Debt Free in 2010?
November 25, 2009 31 Comments
I’ve been planning around with the CNN debt calculator, and it turns out that if I were to raise my monthly contributions to my debt by $200/month I’d be able to have no credit card debt by January 2011 (December 31st, 2010 to be exact).
The idea of being debt free in a year sounds incredible. Certainly it would be a great way to start 2011 with no debt. Now, I don’t know if I’d be able to put an extra $200 towards my debt every month. But here is what I think I’ll be able to pull off in the next 13 months:
December 2009: $1,060 (normal $1000 payment + $2/day towards debt)
January 2010-April 2010: $1,512 (normal $1000 payment + $2/day + $452 from extra class I’ll be teaching)
May 2010-August 2010: $500 (won’t be teaching classes most likely, so will have to make a reduced summer budget to account for $500 less money/month)
September 2010-December 2010: $1060 (assuming I’ll be teaching 1 class, hard to predict this far in advance)
Using the pay scheme above here is how much I’ll have remaining at each point:
December 2009: $12,978
April 2010: $7,790
August 2010: $6,400
December 2010: $2,511
If however I was able to get myself a class in EITHER in the summer or a second class next fall, I will be able to pay off my credit card no problem in 2010. OR if I was able to bump up my contributions each month by $140 (+the $2/day) – I’ll get the card paid off by the beginning of 2011. Absolutely incredible.
So, if I don’t want to count on the “chance” of getting a class in the summer or an extra class in the fall, what can I do to get the extra $140/month?
Well, I could cut my contributions to my emergency fund. Or at least lower it. If I were to reduce my contributions to my E-fund to $25/month rather than $100, I could put an extra $75 on my credit card. And if the E-fund dips below $1000, I could go back up to $100/month.
If I were to just add that extra $75/month to the payment plan I have listed above I could end December 2010 with a balance of only $533 on my credit card. I have to figure out if the debt repayment is better than the E-fund.
It is pretty exciting to think that I could be debt free in 2010. I’ll need to spend some time thinking about what is better: no debt or a $2400 E-fund at the end of 2010.