Well, several weeks ago I posted about my husband's great promotion and raise. Well, we just found out that he's getting a $22,000 bump in his base pay! This is sooo great! The major portion of his salary is still commission, but now we can count on an extra $1,000 in his monthly take home pay! (Now there is the chance that the commissions could plummet and we'll end up taking home less than before, but that is unlikely.)
So, I have already done a revised Debt Snowball where we throw $2,100 per month at the debts (instead of the current $1,100) and if we really can keep up with that kind of a snowball - we'll be debt free in March 2009!! (This is sooo much better than the original debt payoff date of August 2010!)
Obviously, I am happy about the possibility of us getting out of debt sooner rather than later. But there are two specific reasons that this is making me sooo happy!
The first is our car situation. In the near future, we are going to need to replace our minivan. It is very old and is starting to have problems. I am willing to drive it as long as possible (eventhough it has a big rust spot on the front of the hood of the car!), but chances are we will need to replace it sometime over the next 3 years. This has always been in the back of my mind, nagging at me, because if we took 3 years to pay off all of our debts, how could we possibly save up to buy another car? (This is a point my husband would point out to me every time I mentioned how well we have been doing paying off our debts!)
Now, if we can become debt free in 17 months, that should give us enough time to save up and pay cash for our next car. And now that we'll have $2,100 instead of $1,100 each month, we'll be able to save up enough that much faster!
The second reason that I am very happy is - at the beginning of the summer, I spent some time plotting out the probable dates of some future large expenses. (I didn't even put new cars into these equations.) I plotted out start of college for Daughter #1, Daughter #2, and Daughter #3, as well as possible wedding dates (age 28?) for each of my 3 Daughters. Then the possible retirement date for my husband (age 64?). Next to each expense, I put an estimate of the amount of money that would be needed.
I also put the date when we would possibly have the mortgage paid off, and added the monthly mortgage payment towards our available income. I assumed that our money was invested with a return of 8% (actually 12% adjusted for 4% inflation).
I tried and tried but couldn't get close to having the appropriate amounts by the appropriate dates. Even when I assumed that we started saving $1,500 per month immediately (which was quite a stretch given that we only had $1,100 and it was earmarked for debts for 3 more years, and the fact that this didn't take into consideration the need for car replacement, home repairs, or other sinking fund type expenses) - and even with these stretches we still came up a little short for each of the expenses.
I haven't redone all of the math, but I think we are a lot closer to being able to achieve our goals with $2,100 a month!
I really can't wait to tell my husband "I told you so" when we pay cash for our next car! :)