Prime Time Money

As promised, here are a few of our current goals under the category of “debt reduction.” I guess I find it easier to categorize my goals for posting purposes. Last week I listed our current “savings” goals. These “debt reduction” goals will basically be a listing of the debts we have and the order in which we want to pay them off, with the ultimate goal of being bad debt* free!

Debt Reduction Goals

• Aggressively pay off any auto loan with interest higher than 5%. My wife and I both need a vehicle here in Texas. However, I don’t feel like we both should have a high interest loan on a vehicle. This is the last of our bad debt*. So, our first debt reduction goal is to pay off any auto loans that have high interest rates, or get into a new purchase with a low or zero interest rate.

• Pay off any monthly credit card balances. Although we left college with a couple of balances, this is one area that we are lucky to be in control of. We still use credit cards, for the points and flexibility, but we’re blessed to be able to pay them off every month to avoid interest charges.  COMPLETE

• Pay off 0% credit card balances on time. I love the 0% credit card. This is the ultimate in leverage. It’s a dangerous game for the undisciplined though. We always aim to pay these off a month before they actually expire.  COMPLETE

• Pay off any student loan balances using the minimum payments. We enjoy the tax benefits and low interest charges on these loans, so there’s no reason to hurry these along.  COMPLETE

* I define “bad debt” as any debt, other than a house mortgage or education loan, that has an interest rate above 5%, in which you are incurring interest charges (cannot pay off in a month).

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I’ve updated. Go here to see the latest update to these goals.