Author Topic: What should I do next?  (Read 2738 times)

Raislin

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What should I do next?
« on: March 27, 2015, 03:16:13 PM »
Hi, all!  First real post here.  I'm just getting started on working toward future goals with my wife.  I'm 26 and she's 20, so we're both young.  I have a lot swirling around in my head and I'm hoping that getting it out and hearing some opinions will calm me down so I can focus a bit.  Here are some good changes that have taken place lately:

- We got a much larger tax return than expected -- exactly enough to pay the upside down difference on my 2014 Accord (some leftover from previous car, too) and I sold that.
                      $430 payment + ~$25 property taxes saved per month.
- Based on our cell phone habits and desires -- we decided to drop Verizon in favor of Republic Wireless.
                      $130 saved per month.
- We purchased bicycles -- One for me to replace the car, and one for her for recreation and potentially for commuting to work. I do all errands and shopping on my bike. 
                      ~$50 on gas saved per month
- Reeling in our food budget -- We both work at restaurants.  Her meals are free, but mine aren't.  Planning a pack-a-lunch plan and cooking (frozen) meals in advance that are delicious, but cheap.
                      slashes our current ~$300 spending to a $150 budget per month if successful
- Dropping the sold car from insurance and switched providers.
                       A whopping $180 per month in savings.

Excluding the decision to take Republic Wireless over a land line, all of this was planned or done before I even discovered this forum or blog, so I'm pretty proud of that.  We don't make a whole lot of money, and neither of us have degrees yet, but we went from barely getting by to having a lot more flexibility.  What we have left, debt-wise:

- 2009 sedan: $130 monthly, ~$4500 remaining balance
- Kay Credit Card: $125 monthly, $884 remaining balance, 5% APR
- Best Buy Credit Card: ~$1000 balance, 0% APR until January, 2016
- Three regular Credit Cards: Total ~$3300*
- Student Loans: $204 monthly, $18000 balance, mostly 6.55%, but some portions lower

*This is normally paid off monthly, as one card accumulates a larger balance from paid bills.  However, it is currently holding the additional up front costs of the recent changes -- new bikes, new phones for Republic Wireless, Verizon Cancellation fees, an extra car payment made while Honda struggles to get a payoff check from their dealership to their financial services.  Even while taking the next 2-3 months to pay off the higher than normal balance, we save significantly in the long term.

We currently bring in about $2850 per month after taxes, health insurance, and a measly 5% of my (smaller) income toward 401k to meet employer matching.  Our expenses, excluding the planned change to the grocery budget, amounts to $1755 per month.

What should we do next?  The current plan is to rush the regular credit cards, as we're used to paying them off monthly.  The Kay card is planned next, since the balance is low and it's attached to a minimum $125 monthly payment.  After that, I'm not sure.  I'm leaning toward paying off the car, as it'll also drop our car insurance another $25 per month.  I imagine that is what most people here will suggest, so should I start saving after that or rush down the student loan balance?  What about saving for a house down payment instead?

Long term, I'm hoping to finish my electrical engineering degree and aim for either early retirement, or early semi-retirement with a larger nest egg waiting whenever we fully retire.

frugaldrummer

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Re: What should I do next?
« Reply #1 on: March 27, 2015, 05:44:25 PM »
Good job lowering your expenses!!!

First I would knock out the 3 credit cards and Kay card. Then I would build up an emergency fund equal to three mos living expenses. then, depending on the interest rates, I would tackle the student loans or the car loan, whichever has the higher interest rate.

you're young, don't worry about buying a house until you're established in your career and know for sure where you'll live. Just pay off those debts.

Chrissy

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Re: What should I do next?
« Reply #2 on: March 27, 2015, 08:17:43 PM »
Kay card, then the debt with the highest interest rate.  With the current high debt, low income, and youth, you're not in a position to buy a house, or even save for a house.  Get the debt down while finishing your degrees, get career jobs, then start saving for a house.

ClaycordJCA

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Re: What should I do next?
« Reply #3 on: March 27, 2015, 09:00:17 PM »
All of the above is good advice, but also remember to pay off the Best Buy card by January 1. Rate will be awfully high if you don't and check the fine print. With some retailers if entire balance is not paid off by end of the end of the interest free period, deferred interest is charged on what you have already paid.

Raislin

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Re: What should I do next?
« Reply #4 on: March 28, 2015, 10:34:52 AM »
All of the above is good advice, but also remember to pay off the Best Buy card by January 1. Rate will be awfully high if you don't and check the fine print. With some retailers if entire balance is not paid off by end of the end of the interest free period, deferred interest is charged on what you have already paid.

I financed my own laptop like this about 8 years ago and learned that the hard way.  Once the main credit cards are paid off, we should be able to knock off the Best Buy card in one month.  We just have to put it into practice.

Thank you for the input, everyone!  We had some family offer the option of buying their houses these past few months, and I finally feel I made the hands-down best choice by turning them all down.  It's been weighing on my mind recently.  I had to apply back to the state university to get that ball rolling, and I did that yesterday.  I only have the time to take one class at a time, so I'm looking at about four years to finish what's left.

As for what to tackle first, I had considered the Kay card first a few times, so it's good to see someone else think that way.  I think I've got a good plan in motion and I'll probably update here as we make progress.