Happy New Year! Today, I want to tell you about The Debt Movement started by Jeff Rose @ Good Financial Cents in partnership with ReadyForZero. They are trying to help people pay off $10 million of debt in 90 days! Wow, that’s a huge amount of money and I hope they can do it. To get everyone rolling, the Debt Movement is offering The Debt Scholarship – that’s $10,000 toward debt for the winners. I’m sure many of us made a New Year’s resolution to pay down debt, so this could be a great jump start to your debt payoff.
I hate debt
Fortunately, we don’t have any consumer debt in our names. We have always paid off our credit card bills every month and avoided spending money that we didn’t have. We also managed to avoid a car loan when we purchased our Mazda5 a few years ago. However, we do have a mortgage. Our small condo is in downtown Portland and it’s not a cheap location. We purchased near the height of the real estate bubble and we still owe quite a bit on the mortgage debt – $258,639 to be precise. Yowza! That’s a lot of money to owe the bank, but at least we’re not underwater.
Have a plan to reduce debt
It’s important to have a plan to reduce your debt. You can’t just pay the minimum payment and hope the credit card balance will go away. The high interest rate will take a big bite out of your payments. If you have multiple credit cards with various rates, then it might be better to consolidate the debt into the card with the lowest rate. Another option is to check with Prosper.com to see if you can get a lower rate from peer to peer lending. Lowering the payment is the first step to making more payment toward the principal of the debt.
Mortgage debt is a bit different because the mortgage rate is quite low at the moment. If you haven’t refinanced in the last 2 years, then you should talk to your bank to see if it’s possible to reduce your monthly payment. We refinanced a few times and lowered our monthly payment by nearly $500. I still hate having that big mortgage though, so we are paying $700 extra every month toward the principal. With the extra payments, the mortgage is scheduled to be paid off by April 2027. Man, that’s a long time. In 15 years, Baby RB40 should be going off to college and Mrs. RB40 will probably be ready to retire by then. 2027 will be the perfect time for the mortgage to go away. Well, it would be even nicer if we could get rid of it earlier, but we have other bills to pay, too. Perhaps if we make more money in few years, we can increase our prepayment. On the other hand, if the interest rate goes up, we could invest in CDs or bonds instead and generate a better return. We’ll see what happens.
Did you make any New Year’s resolutions to pay off debt? If you need help, check out The Debt Movement. I’m curious to see if they can really pay down $10 million of debt in 90 days.