Debt Considerations

As I understand it, my weekend warrior set out to join the military in some form or fashion for several reasons, the main one being this noble desire to serve his country. I'm proud of him.

Another reason was so that when/if he went into a law practice for himself, he would have a steady flow of income, however small, to offset the unknown income of being self-employed. Once all was settled, instead of being self-employed he found himself with two jobs on one day: he was hired at a local law firm on the same day he was sworn in to the Alabama National Guard, on August 19, 2010.

We've been working (on and off, if I'm truly honest) on getting out of debt. In spring of 2008, during his last semester of law school, MWW and I attended Financial Peace Unviersity by Dave Ramsey at our church in Tuscaloosa, and ever since then we've been working the Baby Steps to pay off automobiles, credit cards, and students loans. (Since then, we've taken on a mortgage as well.) We've had a working cash flow plan (i.e. budget) and sinking funds to pay for predictable expenses. We're not out of debt, but we are experiencing more peace when would-be emergencies arise because they're not emergencies anymore.

We paid off the Subaru in the fall of 2008--six months early--and have been driving two paid-for cars ever since. This last October my student loans for undergrad and grad school were paid off. Now somehow, since he's been away at training, we've had more cash flow to put toward our "debt snowball." Last week, we paid off MWW's credit card, and this next week, after our tax refund is credited, my credit card will be paid off. All we have left are MWW's students loans from undergrad and law school and a mortgage.

The website, My Total Money Makeover, has a neat debt snowball tool (there are other free ones out there if you look, since this one is free for a limited time). So, I went in and plugged in our minimum payments on each of these debts, and if we pay only the minimum on each one, the loans will be paid off by June 2019. This last year, our mortgage payment went down, but I'm maintaining the orginal higher payment since it's in our budget, and if we keep on keeping on, using student loans payments after those are knocked out, our mortgage will be paid off in November 2026, which is 14 years early. The power of the snowball.

Of course, that's just based on minimum payments. But we'll be making more than minimum. The extra cash MWW gets from his unused per diem will be going toward our loans. The payments from our now paid-off credit cards will also be going toward the loans. I'm excited to see how much of a difference these payments make in our debt-free date (complete Baby Step 2), which is when we are debt-free except for the house.

In the meantime, we have an emergency fund of $1000 (from Baby Step 1) which we are going to increase 200% before we go on. With two children and a big old house and a considerable amount of time before our debt-free date, I would like to have a little bit more of an emergency fund, but not a fully-funded one (that's Baby Step 3).

This next part, paying off these thousands of dollars worth of loans, will probably get old fast, so I'm looking for ideas to celebrate our success when it happens. I'm also looking for ideas to keep the "gazelle intensity" going. We can do it!

I know that Dave Ramsey has FPU classes geared toward military on/near military bases throughout the country, and I highly recommend the class. Highly.