On the countdown to debt-free except mortgage!

[mommy4ever]

Ok. so we won't have really paid it all off. We're refinancing and putting it into the mortgage. We are playing it safe with the economy. We'll have an extra $1300 a month we're not paying out. YEAH!

THAT will be our savings contribution to build our EF. Once THAT hits our EF goal, we'll be rolling extra into the mortgage. With that mortgage we'll be able to live comfortable on 1 income, and should be able to really bank most of the other!

So now I'm praying it all goes through as needed. And we'll have more money in the savings account! It's been so lean for so long. with no breathing room.

Ok, I'm off to rework a budget! And I'm excited to do it!

[homesteadmamma]

Just be very careful now because statistics prove that when most people consolidate loans, they are back in debt in no time. It's so very easy to do.

[Greebo]

Just be very careful now because statistics prove that when most people consolidate loans, they are back in debt in no time. It's so very easy to do.

If you're going to do this, and I understand, it can make a HUGE difference in your day-to-day budget, please, PLEASE, destroy all options you currently have to get back into debt. NO more credit cards. NO more 90 days same as. NO more living beyond your means. EVER.

[mommy4ever]

I know it Homesteadmama! My SIL and BIL do it every 18 months!!!

I am closing things down, or finding out how to close them down, so once payments go through, most are closed, a cc each will have a low limit(max of $1500). That's it.

I have worked the budget nicely now. I'll show dh my ideas and then he can add his own and we'll tweak it.

I have set up a spending account for all our irregular payments. Those are the ones that set us back. I have it broken down. I have a pet account too, in case we need to have an emergency for the critters. Includes food, toys, treats, checkups, immunizations and licensing.

I'm setting up the budget for an EF contribution. We're looking at $1500 a month to that until we're funded where we want it to be. We'll be then transfer that $1500 a month to prepay mortgage and max out the contribution every year.

I have a very clean slate to work with, and am excited to do so. I have everything I can think of in it. From a household account incase something goes - covers our deductible, some repairs, water take replacement type budget. I have a ceiling on that, so onc eit's funded if we don't use it I don't have to.

I have bus passes, groceries, utilities, insurances, gift, clothing kids and adults, campsite fees, sport fees, school fees, school fieldtips, savings, bank fees, ortho fees(future, none currently in treatment).

I'm trying to have as detailed accounting of where the money has to go.

So it ends up that $550/mo needs to be set aside for irregular payments, from clothing, gifts, pet etc. so if we get a flat, the cash is available, no credit needed.

Our ratio will be housing - 17.5%
Savings 33% - technically more due to having spending account because we aren't necessarily spending it every month.
transportation 12% (includes insurance, gas, bus passes, registration. we have no car payment, never have had one)
other is 37%. (groceries, spending money)
debt 0% (mortgage debt is housing, which includes, insurance taxes and heating)

[frugalfriend]

I agree with the above posts. It does sound like a good plan if you can keep out of debt going forward. But, I have to wonder wouldn't you be paying more on your debt in the long run rolling it into the mortgage? (If you have to pay for it the entire length of your mortgage vs. just paying it off separately much sooner). Just something to consider.

[mommy4ever]

If you're going to do this, and I understand, it can make a HUGE difference in your day-to-day budget, please, PLEASE, destroy all options you currently have to get back into debt. NO more credit cards. NO more 90 days same as. NO more living beyond your means. EVER.

Greebo, I promise! We've learned the hard way, but we did LEARN.

I have my dh 100% on board with this, we're working together, rather than just one of us. This is a first! It's always been one of the other of us doing the finances. It doesn't work so good.

We're doing some changes on this. We'll have some joint accounts to simplify so that either of us can contribute to the savings and mortgage prepayment. I have a budget binder started that we'll both work with.

The plan is still be completely debt free in less then 10 years, should the layoffs miss us. But we're putting our ducks in a row so that we can afford to live if he does get laid off. We'd be fine on my little income. We'd have to do a few cutbacks, but we'd be perfectly fine. So now, we are more than fine once these changes occur.

I know it's not the ideal plan. But the stress has been taking it's toll on me. This will relieve all of that. We'll just work on that prepayment thing as much as we can!

[mommy4ever]

I agree with the above posts. It does sound like a good plan if you can keep out of debt going forward. But, I have to wonder wouldn't you be paying more on your debt in the long run rolling it into the mortgage? (If you have to pay for it the entire length of your mortgage vs. just paying it off separately much sooner). Just something to consider.

Technically that is correct. However, we are planning to do as much prepayment as we can on the mortgage. So it really won't be much more if any more if things go as we hope.

[HomeschoolMom]

Congrats to you!! I think the others have given great advice.

And your 'peace of mind' is definitely worth it!

[mommy4ever]

I can't wait! To think that in about 14 days, that monkey is off my back and we can work on saving for the EF and Prepayment!!!

The peace of mind of knowing that if dh is laid off we're fine.

And knowing that if there is no layoff, that we're debt free 100% in 2014! THAT is exciting!!

[homesteadmamma]

a cc each will have a low limit(max of $1500). That's it.

This concerns me. You say it's a low limit (it really isn't). $1500.00 can be eaten up in no time. I know, I've been there. It actually should have $0 limit because you said YOU WOULDN"T DO THIS AGAIN. Also having it puts a whole lot of temptation on you. Again, I've been there.

debt 0% (mortgage debt is housing, which includes, insurance taxes and heating)

I don't think you can look at it this way. Mortgage is still debt. When we start to look at it not being debt, it's very easy to once again get into more debt. We begin to think we don't have any, kwim. Debt it debt, whether it's a mortgage payment or a cc debt.


Please don't take this wrong. I hate debt with a passion and I so want you to be making the right decision. I hope from my experience it can help you.

[mommy4ever]

I wouldn't worry about the $1500. As those are currently sitting at $0 balance. We do have to travel and do require a credit card to reserve rooms. No option there, or we can't reserve a room.

In the last few years, we have paid things off, and they have stayed that way. We are just changing it.

I do consider the mortgage a debt, but I don't lump it with the consumer debt as a rule. I keep it separate. Of course it is a debt.

We will not be here again. With any luck, we are mortgage free within 7 years.

[Greebo]

Get a 7 year term mortgage then.

Force yourself to be debt free.

[mommy4ever]

7-year term jumps 2.5%! So not a great idea, it would really slow it all down.

I used a calculator, we should have money in the bank for the final amount so we may not have a mortgage after the first term.

[frugalfriend]

We do have to travel and do require a credit card to reserve rooms. No option there, or we can't reserve a room.

I have reserved rooms with a debit card, no problem. That gives you another option.

[Greebo]

7-year term jumps 2.5%! So not a great idea, it would really slow it all down.

I used a calculator, we should have money in the bank for the final amount so we may not have a mortgage after the first term.

Weird - usually shorter = cheaper.