So for a brief background, I'm 26 years old, and went through a divorce last year, and both my ex wife and myself ruined our credit and landed us in an insane amount of debt for a couple in their mid 20s. I'm in the national guard, and seeing a personal crisis, tens of thousands of dollars in debt, living paycheck to paycheck, and worried about what would happen if my car broke down, I volunteered for a deployment to Afghanistan. I've been here now for 9 months, and I have 3 left before I come home. I've made a lot of progress, to include paying off $22,000 in debt since last September, and catching up several overdue bills and accounts.
I still have $25,900 worth of debt, and two semesters of school left before I graduate. I'm trying to come up with the best plan to pay them off as quickly as possible and start saving.
I currently have $7,200 in the bank, and I have an income of $4,300 per month after deductions. This will end in September once I return home. I also have income tax returns on their way totaling $1,700. I've calculated this to mean I will have $23,837 in my bank account when I return home. I need a car, some new clothes, a bed, and a bicycle when I first get home. I plan to spend $4,500 on all of this (mostly the car), leaving me with $19, 337 in the bank. Using the suggestions from the Dave Ramsey class I attended last year, I think it would be wise to keep $6000 (4 months living money) in the bank, and use the rest to pay off debt immediately. I have two smaller debts that I would want to pay off instantly totaling just over $5000, leaving only my student loan of $20,000 to pay off.
My Budget forecast upon returning home:
Rent: $0 (I lucked up and get a free place at the beach thanks to my well off brother!)
Power: $80 (share bill with his business next door)
car insurance: $50 (just a guess)
Child support: $300
health insurance: $200 (guessing for now, I have to look into what's most affordable for me and my daughter)
gas: $400 (I have to drive to NC 2 weekends a month, I'll be bicycling most of the time at home in FL, i figure the free rent is worth the trade off)
car repairs: $100 (give or take)
food: $250
eating out: $50
gym: $20 (I'm training to compete in a bodybuilding competition, so this one's too important for me to give up)
phone: $25 (just bought a moto g and cancelled my old verizon plan for $90 a month with my iPhone!)
Total: $1,475 monthly budget
Income:
National guard drill
~$300 (monthly training weekend)
GI Bill (until school is finished)
$1100
I still need to find a job when I return home. I'm doing school online so a full time job during the week is entirely possible. Until I know what I can make I can't add it into my income, although I'm sure I can find a job making at least $1,500 a month after deductions. I would hope I can do even better.
Total income: $1,400 + unknown factor.
questions:
1. I know I can make ends meet once I'm back home without having to rely on a large emergency fund. I'm still scared to not have at least some money in savings at this point since I have no assets and I'm in debt. How much should I put back with a projected monthly expense of less than $1500?
2. How much of a priority should paying off my student loan be? I know I can probably pay a large chunk off while I finish school, should I just pay a certain amount each month, or pay a large chunk as soon as I get home and try to finish it off early. Is there anything else I can do that would be wiser in the long term?
3. I would like to buy a house within the next few years. obviously finishing my last year in school and landing a more permanent job will help. My credit is piss poor (580) because of the divorce and stupid decisions we both made. I have paid everything off other than what I've already mentioned, and started a $500 secured credit card through my bank (wellsfargo). What else can I do to improve my credit given my situation with home ownership in mind?
4. After reading as many articles on MMM as I felt was relevant to my situation (not reading much about investments yet since I'm still in debt) I've decided to take further action. I'm going to sell some gaming consoles, books, my laptop (macbook pro almost new costed $2500, I know it was a bad decision lol, planning to downgrade), and several other items through ebay and craigslist to try to make a couple thousand dollars more once I'm home. Any suggestions to make even more money? If it's relevant I'll be living in Jacksonville Beach, FL.