Author Topic: Half mil in debt  (Read 8485 times)

manonfire1007

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Half mil in debt
« on: October 10, 2015, 02:08:49 PM »
Have certainly made some face-punch worthy choices, but doing better.
Was 520k in debt including 250k on house. Student loans (professional school) as well as wife's degree were the rest (cough, 2 cars).
Wanted out, single income is 260k. Paying 9.4k/ mo in debt to have it all knocked out in 4 years 10 months. Church nudged us to accelerate from our self imposed 7 year plan to this 4 year 10 month. It is awesome to see principle drop by 7300/ mo. Live on 5k/ mo and max tax deferred savings.
Can't wait to be debt free and start loading cash into a target date vanguard account like a front end loader.

manonfire1007

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Re: Half mil in debt
« Reply #1 on: October 10, 2015, 02:10:00 PM »
Forgot, passed 500k in July and at 476k today. I love watching that bloated pig shrink.

Kaikou

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Re: Half mil in debt
« Reply #2 on: October 10, 2015, 06:28:21 PM »
congrats. Keep up the good work

manonfire1007

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Re: Half mil in debt
« Reply #3 on: October 10, 2015, 07:29:36 PM »
It's amazing how much better you feel when you are killing debt. There are many little benefits that come along when one is trying to do a good thing.

Kaikou

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Re: Half mil in debt
« Reply #4 on: October 10, 2015, 08:21:00 PM »
I'm trying to get myself in a better position to tackle my student loan debt. I can't wait.

manonfire1007

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Re: Half mil in debt
« Reply #5 on: October 10, 2015, 08:23:17 PM »
I've been very fortunate professionally. It's surprising how much further dumb luck can carry you than almost anything else.

Kaikou

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Re: Half mil in debt
« Reply #6 on: October 11, 2015, 05:56:25 PM »
trying to set myself up the same way.

Mr Money Mutton Chops

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Re: Half mil in debt
« Reply #7 on: October 12, 2015, 06:52:06 PM »
Congrats on killing some debt! You should be able to get rid of the rest of it soon enough too, then it's off to FI :)

Money Badger

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Re: Half mil in debt
« Reply #8 on: October 13, 2015, 08:23:57 PM »
I've been very fortunate professionally. It's surprising how much further dumb luck can carry you than almost anything else.

AWESOME job.   Sustaining this pace will be the trick.    Set some interim goals and some rewards along the way for meeting them.   And a trap to be wary of resist the "I deserve this" syndrome that takes place when one of the big debts is paid off...   After being totally "free" 5 years ago, that's how I ended up with the mortgage that I'm killing slowly and may have to move to be rid of once our girls head to college.   Only sharing to help toughen you and motivate your spouse for the temptations and mental battle that occur during this journey...

MrsPfennig

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Re: Half mil in debt
« Reply #9 on: October 14, 2015, 01:20:05 AM »
Way to go! Great job!

randommadness

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Re: Half mil in debt
« Reply #10 on: October 15, 2015, 06:31:47 AM »
I don't know if you want to get into this kind of detail but it would be interesting to see the varying loan amounts, interest rates, and the drops in balances each month.

Show off the "Oh I'll pay off car #1 next month!" sort of thing. "House about to drop from 6 figs to 5!"

nereo

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Re: Half mil in debt
« Reply #11 on: October 15, 2015, 07:47:38 AM »

Was 520k in debt including 250k on house. Student loans (professional school) as well as wife's degree were the rest (cough, 2 cars)....
Can't wait to be debt free and start loading cash into a target date vanguard account like a front end loader.

Curious - did your home drop a quarter-million$ in value, or are you considering your entire remaining mortgage 'debt' and ignoring home value?

Sounds like you're doing an excellent job with your goal of eliminating debt.  Hope you aren't ignoring your tax-advantaged accounts in the meantime; you'll never get the opportunity to fill those buckets again.

KCM5

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Re: Half mil in debt
« Reply #12 on: October 15, 2015, 08:43:03 AM »
Way to go!

One thing to mention. If you haven't thought about it, consider not paying early on anything with low interest rates (I think of low as under 4%) and investing the difference, particularly if you have space in tax advantaged accounts (nereo's point above). Even more so if you're eligible for a company match that you're not taking right now.

I know some people just want to kill debt, but it's not always the mathematically optimal path.

manonfire1007

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Re: Half mil in debt
« Reply #13 on: October 15, 2015, 05:25:12 PM »
Good points all. Let's see if I can cover these:
House cost 271k 18 months ago, I now owe 227k. It's on a 15 year and will be the last paid off for a few reasons including taxes. It also has a prepayment penalty if done before 5 years (3.5 left) but I'll be finishing student loans right around then. Long story with the mortgage.

I am maxing 401k for full match. No missing out on tax deferred options that I end up owning. We also have a deferred compensation program that I dabble in for some free money.

Mortgage is at 5%. Most student loans are at 5 with a couple at 5.375. There is a nice chunk at 3% average. I'm paying off highest interest student loans as they are not deductible at my income level. Once done, I'll chase the mortgage and knock it out in 4 years 9 months.

There are ways to do this that make more sense in math, but I'm going to override math (gasp). Debt brings an inherent evil. I want it gone. Doing so brings the intangible of helping keep Murphy away/

Non debt living is at 5300/month. My SO is not as interested in this, or the living amount would be lower.

nereo

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Re: Half mil in debt
« Reply #14 on: October 15, 2015, 05:49:51 PM »
Good points all. Let's see if I can cover these:
House cost 271k 18 months ago, I now owe 227k. It's on a 15 year and will be the last paid off for a few reasons including taxes. It also has a prepayment penalty if done before 5 years (3.5 left) but I'll be finishing student loans right around then. Long story with the mortgage.

I am maxing 401k for full match. No missing out on tax deferred options that I end up owning. We also have a deferred compensation program that I dabble in for some free money.

Mortgage is at 5%. Most student loans are at 5 with a couple at 5.375. There is a nice chunk at 3% average. I'm paying off highest interest student loans as they are not deductible at my income level. Once done, I'll chase the mortgage and knock it out in 4 years 9 months.

There are ways to do this that make more sense in math, but I'm going to override math (gasp). Debt brings an inherent evil. I want it gone. Doing so brings the intangible of helping keep Murphy away/

Non debt living is at 5300/month. My SO is not as interested in this, or the living amount would be lower.
I don't quite understand why you are considering almost 50k in home equity on a 271k note to equal a debt of 250k.  I can't figure that out.  You mentioned 401(k) but not IRA - hope you have contributions there, too?
Also - who is Murphy?

Seems like your goal is total debt eradication, and you're killing it.  kudos.

concealed stache

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Re: Half mil in debt
« Reply #15 on: October 15, 2015, 07:17:17 PM »
Giving it a good slamming. Imagine how quickly the positive numbers will build as you charge through 0!

Lady Fordragon

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Re: Half mil in debt
« Reply #16 on: October 15, 2015, 08:43:43 PM »
Great job so far!  I definitely agree with all that's been said so far.  Best of luck in continuing to destroy your debt!

manonfire1007

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Re: Half mil in debt
« Reply #17 on: October 15, 2015, 09:26:23 PM »
271k purchase price. Put 21 down so note was for 250k. I have paid it down to 227k or so.

Murphy is the guy that shows up to do bad things when you aren't prepared for him. He has a law named after him. The more life Experience I have, the more I watch out for his traditional trouble spots and plan around it. Getting and staying out of debt is in line with that.

I do the 401k matched and maxed. I haven't done the Roth due to income. Could do back door Roth but have just chosen to hit debt.
« Last Edit: October 15, 2015, 09:29:45 PM by manonfire1007 »

manonfire1007

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Re: Half mil in debt
« Reply #18 on: October 15, 2015, 09:32:28 PM »
Giving it a good slamming. Imagine how quickly the positive numbers will build as you charge through 0!
The plan is to put away 5 or 6k per month of the 9400 debt snowball and watch it grow. The remaining will go to college savings (not a big dollar value), fun, helping family, or the occasional anti-mustachian activity.

nereo

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Re: Half mil in debt
« Reply #19 on: October 16, 2015, 07:27:34 AM »
271k purchase price. Put 21 down so note was for 250k. I have paid it down to 227k or so.

Murphy is the guy that shows up to do bad things when you aren't prepared for him. He has a law named after him. The more life Experience I have, the more I watch out for his traditional trouble spots and plan around it. Getting and staying out of debt is in line with that.

I do the 401k matched and maxed. I haven't done the Roth due to income. Could do back door Roth but have just chosen to hit debt.
thanks for the clarification.  I still think that's an unusual way of characterizing 'half a mil in debt' - but to each their own.  Also can't agree with debt being inherently evil, but that's another topic.
If you really want to keep "Murphy" away cash-on-hand is your best bet until you have eliminated the debt which causes you so much stress.  With your income though only realistic way I could see you having any financial road-bumps would be if you were to loose that income stream.  In other words, just be careful that a job-loss in the next 4y10mo doesn't leave you unable to pay your bills.

clarkfan1979

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Re: Half mil in debt
« Reply #20 on: October 18, 2015, 10:26:34 AM »
Don't beat yourself up over the mortgage debt. Is the house worth more than you owe? I would assume that the student loan debt is a higher rate than the mortgage debt. If so, put all extra money into the student loans and worry about the mortgage later.

manonfire1007

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Re: Half mil in debt
« Reply #21 on: October 23, 2015, 07:39:15 PM »
Both are at 5%. I'll pay student loans first as they are less deductible. But when student loans are gone, the mortgage will suffer the same fate.

OneDollarAtATime

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Re: Half mil in debt
« Reply #22 on: October 24, 2015, 07:24:43 AM »
Great to read -- especially given your higher income and the fact that you didn't go and buy the most expensive home your 260k salary could afford.  Well done.

Also, it's been hinted at and alluded to (references to Murphy and what Nereo was saying) so I think you've already got this covered, but make sure you have that emergency fund set up, especially since you're in a position with adequate cash flow to do just that.  You can always throw all that cash at the loan at the end to close out the last of your debts.
 

manonfire1007

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Re: Half mil in debt
« Reply #23 on: October 25, 2015, 06:38:16 PM »
Great to read -- especially given your higher income and the fact that you didn't go and buy the most expensive home your 260k salary could afford.  Well done.

Also, it's been hinted at and alluded to (references to Murphy and what Nereo was saying) so I think you've already got this covered, but make sure you have that emergency fund set up, especially since you're in a position with adequate cash flow to do just that.  You can always throw all that cash at the loan at the end to close out the last of your debts.
I have to admit that I've done less in this arena than I should. I keep a couple of k squirreled, but not near what I should. I have a good bit of fat in each check, and I could shut down the debt snowball if I had to. If I had a catastrophic problem, the 401k has 85k or so. I'd scrub toilets before doing either of those, so I think I'll keep myself from having to cushy a net under me.

eyePod

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Re: Half mil in debt
« Reply #24 on: October 26, 2015, 07:02:09 AM »
I've been very fortunate professionally. It's surprising how much further dumb luck can carry you than almost anything else.

Something something that quote about perspiration and something else meeting. Seriously though, it's generally hard work, luck, and being a non-douche that get you far in life. Except for in politics, then the last part doesn't apply!

zephyr911

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Re: Half mil in debt
« Reply #25 on: October 26, 2015, 01:53:04 PM »
I have to admit that I've done less in this arena than I should. I keep a couple of k squirreled, but not near what I should. I have a good bit of fat in each check, and I could shut down the debt snowball if I had to. If I had a catastrophic problem, the 401k has 85k or so. I'd scrub toilets before doing either of those, so I think I'll keep myself from having to cushy a net under me.
I'm with you on that one. I started from a very un-disciplined place, and I basically had to keep myself cash-poor to avoid sabotaging my own plans.
Automatic investments have always been my best friend. Only very recently did I let more than $1k accumulate in checking without deliberately putting it into a debt paydown or new investment, for fear of impulse buying.

manonfire1007

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Re: Half mil in debt
« Reply #26 on: October 26, 2015, 07:24:14 PM »
I've been very fortunate professionally. It's surprising how much further dumb luck can carry you than almost anything else.

Something something that quote about perspiration and something else meeting. Seriously though, it's generally hard work, luck, and being a non-douche that get you far in life. Except for in politics, then the last part doesn't apply!
I do work hard and keep at a thing, but I have neither dizzying intellect or raw talent of any sort. Luck and work.

For the previous question, I owe 224k on a house I paid 271k for and is worth 300k. Not upside down, thank goodness.

SwordGuy

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Re: Half mil in debt
« Reply #27 on: October 26, 2015, 07:52:13 PM »
You have it made provided you don't lose that firehose of an income stream.   

Seriously, 4 years and 10 months to pay off HALF A MILLION $$$$ in debt?   That's seriously awesome.   

That also means that in another 5 years after that you'll easily have $750,000 in investments, plus a paid off house and cars and no appreciable debt.

4% SWR on that $750K is $30,000, which is almost half the $67,200 you're spending now.

Think about that for a moment!

In  12 to 15 years, depending on how your investments do, you would be set for the rest of your life.   Maybe sooner.




manonfire1007

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Re: Half mil in debt
« Reply #28 on: October 27, 2015, 05:17:36 AM »
You have it made provided you don't lose that firehose of an income stream.   

Seriously, 4 years and 10 months to pay off HALF A MILLION $$$$ in debt?   That's seriously awesome.   

That also means that in another 5 years after that you'll easily have $750,000 in investments, plus a paid off house and cars and no appreciable debt.

4% SWR on that $750K is $30,000, which is almost half the $67,200 you're spending now.

Think about that for a moment!

In  12 to 15 years, depending on how your investments do, you would be set for the rest of your life.   Maybe sooner.
That's the plan, Stan. Once debt is dead, I 'll put away 5k/mo in a vanguard account. The rest will be for some non mustacian activities. The 401k is maxed and I still hit the 18k with the hce limitation (absolute horsecrap). We have a deferred comp program, but I don't get the extra goodies in it if I retire from ft work pre 55 (17 years from now). I could bail early, but I'd be walking out on a 6 figure check just waiting for me. Tough call.