So Much To Do- Goals

As I stated in my first post, my major goal is to pay off our over $230K in student loan debt. However, the reality is that this is the major goal in a sea of other objectives. Now that the car loan which had been bugging me is paid off, I’d love nothing more than to throw every single possible cent at the student loan monster. Because I really, REALLY hate it. But more practical considerations have gotten in my way.

If you know anything about the world of personal finance, you know Dave Ramsey, and he advocates for paying off all non-mortgage debt before saving a sizeable (3-6 month) emergency fund or saving for retirement. After much consideration, I decided that this plan wouldn’t work for us, for a few reasons. For one, we’re too old to put off saving for retirement, and we’d miss out on the tax advantages. Two, both of us work in the same organization, and if something were to ever go wrong there, we could both be out of a job, making a good-sized emergency fund (6 months) sound like a very prudent idea. Also, our student loans are so massive, they are clearly mortgage-sized, so I felt justified in changing up the process a bit.

So, we funded those retirement accounts, and have the maximum allowed taken out of our paychecks (split over 26 paychecks per year). We also have 42% of our 6-month emergency fund set aside in savings. The goal was to keep plugging away at building that fund.

But… I have been getting very antsy. Yes, I want that EF nice and full, but those student loans are just sitting there, mocking me. Isn’t an almost 3-month fund enough? Can’t I go fight the loan monster now? I’ve been struggling with this decision for a while, and decided that I can split the difference and do both. No, it won’t be as satisfying as throwing every spare dime at the loans, but I’ll at least feel better doing something about those jeering *&%holes.

I’m also tracking (with the help of the wonderful site Mint.com) our net worth. When I began this process in August of last year, our net worth was approximately -$57,000 dollars (assets= value of home, cash, retirement accounts versus debts= mortgage, student loans, car loans). At this moment in time, it is -$12,811. Although I’d like to say we managed to somehow save $44,000 or so, the truth is I found an old retirement account or two to add to the numbers somewhere along the way. Still, not a bad change! Given how deep in the red I’ve been, I’ll be totally thrilled at some point (soon?) when I’m completely worthless (net worth= $0!).

So, my current goals remain as follows:

• Save 40% of income (this is definitely aspirational, I’ve rarely managed so far!)
• Contribute the max to retirement funds
• Allocate other savings 50/50, EF/student loans
• Reach 0 net worth/build wealth

 

Now, in tackling those student loans, it is much too disheartening to attempt to vanquish all $234,434 at once. Since our loans are spread out over a few loans, I’m approaching them individually. I’m starting with the highest interest one first: $21,322 at 5% interest (all other loans are at 3.8% interest). That number seems a heck of a lot more doable than $230K+.

So, there it is, the grand plan. Onward!