Since the move in March we've been going through a lot of adjustments in our lives and specifically in our financial situation. There have been plenty of hurdles but I think we're finally back on solid footing. Here's the run down of how we've getting back on track and how we're moving forward:
1. Consolidated the high interest credit card debt we racked up during the move/ adjustment period and S' higher interest student loan into one loan from Lending Club. We were able to reduce the overall APR and, by going with a 5 year loan, reduce the monthly payment to this debt. This allows us to allocate more of our budget to higher priority savings and debt reduction.
2. Put my student loan in forbearance. This is our lowest interest rate debt at 2.5% but one of the largest minimum monthly payments, by putting it on hold we are able to put more each month to our higher priorities.
3. Lower medical bill payment. We're not paying any interest on the medical debt from the boys' birth and while it's super annoying to have this little $300 debt still hanging around, it's more important right now to focus efforts elsewhere. I've heard somewhere that as long as you send something in, the medical billing won't send you to collections. I'm hoping that's true because until the medical billing people tell me otherwise they are only getting a $25 payment each month!
4. Build up our emergency savings to $1000. The three previous steps freed up an extra $330 to pour elsewhere. By end of summer we should have our emergency fund re-established (barring any emergencies along the way!) and be ready to hit the debt hard.
5. Our first priority debt is the remaining $6,270 in credit card debt. This debt was refinanced through a balance transfer last year to a 0% APR that expires in June of 2015. Our goal is to have as much paid off before the interest rate goes back up to 8.99%. I'm projecting that we should at least be able to pay off 60% of the debt before the rate hikes. Once that rate expires we may look for another balance transfer offer or refinance it with the debt from step 1 above with a shorter repayment period/ lower interest rate or maybe we'll just keep paying it at the higher rate. We'll examine all options and pick the lowest cost option next year.
Feels good to have a plan in place again!