Debt Payoff Progress for April 2013

dead endI had every intention of making April better than March in regards to debt payoff, and in reality, it is not as bad as it seems.  But the debt that I report here didn’t even decrease.  I had hoped to drop below the psychological $200,000 mark.

However, the reality is that we did make some progress on the commercial building as well as in other areas.  Our total liabilities decreased by just over $1200 and I didn’t include the payments that we made on the building or other real estate.  And with the stock market on a tear, the mutual funds in my retirement accounts really added to our assets improving net worth even further.  I am close to my net worth goal for the year, but I realize that the market can easily go down which is why I want to focus on paying off debt to improve our net worth.


Here are the monthly results:

February 1, 2013:  $204,682.21

March 1, 2013:  $202,074.40

April 1, 2013:  $200,241.22

May 1, 2013:  $201,650.44


Now part of that number is represented by “new debt”.  I say that because my wife and I are doing some much needed work on the house.  The intention is to cash flow the work, but since there was a sale going on at Lowe’s, we decided to put the purchase on a credit card since it was something that needed to be done anyway.  I had some bonus money coming at the end of April so the purchase was recorded as of May 1st while the cash was just getting into the bank.

We have a set budget for the work that we want to be done and the cash is sitting in an account and available to pay the bills as they come due.  That’s why I think that ultimately, we will see a little bit more progress as we head through the summer.

Unfortunately, this seems like such a long process to me, but I have 32 more months to go.

Debt Breakdown–Six Figures is Only the Beginning

debt breakdownHank 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:

  1. Past due income taxes:  $126,000 at 14%
  2. Loans from individuals:  $55,000 at 15%
  3. Loan from family:  $25,000 at 7%
  4. Credit card debt (9 of them):  $85,445 at 7.15% up to 24.49%
  5. Credit lines (4 of them):  $96,282 at 12.75% to 13.99%
  6. Prosper loan:  $14,067 at 18%
  7. 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:

  1. Past due income taxes:  $0
  2. Loan from individuals:  $0
  3. Loan from family:  $0
  4. Credit card debt:  $72,499
  5. Credit lines:  $93,220
  6. Prosper loan:  $13,185
  7. 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.

Welcome to Shredding Debt!

welcomeWelcome to Shredding Debt.  This is my newest blog about finally getting sick and tired of being in debt and wanting to do something about it.  I have carried debt for a long time, but now that I am getting older am starting to realize that spending much of my hard earned cash paying someone else just isn’t fun.

I have a decent lifestyle so now is the time to prepare for retirement and the first step in that process is to get out of debt totally.  Unfortunately, it will take me several years as I have quite a bit of debt.  But I am working on a 10 year plan to see if I can become debt free in the next decade.  Then I can have the financial flexibility to decide exactly how to proceed.

The first step is going to involve paying off $435,000 in 40 months.  This is a lot of consumer type, unsecured, depreciating asset debt that eats up too much of the budget.  There was also some tax debt in this total at the beginning.  I started this step in October, so that means I am 4 months into this phase of getting out of debt.  You will be able to follow my progress right here on this blog.

With my first post, I will recap what I have done over the past 4 months to get to this point.  In the meantime, welcome to shredding debt.  Feel free to share your stories about getting out of debt.