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!

2 comments:

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!