A Two Year Project

So I need to make a 2-year plan to success. The task of coming up with this plan is intimidating to say the least. I love structure and certainties in my life, but there are so many “What-ifs” that my brain is spinning trying to see this from every angle. I might not yet know how this can be accomplished, but let’s first figure out exactly how much debt I need to reduce on a monthly basis.

What needs to happen?

Divide the total amount of debt by 24 months.

$88,712.59 / 24 = $3696.36/mo that I need to sock away towards this debt.

I can subtract $455 from 3696.36, because that’s how much I’m currently contributing towards the debt already. This leaves me $3241.36 a month that I need to create in my budget via increasing income and reducing expenses. Multiply this by 24, and I’ve got a $77,793 delta.

Cutting Costs

Rent: $684/mo

Unfortunately, this is already pretty cheap. Also, a roommate is not an option when you’re married. Even worse, we’re moving in a couple of months and this will actually go up to $708/mo.

>Potential Upside: $ -24/mo | -576 through May ’14

Student Loans: $667/mo

None of my loans are anywhere close to being paid off. It will be a while before I can add to my monthly snowball by paying off one of these loans. I’ll just ignore the future snowball benefits in my planning, and whenever they do come around they’ll cancel out the loan interest I’ve been ignoring in my calculations.

>Potential Upside: $0

Tithe: $587/mo

Given the largeness of the situation at hand, it is very tempting to temporarily redirect these funds. However, at this time I’m not yet willing to change my values. I’ll have to trust that God will work in our lives another way. If I wait to start the habit of giving until it’s convenient for me, it is likely to never happen.

>Potential Upside: $0

Groceries: $500/mo

I don’t think this is something we’ll be able to drastically change immediately. As we strive for efficiency, I think we can gradually reduce this. Starting next month we’ll try to keep it under $470.

>Potential Upside: $30/mo | $720 through May ’14

Fuel: $257/mo

This is the one I’m excited about. With the new apartment in July, our fuel costs will drop dramatically. Currently, Rachel and I both commute 15 miles one-way every day. That’s 150 miles of driving every 5 work days. According to the EPA website, Rachel’s ’05 Honda Civic costs $3.06 for every 25 miles driven. By not driving 150 miles a week she’s saving $18.36, with a monthly savings of $73.44. The same website estimates that my ’06 Scion xB costs $3.50 for every 25 miles. By biking to work I’ll save $21/wk and $84/mo.

>Potential Upside: $157/mo | $3,454 through May ’14

Car Insurance: $215/mo

Just renewed the policy, so it is what it is until August. Next time though, I’ll turn 25 and should expect around a 15% discount on my portion of the insurance. I’ll estimate $120 less every 6 months, starting in September.

>Potential Upside: $20/mo | $400 through May ’14

Misc: $200/mo

This amount is already a pretty small net for catching all those little unplanned and uncategorized expenditures, including clothes and shopping. I’ve experimented with different estimates every month, but the average always works out to around $200. I think I’ll leave this alone.

>Potential Upside: $0/mo

Auto Payment: 182/mo

This thing is getting close to being done! The goal is to have it paid off by June, and add the $182 to the monthly snowball starting in July.

>Potential Upside: $182/mo | $4004 through May ’14

Auto Repair: $150/mo

Well, with 600 cumulative miles not being driven every month I’m going to plan on chopping this expense in half starting in July.

>Potential Upside: $75/mo | $1650 through  May ’14

Dining Out: $90/mo

The money I spend taking Rachel out for a couple of times a month is worth it for the investment in our relationship. However, I should no longer  buy lunch at work or hit up fast food joints. I’ll budget for two $25 dinners a month.

>Potential Upside: $40/mo | $960 through May ’14

Electric: $74/mo

We’re already good about turning off electronics, lights, and A/C when they’re not in use. I don’t see this going any lower.

>Potential Upside: $0

Cell Phone: $64/mo

Rachel and I both remain on our respective families’ cell-phone plans. Next month, we’re going to each go for the $25/mo AT&T prepaid plan. We don’t use data and rarely use talk-time minutes, so the plan that offers unlimited texting and 250 minutes a month is going to suit us just fine. There will be an initial investment to get Rachel an AT&T compatible phone, but it’s all savings from there on out.

>Potential Upside: $9/mo | $216 through May ’14

Water: $58/mo

Same story here as with the electric bill. We don’t waste water, nor do we have a lawn to water. This isn’t going to change.

>Potential Upside: $0

Running Expenses: $50/mo

Running is Rachel’s primary hobby. It keeps her healthy and feeling great physically and mentally. It’s worth the $50 investment.

>Potential Upside: $0

Gym: $32/mo

Same reasoning as the previous item. Rachel loves working out in the pool and on their weight machines. This will stay the same for now.

>Potential Upside: $0

Internet: $31/mo

It’s already about as cheap as I could find anywhere. If anything this might go up a bit when we change apartments and sign a new contract with a different provider.

>Potential Upside: $0

Health Deductible: $300/mo

The reality of the mess I’m in has caused me to rethink this a little bit since the last post. We currently have $1718 in our “Health Care” savings account with ING. We also have an emergency ING account funded with $1000. Especially before the July fuel/auto savings kick in, we need some jump-start cash to meet the goal. I figure if we have to visit the ER funds could be pulled from both accounts to meet the $2,400 deductible. It’s time to redirect these funds.

>Potential Upside: $300/mo | $7200 through May ’14

King Size Mattress: $50/mo

For reasons explained in the last post, this is a goal that needs to be met. We currently have $470 saved, but I’ll watch the market and the local sales and see if we can make this purchase for $800 instead of the $1,000 we planned. That would free up $50/mo starting in  November.

>Potential Upside: $50/mo | $900 through May ’14

Bicycle: $200/mo

This is a short-term expense that will be purchased this summer. The cool thing is that it pays for itself with the auto/fuel savings in less than three months.

Potential Upside: $200/mo | $4,200 through May ’14

Total Potential Upside

So, by cutting some costs it looks like by May ’14 I can contribute $23,128 to the $77,793 delta. This leaves me with a $54,665 delta.

Increase Revenue

How the heck am I supposed to make $54,665 in 2 years on top of working a 50-60 hour a week teaching job? That’s $2,277 a month!

Well, Rachel and I do have some time to work during summer break, I do have a semi-functional used cell phone business, and in the best case scenario Rachel might get a higher paying job. My head aches from all the number crunching this morning, I’ll need to brainstorm some more cash generating ideas before next time.

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