February Debt Reduction Process

One of my financial resolutions is to pay off $40,000 in debt. January was a good month for debt reduction, but February was a great month. Not only did I make good debt progress, but I also made progress in other goals.

Debt Reduction Successes in February
Due to a windfall, we were able to pay $11,500 in addition to normal debt payments this month. We will have to pay taxes on the windfall come April, 2009, but we decided to use all of it for debt now and then save for the taxes once the debt is gone.

That large a payment means our credit cards are more than 50% paid off. One credit card is at 0% until April, so we’re deciding whether to transfer again and take another hit on our credit, or simply pay it down with interest. By April, the balance should be low enough that the interest will be manageable. We are expecting one more windfall sometime in late summer, and hoping for a second within the next several months.

Debt Reduction Goals for March
For March, I would like to have one credit card completely paid off (about $1,000), and make a $1,500 dent in the remaining balance of the other debt.

Progress on Other Goals
I boosted my retirement withholding, but only because of a salary increase, not because I increased the actual percentage. The emergency fund hasn’t been started yet, but it’s getting closer.

Even without the debt, we would probably continue to wait until the end of the year to buy a house. Prices are falling fast in Los Angeles, but one lender is now requiring a 25% down payment. More lenders may follow their lead. By waiting until the fall, we can hopefully have more options in our price range and be dealing with less panicked lenders who understand that a 25% down payment is excessive for a first-time home buyer.

I also have a goal of losing weight that I haven’t mentioned on the blog before. My initial goal was to lose eight pounds. So far I’ve only lost three, but my clothes are fitting much better, so I suspect that I’ve lost fat and gained muscle. My new goal is to drop one dress size. I’m halfway there already.

If you have financial resolutions or debt reduction goals, how’s your progress? Tell me in the comments.

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