My Debt Reduction Plan

Posted by Mrs Money on May 20th, 2010

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As of this moment, we owe $3,040 on our car loan. Add to that the $1500 I got burned by lending money to a friend, and we are $4,540. in debt.  Honestly?  I’m not stressing too much about it.  I know that we are doing our best to get it paid off.  At this point, though, I’m very tempted to just take the money out of our emergency fund and pay off the car loan.  That would be that.

At the same point, though, $3000. is almost a year’s worth of payments.  I could keep making the $250 car payment.  Life would go on.  I’m thinking that once we get down to $1500 or so, I’ll just take that out of savings and pay it off.

How is your debt reduction progressing?

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21 Responses to “My Debt Reduction Plan”


  1. Forest says:

    I got burned too by family but the final sum is closer to $40k…. Very upset about the whole thing and in many ways it screwed up my life!

    I’m upbeat about it now though and pushing forward on getting it all gone!

    I think once the car debt is gone you will feel great!

    [Reply]

    Mrs Money Reply:

    Forest- I think so too. I think that will be all worth it. It’s soon! :)

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  2. Jackie says:

    Hm, what’s stopping you from just going ahead and paying it off?

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    Mrs Money Reply:

    Jackie- I like having a good emergency fund. I’m afraid if I pay it off that I won’t have enough in savings. I probably should just bite the bullet and do it- it probably would make me feel better!

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  3. Jenny says:

    We are doing the opposite, paying our van off aggressively first and then we will save. We do have some savings right now, but it’s not what it should be. We have reasoned that since this was our first car loan and we have a pretty high interest rate, letting more than a minimum emergency amount of money sit in savings will cost us. Right now we are almost doubling our minimum van payment and putting all extra dollars we can afford towards it. This van has been the second-largest chunk of our monthly budget for almost three years, so getting it paid off will cut us some serious financial slack! I am so looking forward to having that money freed up to put in savings and do other things. We only have a little over $900 left on ours and if all goes well we are paying it off the end of June, more than two years early :-)

    [Reply]

    Mrs Money Reply:

    Jenny- WOW! That’s great! You’ll have that gone in no time. I’ve said that I hope I never have a car payment again. ;)

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  4. Becky R says:

    I think paying off the debt and then putting all extra money in monthly budget towards savings will be more satisfying!

    Then again if you are at risk of losing job even having $3,000 less in emergency fund could be more stressful.

    But be glad your debt is relatively small. Many owe many thousands more and that causes

    Thanks for your blog!

    [Reply]

    Mrs Money Reply:

    Becky R- I may just go ahead and do that. I think it may be more satisfying too!

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  5. Heather says:

    Ugh. We’re paying off his car at a faster-than-regular-payments rate. After that’s gone, we have student loans and a mortgage, and that’s all.

    We could pay these things down more aggressively, but I’ve spent so much of my life not doing things that I wanted to do because I had other financial obligations (car accident while uninsured that led to lawsuit) that I refuse to do it any more. We’re being frugal in many ways, but I’m not going to put building my business on hold until we have more money for it. I’m just spending the money – carefully and with calculation – and the debt will go away one payment at a time. (If the business goes as planned, we will have extra money soon enough, and *that* can pay off the debt.)

    In the mean time, I’m going dancing :)

    [Reply]

    Mrs Money Reply:

    Heather- I think car payments and credit card debt are the worst. :(

    I wish you the best of luck with the business! I hope it goes even better than you ever imagined!

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  6. I am so sorry you are still hanging on that $1500! Who knows, maybe one day she’ll surprise you… I hope.

    Our debt plan is very boring at the moment. We send extra to our mortgage every month and dump any unexpected cash towards it as well. My hope is that our 30 year mortgage will be paid off in 12 years.

    [Reply]

    Mrs Money Reply:

    LeanLifeCoach- I hope so too. :)

    12 years?! That is fabulous!! I hope that happens too.

    [Reply]

  7. Money Funk says:

    How much interest would you save if you paid it all off now? If I were you, I would kick the car loans butt and be done with it. :)

    As for mine…on auto pilot. Its going. (sorry, not very exciting).

    [Reply]

    Mrs Money Reply:

    It’s at 0% so I don’t have any interest. I think I should just do it for peace of mind! ;)

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  8. Our credit card debt is history — we only have our mortgage (5%) and our car loan (0%). I may now up our extra principal payment on the mortgage, but I won’t accelerate the car loan payment, since it’s not accruing interest. I’m comfortable with where we’re at, financially.

    [Reply]

    Mrs Money Reply:

    RainyDaySaver- WOO! That’s great! I totally understand your thought process. I’d probably do the same thing. ;)

    [Reply]

  9. Little House says:

    Sounds like you’re doing great with paying off you debt (sorry to hear about that dead-beat friend!) As for my debt repayment plan, I’m being very aggressive with paying down my line of credit. But I have to be, the APR stinks at 29.99%! I’m hoping to get that baby paid off by early next year. This year would have been great, but I’m not so sure I’ll be able to do it in a year. Then it’s on to my student loan (at least that apr is below 4%, whew!)

    [Reply]

  10. We’re throwing an extra $650 every month at our $9500 car loan plus anything extra after the rest of the budget is taken care of…I feel your pain. I was seriously thinking about using our emergency fund for the rest, but I’m glad I didn’t since hubby ended up needing $2700 of dental work…

    [Reply]

  11. akborn says:

    Ugh sadly we still have abit to go on our car loan- but considering it is are only “debt” I will not complain, but I will admit that its getting smaller every month and it sends chills of joy up my spine everytime I pay it:-) so I cant wait till the day I make the last payment…. lol..

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