The Plan

Our new plan addresses a few issues with our finances. Mainly, we are not bringing in as much as anticipated, and therefore cannot make the debt payments as high as hoped. And then we are spending more than we bring in, last month on items such as travel, including business travel. The solution is to reduce our overall budget, reduce our debt snowball payment, and increase the savings account, and include savings for travel and unexpected expenses.

Another large factor is that our family debt (see sidebar) MUST be paid by July 2008.

The plan takes advantage of 2 low interest credit card offers we have received in the past month. Our financial advisor had suggested we take advantage of these offers to save ourselves money on some of our loan interest which is as high as 10.25%.

First card- 4.9% on balance transfer for 5 billing periods after the balance is transferred.
Second card- 1.9% on balance transfer for 10 months.

We owe my parents $8,230. I have already written them a 4.9% balance transfer cheque for $4,000. This originally was a no interest loan, but it is worth some of the low interest for peace of mind that we will repay this debt on time. Our original agreement was that we would find some way to come up with half the money (which we have) whether we borrow it or not. At the end of the 5 months we will transfer again or accept the 9.4% interest rate (I am going to try to transfer!!!).

With the other card I am going to transfer off $5,000 from my student line of credit for 10 months, reducing my interest payments by almost 9% (savings of about $345). At the end of the 10 months I will transfer back to the LOC OR see if I can extend the low interest offer etc.

Our payments will be as follows:
Credit Cards- $429
Family Loan- $500
Student loans- $1055
Car Loan- $381
Total loan payments: $1984, about $700 less than currently

Sticking to the plan = Family Loan paid off in May 2008.
Sticking to the plan = $20,000 debt paid off in one year.

Savings- currently this is $100 to our RRSP and $50 to savings. We are bumping the savings up to $100 for EF, and travel for a total of $200.

We have made other budgetary changes, and one thing I need to make sure I stick to is saving for car maintenance, water taxes, and gifts (Christmas is coming). These items are in the budget, I just have been less than disciplined at transferring the money into our short term savings account.

Goals for October-
1. Add $75 back to the EF
2. Eat out less when at home. Stick to $30 a week. Try and eat out less than $30 a week.
3. Meal plan! It saves us money.
4. Close the CIBC bank accounts to save money.

3 Comments:

  1. FourPillars said...
    Sometimes reality just sucks but adapting to it means that you're going in the right direction.

    You guys are young enough - you'll get out of this and look back one day and laugh... :)

    Looking at your sidebar - how long did it take you to get from $96k debt to $84k debt?

    Mike
    nancy (aka money coach) said...
    lol - the Meal Plan! Maybe we should do an online "we're all doing this together" plan? I know that more than anything else, this eases my budget and I just feel better, and more in control ... but planning and eating meals at home seems to be the first thing that goes, when life gets hectic.

    Cheers to you as you proceed with this!
    Frog of Finance said...
    It is a fact of life that we need to adapt. Our situation changes all the time, so if we don't adapt, we get in trouble.

    Good work!

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