January Stats

Today is my birthday, and I announced on Facebook my intention to be debt free by the time I turn 40.  This post will be my starting point for that progress.

Interest Rate Remaining Base Payment Extra Payments
Student Loans 3.76% $23,830.96 $180.74 $0.00
Mortgage 3.50% $314,662.64 $2,259.03 $0.00
Total $338,493.60 $2,439.77 $0.00

Haven’t made any extra payments because we’ll need all the money we’ve got for moving (this coming weekend!) and for taxes coming up. Taxes should settle around the time we finish the major renovation, and finishing the renovation should free up some other money as well.

As an aside, you can see that the interest rates on our debt are pretty low.  The mortgage interest rate is fixed, but the student loan interest rate is variable, so it will rise as rates rise.  There are many people who would recommend investing any extra money rather than paying these debts off more quickly, as the expected returns of the market would outweigh the expected returns (= interest rates) of paying down these debts.

However, in terms of quality of life, having higher monthly expenditures* adds stress.  If I require $5,600 pcm to cover my spending, I need a fair bit of income.  If I drop my spending to $3,200 pcm**, it’s now easier to cover.  If I keep my high-paying job, I can save more; if I switch to part time or to a lower-paying job, I can still cover my spending.  If I lose my job, replacing enough of my income to cover expenditures isn’t as difficult.  This eases money stress (one of my current major stressors) and thus improves quality of life.

That being said, once we free up some money, I do intend to start putting some more into investments.  We’re currently only putting 6% (+6% match) into my 401K, and I want to put more of our little green employees to work.

 

* I use the word “expenditures” rather than “expenses” to indicate that I have control over what I’m spending.  An expense is something that has to be paid; a lot of what we spend, though, is pretty optional.

** This is a rough estimate of our monthly spending sans debt service.  Expect it to go down in the next few months as our weekly expenses go down and we empty our storage container / cancel our storage contract.

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