Goal: Get our finances back on track.
Yep, that’s the goal, but what does that really mean? The thing I talk about most frequently is the $109,000 in credit card debt that my wife and I are paying off through the help of a debt management plan. While it is the biggest and most visible item, it’s not the only thing that needs to be done to repair the damage done by the thirteen years of over spending that left us at the edge of financial disaster. It’s completion, however, will unlock our ability to finally put into place the other pieces of our financial puzzle. Vonnie and I sat down over the weekend and mapped out some of our financial goals for putting this puzzle together over the next few months.
Debt Management Plan (DMP) Completion: As mentioned, this is has been the centerpiece of our financial efforts over the last four and a half years. With only two payments left, we’re now looking at the other things we need to do to fully build a solid financial foundation for the future. Our last payment is scheduled for February 28th, although there’s still an outside chance we’ll finish it off on January 31st.
Refinance our Mortgage: When we built out house in 2004, we took advantage of what our mortgage banker referred to as, “creative financing,” to allow us to build the house we wanted even while already carrying significant credit card debt. We had two mortgages, the first being an adjustable rate mortgage, and the second being an interest only home equity line of credit. One of our goals has been to get our mortgage refinanced under a single fixed rate loan. I didn’t think we would be able to do this until we had completed our DMP, but we successfully worked our way through the process and signed the closing papers earlier this month!
Consolidate Other Debt: We had two lines of credit that we were unable to include in our debt relief program and have been just making the minimum payments. As we were going through the mortgage refinancing process we also tried to consolidate these remaining lines of credit into a personal loan with a lower interest rate and a finite term. Unfortunately this didn’t work out as the underwriters didn’t like the fact that we are currently enrolled in a debt relief plan. We were advised to try again in a few months.
College Accounts: We want to help our kids with their college education. Once we complete the first three changes above, we want to investigate our options, and begin to put money towards this goal.
Retirement Planning: Right now, my employer contribution of 2% of my income is the only source of new funds going into our retirement 401K. My employer provides matching contributions, but we’ve been so focused on our DMP over the last few years we haven’t been able to do anything with this. We need to meet with a financial advisor and map out our path to retirement.
Life Insurance Policies: Vonnie and I each have a whole life insurance policy, which we reduced the contributions to a level just sufficient to keep them going in order to maximize the amount of money we had available for our monthly budget. We need to sit down with our life insurance agent and re-evaluate our life insurance strategy going forward.
Over the last four and a half years we’ve had financial tunnel vision as we’ve focused solely on our debt management program, and improving our financial communication and budgeting skills. As we reach the end of that tunnel, we realize we have several very important issues we need to deal with as we move forward to ensure our financial success. It’s a little scary, kind of like the training wheels are coming off. But on the other hand it’s exciting to be able to have goals to work on other than just paying off a mountain debt.
Have you ever had financial tunnel vision? What financial goals are you working on?