a little counter-intuitive, but as a smart consumer, you will not have as many opportunities to build your credit score, because you won’t be charging up a storm on credit cards, opening installment loans, etc. Milk this loan for all it is worth to improve your credit score and save like mad so you can pay cash for your next car. You might not ever need a car loan again and a good score will come in handy when you are ready to buy a home.

I admit, I also geek out over our household’s budget spreadsheets! And, the obsession is 10x worse now that I have over a year’s worth of data for the same tracking categories (now, I can compare YOY income vs. expenses – a whole new source of unbridled spreadsheet geekiness!).

You may be doing this already, but one thing I did to avoid tripping over “reality” when it came to the forecast was to create a dedicated “what if” tab. (I even colored the font a different color so I wouldn’t get mixed up.) In that tab, I can play with sudden drops or increases in income, manipulate our expenses (or even see what would happen if we got rid of one or two entirely), recategorize spend buckets, etc., all without messing up the “actual” planning budget.

That said, some of our debt reduction is VERY slow-going, as you already know, so it is hard to stay motivated. I find myself trying (and failing) to see if there is ONE more thing I can shave & pay something down faster. If we stay the course we’re on, we’ll be pretty much debt free in just under 2 years, but that seems so far away!!!

This made me consider the idea that you (a general “you”, not Honey specifically) might have otherwise paid for a new cell phone by borrowing money. This seems utterly insane to me. If you have so little cash on hand that you’d need to borrow $99 or whatever for a cell phone, then you can not afford a cell phone (especially since you can literally get them for free. And I don’t even mean “free on contract” but free as in “all my friends have drawers full of one and two year old phones that they’re too lazy to recycle that they’ll gladly give me”).

@Honey — Welcome to the slow-drip debt reduction club. It can take a very long time to reach the medium and long term goals. I only update my debt reduction charts once or twice a year. I keep a journal with all of my various goals, tracking my debt reduction along with my long term investments, so I can see the liabilities shrink while the assets grow. It’s funny to see though — cars that were paid off a few years ago, credit cards that were paid off seven years ago, student loans substantially reduced, remaining balance on my mortgage shrinking, 401K balances slowly rising.

Of course, it’s just a dinky mobile, no internet features or anything. But if all you want is to talk and text, like me, it’s great. I think I bought the phone in a drugstore.

1) pay off high interest debt
2) create a 6 month emergency fund
3) invest for long-term goals (retirement, college, home purchase)
4) pay off low interest debt

Because long-term investments in the stock market earn about 7% per year on average, if you pay off your 4% loan first, you’re giving up a 3% difference. Conversely, if you’re saving for retirement, but carry a credit card debt at 14%, it’s costing you the 7% difference.

So, if your student loan is low interest, you may want to pay the minimum and use the excess to create an emergency fund or start investing for retirement.

Short terms goals are key to help keep me on track. My most recent short term goal has been to get more involved with investing (another section in the spreadsheet yippee). Starting small right now with index mutual funds, but as I learn more I plan to get involved in other investments.

Another short term goal was to get my wife on page with our budgeting strategy, which she is slowing coming around too. She’s a little skeptical of the personal escrow thing, but work in progress.

Has there been any notion on this site about sharing spreadsheet templates or budgeting templates? (No numbers involved of course) I’m always interested to see how others create their budget spreadsheets.

Thanks for the article, Good luck!

For example, I budget $60 for a new work outfit, but through waiting for a sale and using a coupon, I get it for $45. The extra $15 goes to the Consolidation Loan that same day! And if I ordered it online and got a $1.50 rebate through ebates, well, as soon as the rebate pays out, it goes against the loan too! (Of course, sometimes there is a limit to how small a payment you can make, so you would have to save up those little bits, but there isn’t a limit on my particular loan.)

I admit, these are pathetically small “wins”, but they make me happy all the same, and I can see the progress on my graph.