Debt Free Journey – Part I – 2021 Q1 Update

“What if we paid off all our debt by the end of 2021 except for the mortgage? That’d be a stretch goal but why don’t we shoot for it?” And she agreed. So there you have it, we’re taking that number we threw out there back in October – $186,328.28 – and taking that down to 0 by the end of this year.

This might happen. It might not. But I’ve decided we’ll document our progress on a quarterly basis like how companies report earnings report LOL! So where are we at today? TL;DR > Our Total Non-Mortgage Debt is…

$99,581

Okay before you get super excited about dropping that debt by almost six-figures, remember that a sizeable chunk of that basically moved from high-interest credit card debt to our mortgage. However, I’ll still take that as a win because:

  1. That debt went from a rate of 15-20% down to 3.875%
    • Note to self: I still need to write a post on our stance on accelerated mortgage paydown.
  2. In the process, our monthly mortgage increased by only $150.

Despite that, don’t discredit us from the hard work & hustle we put into paying down a good chunk of that as well. Honestly, I’m too lazy to go into the breakdown of what was juggled vs. what was actually paid down. I’ll try harder next time. 😛

Debt Composition

That remaining $100k-ish can be broken down into the following:

  • Personal Loans
  • Student Loans
  • Car Loans
  • Balance Transfers

Personal Loans

Amount: $36,796

Interest Rate: 6.890%

This loan was part of the rehab costs. It is on an 8-year term with monthly payments of $543. I’m leaning towards paying this one down most aggressively since it has the highest interest rate. It’s likely that chunks of this will also roll over into balance transfers as paydown & promos of those pop up.

Student Loans

Amount: $6,231

Interest Rate: 5.500%

I’m really proud of seeing this loan down to $6,200 because this was close to six-figs when we started focusing on this back in 2014. I remember at one point when we were making payments upwards of $3500/mo. I don’t remember what the timeline was for full payment but our extra payments allowed us to re-amortize this loan (aka re-calculate monthly payments) and reduce what used to be a $380 payment down to <$50. But to not fully take our foot off the pedal, we’re sticking with $100/mo on this one.

Car Loans

Amount: $6,900

Interest Rate: 0.000%

Ah yes, good ole’ Moose. It’s a little crazy to think that he’ll be turning 5 this year. Since this loan is running at 0% interest, there’s little incentive in accelerating this paydown. We’re paying $575/mo and have 12 months left so the payoff pretty much aligns with our BIGGER goal.

Balance Transfers

Amount: $49,654

Interest Rate: 0.000% (but typical transfer fees are 3-4%)

This bucket is the other large chunk of the debt. It’s spread across five credit cards with the next expiration of the 0% promo rate coming up in April. Before really thinking about it, I was planning on focusing our extra payments to paying these down. But our credit scores bounced up a lot faster than I expected; we’re both 720+ again & not looking to stop the climb. So I’m not really concerned with having available balance transfers a couple months from now. That’s why I think we could/should focus on paying down the personal loan first. I get that there is a bit of risk with credit drying up regardless of our credit scores if the economy goes south but we have a couple different backup plans in that case so we’ll cross that bridge if we need to.

In summary

Time to really put the focus on this debt paydown. But like we’ve always discussed, we’re not gonna do it at the expense of living our lives. The tricky part is finding that balance. Shell out for the things you really love that make a difference in our lives but be aware enough to really know what those things are vs. things that only bring you instant gratification with the luster wearing off rather quickly. Here’s to:

No more (non-mortgage) debt for me & you; by the start of 2022!



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