After making such great progress in May, we took a break from debt reduction in June. We were hoping to get one more debt paid off, but it was not to be. That said, we will be able to pay off one more debt in July and will get back on track. My husband also added up all the debts included my goal and discovered it’s a hare over $35,000, not the $40,000 I added up. That means we’re 54% towards our goal.
Debt Reduction Progress in June
We have about $750 left on one debt that we’d hoped to pay if off this month, but instead we stuck with the standard $150 payment. We did make an important discovery, though. The interest rate on one of my husband’s student loans has been going down, so the payment has been declining. Rather than pay less, he paid the same amount as before with the expectation the overage would be applied to the principal. We studied the latest bill and discovered that they’ve been prepaying interest instead! Why would anyone prepay interest? Now we’ll have to call every month to tell them how to direct the payment.
Debt Goals for July
We’ll pay off the small medical loan in July. We’ll also pay at least $1,000 toward one of his high-rate student loans, and follow it up with a call to make sure it’s properly applied.
Debt Plan Update
My husband plotted out our debt payments for the rest of the year. We could pay off one of his loans even without the second windfall he’s expecting. We’ll easily eliminate the second one when that windfall arrives. We’re not 100% sure when my windfalls will start arriving, but we should get at least a portion by the end of the year, which will go toward our taxes. By not sure, I mean that we have dates, but I’m trying to decide whether I should try accelerate that schedule. As it stands now, I would receive the bulk of the money in 2009, which would reduce our tax burden for this year.
Progress on Other Goals
Money Magazine predicts that the LA housing market won’t hit bottom until Q3 of 2009. I’m not prepared to wait that long to buy a house, partly because we’re rapidly reaching the point where we need the mortgage deduction (the interest will be far more than the standard deduction we get now.) I’m thinking we should look in spring of 2009. Prices are just starting to give in my area, so hopefully they’ll have taken a hit by then. By that we’ll also have reduced our monthly debt payment to $1100 (vs. $1700 at the beginning of this year.)
The emergency fund and retirement boosts are still on hold while we pay off debt, but I’m eager to get them started.
How was your debt progress this month?