Two weeks ago I took a look back at our savings goals we’d made earlier in the year. Today I’ll do the same for our 2007 debt reduction goals. Remember, these goals were made in early 2007 and are 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!
This post will hopefully give you a feel for our debt tolerance.
Aggressively pay off any auto loan with interest higher than 5%. (cue failed game show contest music) Wow, we haven’t made much progress here. We’ve only made the minimum payments on our auto loans this year. Why? Because we were saving most of our extra cash for our house down payment. Since we closed on the home in September I’d hoped to have made a dent in our auto loans by this point in the year. However, with the home we needed to purchase a few extra things and so our ability to repay these aggressively was limited.
Another aspect of this is that want to buy a new vehicle and finance it at or near 0%. Right now we both have older used vehicles with relatively small loan amounts, but the interest is high. If we buy a new vehicle, we’d end up with one huge debt at low interest and one small debt at high interest that we could focus on paying down aggressively. Anyone have a strong opinion against moving toward this position?
Pay off any monthly credit card balances.
Pay off 0% credit card balances on time.
Pay off any student loan balances using the minimum payments.
What do you think of this debt reduction strategy?