Image by alancleaver_2000 via Flickr
Since my big goal for this year financially is to pay out all my consumer debts I needed to set some specific milestones to help me measure my performance through the year. This is not too hard as I have only three debts to consider:
- A personal loan worth $13,594.67 as at 1 January 2012;
- The new MacBook Air, $1,849.00 as at 1January 2012; and
- A holiday to Tasmania in early March which I need about $2000 for.
OK, I know that last one is not a consumer credit debt but it is a debt none the less: I am taking my recently widowed mother on the holiday Dad never took her on. There really isn’t any way out of this and we have paid for the airfares already so I am thinking of it as a debt I owe Dad. I am going to use a debt snowball on the smallest debt first once I have this holiday out of the way.
For the next four of my fortnightly pays I will pay:
- $403 toward the personal loan (the minimum payment)
- $150 toward the MacBook Air (the minimum to pay it out in the interest free period)
- $500 toward the holiday.
This will see me take the holiday with $2000 and meet my other minimum obligations. The minimum monthly payment on the MacBook Air is only $40 but if I only pay that much I will not pay the loan out within the 6 month interest free period and then I will have to pay almost 19% interest on the balance. Not such a bargain if that happens.
Once the holiday is over I will pay $650 per fortnight on the MacBook until it is paid out on 21 March and still making the minimum loan repayments of $403. Then I will have only one debbt and I can pay $1053 on the loan each fortnight until it is paid out on 5 September.
This plan sees me paying $1053 each fortnight on my debts and despite my high salary that is only going to be possible if I am incredibly diligent about budgeting and planning for my other expenses. This is not a description that has ever been applied to me before so I am now on a steep learning curve about budgets, savings accounts and expense tracking. Guess I’ll be writing up something about those in the next few days too!
