Cowgar Family Adventures

Sunday, December 28, 2008

Debt Snowball and Emergency Fund

As for the budget, I really want to follow Dave Ramsey’s baby steps for the Total Money Makeover. Baby step #1 is a $1000 emergency fund, and baby step #2 is debt snowball. Right now we have $152.12 in there (since the car broke and we spent $300 on springs and lower ball joints and a tire). I also have another $50 to put towards it right now from Christmas. I hate paying a little above minimums and that is it on the credit cards, but we would need to do that for another 2 months to get us to our $1000, depending on what my paychecks look like. I will post the table of our debt snowball, but I’m not sure if we will put that much to our first credit card in line, or if we will do the minimum and put the money towards our E-fund. I have to think about it and talk it over and crunch numbers, so we will see. FYI, we keep our Emergency Fund in a Capital One Money Market account. It gets better rates than a normal savings account through our local bank, but the money is still liquid enough that we can access it instantly if we need the funds. It has a debit card and a checkbook, and we can do online transfers that will take a few days to clear.

We have 5 credit cards in our debt snowball, and I have them listed in the order we hope to pay them off in (higher interest rates first). We are also going to start paying Luke’s dad $200/month starting in January for the land loan he gave us (4 ½ years ago)! We also have $50/month for home improvement, $50/month for medical savings, and hopefully $20/month for thrift (which will be a savings for this coming summer’s yard sales). Then we have our usual bills, mortgages and a car payment. I’d like to try and follow the budget as closely as possible for a month or two before I post every amount of expense we have, but I’m sure I will post the entire budget sometime in 2009, to show our progress and help inspire others. As it stands right now with the current figures, it seems as though it should take us around 2 years to pay off these 5 credit cards.

My plan for now is to post our debt snowball table at the beginning of the month to show our goal, and then at the end of the month, repost it with the actual totals to see if we met our goal…or hopefully exceeded it!

Credit Card Minimum Payment Projected Payment Actual Payment Balance as of 12/31/2008
Holly’s BoA $110.00 $300.00 $- $4,176.20
Luke’s BoA $80.00 $80.00 $- $4,798.05
Luke’s Chase $180.00 $180.00 $- $8,493.16
Luke’s WAMU $65.00 $65.00 $- $1,502.77
Luke’s CC $30.00 $30.00 $- $1,114.74
Total $465.00 $655.00 $- $20,084.92

Time Table Months Years
Minimum 43.19 3.60
Projected 30.66 2.56
Actual 0.00 0.00

Emergency Fund: $152.12/$1000

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