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October 24, 2011


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It looks like you have a pretty solid plan. The one area that stands out to me is the food/personal care/eating out. That's $520/month for two people. Is there room to cut a little there?

Congratulations on getting married and not incurring any debts from it! I have to say you are financially conscious and doing a good thing for yourselves in your future.

I would talk to your parents about possibly paying them back in a few more months. Emergency fund is only to be used in an emergency. You are doing injustice to that by using it for loan payback. If you feel conscious about delaying payback, then promise to pay them back with interest.

What are the interest on your student loans like? This will help give you more precise advice.


10% to church seems like a given your debt

I stole your Ramsey quote for my Facebook page!! :-) That is one of my favorites as well. Good plan -- definitely help your wife land her job first (think of that as your second job). Help her with her resume and online presence. There are lots of public AND private options out there (my wife ended up teaching privately when the opportunity presented itself during a period of intense career focus). Once that is taken care of you can move onto starting a side business and continuing to chip away at the debt. Live like no one else my friend (so that later you can LIVE LIKE NO ONE ELSE!!!!). Also I love that you are still tithing while paying off the debt; very diligent faithfulness that will surely bless you in many surprising ways. Keep up the good work!

I just stepped into baby step 6 and I can tell you sticking with the plan is totally worth it. I look forward to hearing your debt free call one day my friend.

I think you should take that "tithe" and put it into a retirement fund for you and your wife until your loans are paid off.

After that you can give whatever you please (& please also keep up with the retirement contributions!), but until then you actually don't have the income to give that much because your loans' interest rates are devouring it & your future.

God doesn't want you to be destitute when you are old, you know. There's a time to give to the church and there's a time to put your own financial house in order.

@FMF - You should follow up with AP in six months! I'd be very interested to see how he has progressed, if things have changed in his budget, etc.

@AP Sounds like you have a good plan and have started execution of it. I hope you get to do a follow up, knowing that you'll be reporting back in six months might be a great motivator to stick to the budget.

It seems you have a plan and have already make some good progress toward it. If you followed your current plan you should do fine, here are some ideas to consider:

Could you refinance the car loan? The 9.44% is approaching credit card level- I would expect that a credit union would offer half that. A credit union membership is usually pretty useful anyway- join a local one and see if they can help with that interest rate.

>I would like to purchase a house in 6-7 years.

That time frame makes a lot of sense from the point of when your debt/savings, and I'm sure you don't want to take on any more debt at this point...

However, right now is probably one of the best times to buy a house in decades- interest rates are historically low and prices are depressed because of foreclosures.

Will it be a great buyers market in a year or two, most likely. Will it still be in 6-7 years? Maybe, but the current market won't last forever, so it may make sense to buy earlier, assuming you are going to stay in the area.

If I was in your shoes I would investigate the housing market in the area. You may find you can get a great deals that purchasing today really makes sense.

Just try to stick to a neighborhood where where you make the same or more than your neighbors- since
as Thomas J. Stanley Notes in The Millionaire Next Door:

“Living in a status neighbourhood is not only poor value, but you will feel the need to keep buying status objects to keep up with your neighbours,”

>Building retirement savings is something that I know needs to happen ASAP, but >unfortunately is not a viable option right now.

Getting ride of those 12.65% and 9.44% loans are very good investments. Likely better than you would get in your retirement account, and it helps your net worth just as much to pay off a debt as to make an investment.

However, don't put if off for too long either- time really is money when it comes to investing.

Rick Francis

I assume that you have summers off because you're an educator; take a second job to pay off debt; build your emergency fund; put away 15% into your retirement funds. Reduce you tithe. As your salary increases and you debt decreases, you can add back. BTW, once your cars are paid for, put that payment into a savings account toward the next car(s). Next to purchasing a home, a car is the next most expensive item in our budgets. You're off to a good start--all the best to you and your wife.

I don't understand tithing at this point in time given the amount of debt. God must have a long term investing horizon so why not give later in life when you are out of debt. That money is needed by you now. I accept that I probably don't understand tithing but maybe someone can explain why one would tithe when deep in debt.

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