Author Topic: Please critique my plan to get rid of $71K in debt  (Read 604 times)

oldmanintech

  • 5 O'Clock Shadow
  • *
  • Posts: 11
Please critique my plan to get rid of $71K in debt
« on: November 26, 2018, 10:54:26 AM »
Trying to get a handle on our crazy $71K of consumer debt, I think I can be done by next Fall.  With our income so high, I would love to make the flip from debt paying mode to savings mode.

My income is $150K/year with a $22,500 bonus in March of 2019.
My wife's income is $80K/year

Take home is ~$12,200/month for the two of us.

My current situation is below:
1) House Payment - $2400
2) Utilities (power, water, internet) - $400
3) Verizon Cell Phone - $210
4) Car Insurance - $250
5) Toyota Lease (ends 9/2019) - $342
6) Student Loans ($24K Remaining @ 6.5%)  - $352
7) Afterschool Childcare (8 months per year) - $382
8) IRS Payment Plan ($12K Left) - $300
9) Lending Club ($21K Remaining @ 12%) - $1,054
10) Marcus Loan ($22K @15%) - $754
10) NFCU CC ($17K @ 16%) - $340
11) NFCU CC ($11K @18%) - $220

Much of the is facepalmish I know.  My plan is to put ~$2500 per month toward the CC debt (snowball method) until I get my bonus, use the bonus to pay off Lending Club which will free up another $1000/mo to put toward the remaining debt.  No idea what to do when my lease is up in September of next year.

I think I can shop around for cheaper cell phone service.  Verizon unlimited for two people is crazy.  Also, State Farm charging us $250/month is quite high, I went online and got a quote from Progressive for $130/month.


Bracken_Joy

  • Walrus Stache
  • *******
  • Posts: 8820
  • Location: Oregon
Re: Please critique my plan to get rid of $71K in debt
« Reply #1 on: November 26, 2018, 10:57:32 AM »
Looks like you're hitting big ones: car insruance and cell phone plan. But a LOT is missing from this. I recommend you go see that case study worksheet and fill out all your details. How are you tracking expenses? What are you spending on food/restaurants/alcohol/personal care/hobbies/clothes/utilities/gas/car maint on and on? So much missing here.

Next step: figure out what you'll do after that lease! Leasing a car is just... well, face punch worthy. Do you have cash on hand? How much? What's your credit score like, what sort of loan can you get on a used car? These are good things to research.

oldmanintech

  • 5 O'Clock Shadow
  • *
  • Posts: 11
Re: Please critique my plan to get rid of $71K in debt
« Reply #2 on: November 26, 2018, 11:07:06 AM »
I'll do the case study worksheet.  I am sure we go out to eat too much, don't cook at home enough, etc....

My FICO scores are in the low 700's but have very little cash on hand for a new (used) car next year.  I was thinking of setting aside $5K from my bonus in March to get a used car next September. 

I know leases are face punch worthy but the predictability is nice.

AMandM

  • Pencil Stache
  • ****
  • Posts: 856
Re: Please critique my plan to get rid of $71K in debt
« Reply #3 on: November 26, 2018, 11:16:01 AM »
Mathematically, you're better off paying down your loans in order of interest rate, from highest to lowest. That would mean starting with the 18% CC (unless the IRS has a higher interest rate). If you're putting an extra $2.5k to that every month, then it will be done by the time you get your bonus. Your bonus can then be used to finish the other CC and part of the Marcus. You'll have an extra $560 (instead of $1074) to throw at the debt, but it will be lower-interest debt.

And I second the recommendation for a full case study if you want to get ideas for how to free up more cash each month, and more importantly, how to change your spending so you don't just run up new CC debt.  Two thoughts off the top of my head: keep about $5k of your bonus for a used car to replace the lease [ETA: whoops, just saw you've already thought of this], and get a grip on your utilities.

Congrats on making a plan and having a goal!