This January 2012 has brought home organizing and financial goals/priority-setting to my attention.
In September 2009, I wrote a summary of how to Becoming Financially Independent and I used that when I first
started. I review this annually to make sure we are on track for our debt repayment and other financial goals. This year, I may consider setting a percentage of paying off a loan goal to further motivate us.
I was looking back and some posts and I saw that in November 2008 I had set out a 5-year budgeting plan for paying off student loans. We paid off the last one in May 2011. According to my calculations, that is only 2.5 years that it took to pay-off the loans ... half the original budgeted time - talk about motivating! I believe because I set out the plan and we used every extra cent to put toward the loans made it go faster. I also minimized payments on all but the one with the highest interest rate and then rolled over that payment plus the minimum payment to the next in line, and so on and so forth until they were all paid off.
Moving forward, I'm unsure whether we should designate an account with a specific savings plan (e.g. my husband will be needing a car within the next 6 months or perhaps sooner if it doesn't lasts that long) and, if so, how much to put in it per month, or maximizing our payments to pay the loan with the largest interest rate or somehow combine the two.
What would you do and why? How do you balance savings versus maximizing payments on a loan?
Labels: personal finance