Hank at Money Q and A was interested in seeing a breakdown of my debts, so I thought I would provide one. I re-read my earlier post about paying off over $200,000 and noticed that I didn’t give an overall debt total. It may have appeared in an earlier draft or on another blog, but it wasn’t obvious that the debt I want to pay off in the next 3 years or less is only the beginning. The almost $435,000 in debt I am looking to pay off represents consumer debt with high interest rates or relatively high payments that if paid off would help the monthly cash flow.
Here is the breakdown of the debt on October 1, 2012 when I started keeping close monthly track of it on a spreadsheet along with the corresponding interest rate:
- Past due income taxes: $126,000 at 14%
- Loans from individuals: $55,000 at 15%
- Loan from family: $25,000 at 7%
- Credit card debt (9 of them): $85,445 at 7.15% up to 24.49%
- Credit lines (4 of them): $96,282 at 12.75% to 13.99%
- Prosper loan: $14,067 at 18%
- Car loans (2 of them): $32,948 at 0%
The grand total for the above is $434,742. You will notice that there is no mortgage debt or student loan debt in these figures. It is not because I don’t have mortgages or student loans. It is because I didn’t want to be overwhelmed and decided to break out these particular debts for paying on and focusing on over the 40 months from October 2012 to February 2016.
Then I can focus on the other debt. As I am sure you are curious, my total liabilities are not quite $1.6 million. I do have a positive net worth, however. But that is little consolation if it is difficult to cash flow the month. That has gotten much easier as of late since paying off a big chunk of debt.
Let’s see where the above list currently stands as of February 1st:
- Past due income taxes: $0
- Loan from individuals: $0
- Loan from family: $0
- Credit card debt: $72,499
- Credit lines: $93,220
- Prosper loan: $13,185
- Car loans: $27,607
The grand total now is at $206,511. I could easily be under $200,000 but I am holding onto cash for some much needed repairs to the house and for a possible business venture. Nevertheless, I am still devoted to getting this done by the deadline of February 2016 if not sooner.
After that, it will be time to list out the next several debts upon which I would like to focus. In the meantime, simply making the monthly payments will help decrease the balances over time so I would expect the situation to be continually improving. I plan on being debt free 100% before retiring so this will be the first step in moving toward retirement.
Ultimately, I will have the necessary assets. I just need to get rid of the liabilities.