Paid of first debt in snowball plan

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Paid of first debt in snowball plan

Postby cmittle » Sat Oct 10, 2009 6:35 am

I just sent a check for $811.73 to Harley-Davidson Credit for my 2006 Sportster. In August of 2005 I went in and bought a new motorcycle with about 30% down. I got a 6 year loan to repay the rest at I believe 8.25% and I just sent in the pay off balance 22 months early.

The best part of this accomplishment is that it's the first step in our snowball. Now this $125 per month will be added to Sarah's monthly Civic payments of $250 (her minimum is $165), coming to a $375 payment per month which should bang out the remaining $3500 pretty quickly. When we get to March or so and there is ~1500-2k left we will probably pay that off in a lump.

The next step is my Honda Fit, minimum payment $276, this will put us up to $650 monthly payments on my car with a current balance of $11k. This puts us at paying it off near the end of 2011. I got the loan in July 2008 for $14k for 60 months, and we're projected to pay it off in ~36-38 months, again 22 months early.

After that we wrap the snowball into our house payment. Our minimum payment is $898 (currently about $660 of that is interest) and we overpaying by $93 every month to round our housepayment off at an even $1100/month with escrow. We will get the house reappraised soon with the finished basement and get the $80/month we're paying for PMI right now to go towards principal as well. Then when we get the Fit payed off we will be wrapping that $650 into our housepayment for a total of 1670/month going toward our $898 house payment (I know $650 + $898 isn't $1750 but we will have snowballed another ~$40 payment in as well as the $80 from PMI). If we can stick to this schedule we will pay off the mortgage we got in May 2008 by about late 2018, nearly 20 years early!

There are a lot of things that aren't figured into this plan at this point. We do have retirement accounts setup and we both have plans on opening a second in the next couple of months. We are packing a little bit away in a savings account per month and we should reach 3 months expenses in about the next month and a half. I know we're a little behind on this based on the suggested rate, but our expenses every month are ~2400 (loan payments, groceries, gas etc..) and that's one of our incomes every four weeks. So we could just scrape by paying for everything on one of our incomes. On the other side I haven't calculated in any raises to these figures. My plan is to take the difference per check and shift that extra in to my automatic savings transfer. This will help me save more will maintaining my already established budget on my current income.

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