I was playing around on Dave Ramsey’s website (that I pay $89.95/year for) and started inputting my debt numbers into his Debt Snowball tool. It allows you to put the amount of debt, interest rate, minimum payment and payment date for every outstanding loan/credit card debt. Then, with taking into account interest, it tells you when you will pay each debt off. Remember, with the debt snowball method, once you pay something off, you take that payment and put it towards the next lowest amount. Once a specific loan is paid off, it is so easy to take the payment amount and spend it on other stuff or feel like now you have more money again to afford something else and make monthly payments. If you have to charge or take out a loan on something, does that really mean you can afford it? I used to think so. Just because you can afford the monthly payment, does NOT mean you can afford the product. That is just my opinion though which obviously has changed since we started this journey. Dave Ramsey preaches getting out of debt so eventually you can just pay cash for everything. It still seems pretty unreasonable to be able to pay $30,000 for a car in cash, especially being just an average American. I sure am hoping he is right though!
Back to the Debt Snowball tool. With just making minimum payments then taking each minimum payment and putting it towards the next debt, we are expected to be out of debt in 2025. 10 years is honestly not bad at all! Especially when some loans are expected to take until 2032 or 2060! No, thanks! Fortunately, we are going to be able to afford more than the minimum payments which is why our goal is to be debt free in 3.5 years.
Long-Long-Long Term Goal
My reason for wanting to be debt free so soon is because I want to be able to contribute to our retirement to the maximum extent possible. I also want to build our own home and I want to have a very, very large chunk of cash saved for that. As of now, my husband and I both plan on retiring from the military. I have 18 years left and he has 15. That is when I want to build our home. That gives us plenty of time to save for our Dream Home. As Ramsey says, “Live like no one else now, so you can live like no one else later.” I. Love. That. Motto. I never used to want to do that, I believed we could live comfortably and have fun while paying our debt. Well, we could but then we would be paying forever and not saving to the maximum extent possible.
So, in 2013 we won a $40,000 wedding package. We had our dream wedding in 2014 but weren’t able to take our honeymoon yet, well we took one because we got one for gift as well (spoiled, I know) but part of that package was a $3,000 voucher for a honeymoon through a travel agency. We also have about $2600 saved as well. I thought about putting that $2600 towards debt and just using the $3,000 voucher for the honeymoon. However, I decided since we won’t be doing much else the next couple years we deserve another great honeymoon! I would like to get our savings to $3,000+ for this honeymoon but I am looking for input on great locations! We don’t want to do the beach honeymoon because we already did that for our other one. Any input would be greatly appreciated!