Outstanding Debt as of November 2007

I finally sat down and caught up on all my paperwork, including two quarters’ worth of accounting. I also took the opportunity to update my debt spreadsheet since I hadn’t had time to do it last month.

Here is a snapshot of my latest numbers (they are currently sorted in order of how they should be paid off, based on interest rate and balance):

Debt Snapshot November 2007

The numbers don’t look good, but I didn’t expect them to. We incurred a number of expenses when we sold our house and moved, including a plumbing repair of nearly $600. And when we began renting, we had to put down the first month’s rent plus a deposit, which was like paying a double mortgage payment. These two extra expenses account almost 100% for the increase in our debt over the last month.

The good news is, we received over $10,000 from the sale of our home. We are currently using that money as a cushion, although I may use it to pay off a couple lines of credit this month.

If I leave the money in a savings account, it’s basically doing nothing but giving me warm fuzzy feelings. But if I use that same money to pay down debt, then it’s effectively saving me the 14.91% average interest I’m paying on my debt. Based on the numbers, it seems I should use the money to reduce our debt.

This should be the last time I post an increase in debt, assuming the birth of our third child is complication free (my wife was due yesterday). I intend to start paying off debt again starting this month. I had hoped this process would begin more quickly, but just as a massive ship turns slowly, it usually takes a few weeks to stop taking on debt and turn things around.

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4 thoughts on “Outstanding Debt as of November 2007”

  1. You may be right about focusing on debt reduction versus savings.

    I always kept on saving 10% and paying off 10%. But maybe it would be better to just put 20% into debt reduction.

    I was doing the savings thing to help build a more a prosperity mindset — versus merely a debt-reduction mindset.

    But when you’re in debt your net worth is often in the negative, so getting it out of the negative is the first step.

    All the best regarding the approaching birthday!


  2. I know where you’re coming from, John. I, too, have questioned the value of focusing exclusively on debt elimination. As some people say, it causes you to focus on lack, which can work against a person’s ability to earn wealth.

    If we were only to examine the numbers, clearly it is better to eliminate debt before saving. That is because you will always pay more in interest than the interest you will earn on money saved.

    And the reason for the low interest earned on savings is because it’s being lent back out at higher interest rates. The bank collects 12% interest and pays you 0.75%. What a great deal!

    Thanks for the good wishes. We just got back from a doctor visit, and it looks like we’re going back tonight. The doctor wants to induce since Steph is late…

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