Because I always change my mind! I’ve mentioned before (many times, actually) that since paying off my personal loan, I’ve really struggled to find financial direction.
Pay off the rest of my debt or save? This has been the financial question racking my mind for almost a year now. I’ve gone back and forth many times, basically because I’ve never been comfortable with the conclusion I’ve come to. In fact, just a week ago I re-established my 2010 goals to reflect my decision to focus on saving. And now I’m back-pedaling.
So, before saying what I’m about to say, I want to tell you all: thank you. Thank you for listening to my constant waffling and not berating me for being so indecisive. My readers have kept me honest and accountable through all of my flip-flopping and I can’t thank you all enough for being so great.
Now, my big financial decision: I’m going to aggressively pay off my car and my Citi student loan.
Why the change? Well, in previous posts I alluded to the fact that some things in my life might be changing and I might need savings to accommodate those changes. Turns out, those changes won’t be happening this year. Also, I really struggled to get a summer school position this year, and my position is by no means guaranteed for next year. So basically, I feel like this is my moment. I have a ton of extra income coming in in the next 4 months, and this might be my last opportunity to really kick my debt’s ass.
Notice, however, I didn’t say that I’m planning to pay off all of my debt. Why not attack my federal student loan also? Two reasons:
1. The interest is tax-deductible, and the monthly payment is pretty low.
2. Some or all of it may be forgiven after my 5th year of teaching.
So I’m not really in a hurry to get that one paid off right away. After the end of my 5th year I’ll know for sure how much is getting forgiven by the federal government, then I can make plans to aggressively pay off the remaining balance. But for now, I’m letting it ride.
Here‘s the new plan:
1. Immediately amp my Freedom Fund up to $1000. Withdraw all contributions from my Roth and temporarily stop contributing to it.
1. Use all extra income and funds from my Roth to pay off my car. Based on my calculations, I think I can make this happen by Christmas.
2. Once the car is paid off, attack the Citi student loan. Based on my calculations, I think I can make this happen by the end of next school year.
4. At the beginning of next summer, begin contributing to my Roth again and establish a Freedom Fund that will cover 3 months of living expenses. Based on my calculations, I think I can have this finished by Christmas 2011.
5. Keep saving, and make plans to pay off the rest of my federal student loan when the amount that I can get forgiven has been established.
I know it’s not exactly the Dave Ramsey plan, but I think it will work for me. Thoughts?
