Tuesday, February 04, 2014

2014 Debt Reduction Plan...

Here is my debt reduction plan for 2014. This is the best case scenario. I will be happy with $20k-$25k in debt reduction but I am going for the gusto so I can be free sooner rather than later.

The promotional rate on my BofA credit card balance transfer was set to expire this month so I took advantage of two-0% transfer offers to my Chase and Capital One Credit Cards. This year, Chase is limiting balance transfers to $15,000 every 30-days. My current credit card balance is $17,100. So, I transferred $15,000 to Chase at 0% until 4/2015 with a 2% balance transfer fee so the new balance on my Chase card will be $15,300. I transferred the remaining $2,100 to my Capital One Miles card at 0% for 12 months with a 2% balance transfer fee so the new balance is $2,142. In April after quarter end, I am going to liquidate my ESPP stock and pay off the balance on my Capital One card and continue to pay $200/month towards my Chase card reducing the balance to $13,300 by year end. That will be my lowest credit card balance since 2009.

I will continue to liquidate stock every six months. With the bi-weekly pay schedule, twice a year I receive two extra paychecks. This year that will be in July and December. My annual bonus which was approx. $13,000 after taxes this year will also payout in December. To continue to make progress throughout the year, I will reduce Private Loan #1 by $2,400 in July, by $2,400 in October with stock sales and $2,400 again in December. Then, I will pay off the remaining balance on Private Loan #1, pay off Private Loan #2 and any remaining funds will go to reduce Private Loan #3.

So along with regular monthly payments, that will bring my debt reduction total to well over $20,000 for 2014 and then the following year, I will repeat with an additional $12,000 payout in December when my stock options vest. So, the goal is a minimum of $50,000 over the next two years and I know I can do it because I know it's possible.

In the meantime, I have $10,000 in reserves for car repairs, emergencies, etc. I will not be replacing The Green Machine (My Nissan Altima) anytime soon. Focus Chitown!


Charlena Leonard said...

For others, managing debt is overwhelming. But you clearly do not have that problem, what with this great plan to reduce your debt in a very organized manner. If this plan succeeds, there’s no doubt that you’ll be free from your debt within a year or so. Keep it up!

Charlena Leonard @ Weidner Law

Chitown said...

Hi Charlena! Thank you for reading and for posting a comment. I am definitely working on paying all of this debt off sooner rather than later. I hope you continue to read. Have a great day!