Writing our 2012 financial goals was surprisingly easy for my husband and I this year. We are the most “on the same page” as we’ve ever been, both of us with our heads down running as fast as we can towards being debt-free. As I showed you a few days ago, our 2011 financial goals mostly failed, but only because we changed halfway through the year from being reactive to proactive. This year is all about power. WE have the power to pay off our debt. WE have the power to increase how much we pay off by living even more frugally and by me earning extra money wherever I can. WE have power over our money, not the other way around (as we’ve lived for the past 18 years).
I am so excited about 2012.
Last night, we reviewed all of our debts and wrote out these financial goals. This Friday, we have another date planned to go through our monthly budget with all the changes (electric & water have gone up, his transportation subsidy was drastically reduced, some of our medical costs have increased, etc.). We’ll budget our monthly income and put a name on every penny, so that everything else goes towards the debt. Here’s the plan:
1) Pay off our second mortgage by February 20th.
This is the momentum that pushed the whole debt-free train forward. Once this is paid off, we will no longer be upside-down on our house, and we can refinance (see below). This is where we’ve pushed all our extra money in the last four months of 2011, and we are so close to paying it off.
2) Refinance our mortgage by the end of March.
Our current mortgage is at 7.375%, which is horrendous, but we have not been able to re-fi. With #1 complete, we finally can! With current rates at 3-4%, we’ll see a significant savings, plus we plan to re-fi to a 15-year fixed loan. This will make our monthly mortgage payment a few hundred dollars more than we’re paying now, which we can easily afford once #1 is done.
3) Continue the Debt Payoff towards our three remaining debts–HVAC, student loans, and van–and pay off by the end of December.
We’ve prioritized these three debts based on their interest rate (not based on the amount, as suggested by Dave Ramsey). The only reason there’s any van loan left to pay off is because it’s been sitting there at 0% and not due until mid-2013, so we’ve just ignored it. We just took on the HVAC loan a few weeks ago, and it’s also at 0%, though temporarily. We want that paid off before it shoots up to 24%, and the remaining student loan is at 2.25%. We can do this!
That’s it–three simple (but not easy) goals. We actually know what we’re doing for 2013 already because once all the debt is gone we’ll go back to the 7 Baby Steps. It feels so good to have a plan, and it feels even better to be working as a team. Even our kids are on board; they know there’s no big vacation this year, and they understand that we’ll all be rewarded in the future with discretionary income once again. Here’s to a successful 2012!
Image from .oskar at Flickr
I love that feeling when you know your goals are within reach – and I love that you’ve gotten the kids on board, that’s awesome. Good luck, Gina! I look forward to reading about your successes throughout the year
Congrats Gina! It sounds like 2012 will be a great year for you, and I’m so excited that you are reaching your financial goals! Thanks for sharing your frugal journey with us all.
Congratulations! It’s great to be debt free… we’re currently working on 3 months of our emergency fund. Quick question, when you refinance, will you be required to put money down? We haven’t been able to refinance because we don’t have 20% down. Just wondering how you’ll do this. Thanks!
I’m not an expert on this, but I think that the amount of money you pay to refinance just depends on the bank you’re doing it with. We refinanced last year with the same mortgage company that we originally had, and we only owed “fees”, which came to being only $900 more than our original monthly mortgage payments. And, with any new mortgage, you don’t owe anything the first month, so I just considered the cost of our refinance to be $900.
Meredith & Noe–I haven’t actually done any research on the re-fi yet, but I was under the naive impression that there would just be fees that would get rolled into the loan. With such a huge change in interest rate, it’s worth whatever the fees will be. We’re also looking for a 15yr fixed with a plan to pay more (after the rest of the Baby Steps are done) and pay it off in 8 or so.
ThsOne of my many goals this year is to find a budgeting system that works for us, and to stick with it. My husband and I have always been “frugal-minded”. We have always looked for deals and take the least expensive choice in most cases, but we never have put limits on our spending before. In our case, being frugal-minded was just not good enough anymore. My husband and have had goals that we were not doing our best to work towards, like saving for a kitchen remodel, paying off our student loans as quickly as possible, and last saving for college for our 2 year-old daughter. This is something I want to change this year by using a budget and commiting ourselves to it. If you’ve ever heard of the Economides family, also known as America’s Cheapest Family, I intend on using their method of budgeting from their book. I am confident that their way of managing money will work for us. Keep your fingers crossed for us!!!
You can do it! Keep your focus and don’t lose hope!
It’ll definitely be worth it to refinance…good call! Definitely shop around your lenders. My parents recently refinanced and their closing costs were only like $500. CRAZY low.
Great goals! We also plan to be debt free except for the mortgage in 2012. We are thisclose so it’s getting exciting!