Six Figure Debt

This Christmas season has been much more enjoyable than last year.  A year ago we were without work and had no money left in our emergency fund, this year we BOTH have great jobs and we are quickly repaying debt and rebuilding our emergency fund.  I know it sounds very basic, but the emergency fund has become an obsession.  We are throwing every extra cent we earn into the emergency fund as we understand that this economy could see one or both of us unemployed in the blink of an eye. We won’t stop funding the fund until we have a solid six months of living expenses in our savings.

Now that Mrs Bad Spender and I are employed and in the process of debt reduction we have put together a budget to accomplish our goals.  Our goals are to be debt free in 12 months, start contributing to our children’s college funds again, save for a vacation and to begin rebuilding our wealth.  This budget is our first attempt to get our finances under control, we actually started budgeting last month but we needed a month to tweak it before we were ready to lock in our figures.So, this is our December budget and we have not strayed.  We even subtracted money from the “entertainment fund” because we really don’t go out that much anyway.  We used the money to purchase Christmas presents for the kids and added some to the Emergency fund.  The budget is a work in progress, we will continue to squeeze more and more money from it to repay debt, but we really need to get the Emergency fund fully funded.

It’s pretty obvious that we are going to take many years to get to the point where we are debt free.  We understand the road ahead and aren’t overly uptight about it. We see this journey as a series of steps toward a debt-free life.  My debt snowball estimates we will be debt free in 2021, yes,  that is 12 years if we don’t throw more money at the current debt.  Our plan in 2009 is to drop that debt free date to 2015, which means we will need to increase our debt snowball by $200 a month, which is totally within our reach if a few things break out way in the new year.