It’s that time again for us to reevaluate our budget. As I had mentioned in an earlier post, we have decided to work hard to become completely debt free. We are following the 7 Baby Steps to Financial Freedom and are in step 2 with a bit of step 4 & 5 mixed in.
I am going to admit that we did not do as well this month. But having said that, let me explain what will be happening next month that will start making a big difference.
We have been paying a set amount toward our debt every month such as our car payments, college loans, etc. At the end of the month I usually plunk down a chunk of money that I have socked away from other things. Now don’t get all excited, it’s not that big a chunk but it’s something and it does help. Well, the end of October came and I was all set to make some extra payments and bam…my life did a 180.
If you have been reading my site for a while then you may remember the rough couple of months my son has had. The football injury and most recently the car accident. I had started to pay some of his doctor bills that were out of our insurance network and I was doing fine with that. Each week we put a little money in a medical fund so I had some money put aside albeit not as much as I needed but it was at least something. Now, on top of the medical bills, we have just learned that the car is totaled. So, now, we need a new car.
The car we had was financed so we carried a nice chunk of a car loan. Thankfully our auto insurance and the gap insurance we had purchased covered the entire loan. Since we are on this debt payoff mission, we have decided to purchase a used car at a low price so we do not have to have that big car loan again. This, obviously, will reduce our debt considerably once the insurance pays off the loan. The money I have right now, that I would have used to plop down on some debt this month, is now being put to the side to pay for the new, used car as well as using some of the money from our emergency fund.
So, for this month I have only reduced my debt by another 1/2% for a total of 4 1/2% but I am on my way to reducing it by quite a bit in the next month or two so I’m really looking forward to that.
Now, the trick will be finding a car in our price range. Ah, things are never that easy.