A positive week

Well, I had Monday off (6 free days off work in a row!). I spent the day tediously gathering information for pre-approval on a mortgage loan. We had a meeting with a loan guy on Wednesday and while he was getting us approved he was also giving out really helpful advise on paying down debt faster. The concept is pretty simple and after researching it and crunching numbers we realized I could pay off my school debt in 5 years instead of 11 and he could have his paid off in 12.5 years instead of 30! Currently we both pay our school debts separately, but out of curiosity we decided to see how it would differ if we started paying off our debts together using the same concept. Turns out we can pay off 120K in combined school debt in 8 years! I don't want to bore folks who aren't interested in the details of how it works so all that is at the bottom of this post. [...]

Last night we went to BJ's, a brewery chain that just opened a new location near us, for drinks with Sidney (who Matt met at a networking group) and her fiance. This is how we became friends with Cheryl and Chris too. Ed and Suz joined us for dinner and a good time was had by all! Oregon has been so much better for meeting and making friends- unlike DC where everyone is so far apart that no one wants to get together without planning a week in advance! 

Today I got to visit with one of my favorite Alaskan families. Tara and her brother were in town this week to visit their parents and we all finally had time to get together before they head back home. It was hilarious watching Bonanza with them- it was the strangest episode ever.

Outside McMenamins after happy hour!
Derek, me, Uncle Tom, Tara, and Tina

If you're not interested in how the debt repayment plan works, 

then this is the end of the post for you, friend!

How does it work? Well, there are two main methods: snowballing and avalanche. Cute, huh? When you snowball your debt, you start paying off the smallest debts first and work up to the larger ones. Say you are paying $50/ month on a $3500 loan, $100/ month on a $6,000 loan, and $300/ month on a $20,000 loan- $450 a month total. In the snowball you would aim to pay off the $3500 loan first by paying more on it every month and paying the minimum on the other two. The goal is to try and double your payment. So, you'd pay $100/ month instead on the smallest debt for a total of $500/ month. Once that the first loan is paid off you have $100 extra to pay on the $6000. What most people do is pocket that money, but the wise thing to do is to apply it to the next debt. It's still $500/ month: now it's $200 to the smaller loan and still $300 to the larger one. Then once that one is paid you put all $500 toward the last and largest loan. The plan ignores interest rates, by just paying off the loans smallest to largest. The benefit is you free up money faster (though for the method to work you need to put that money toward the next loan) and it's invigorating to see debts disappearing. The downside is that because you are ignoring the interest rate, you will pay a bit more in interest than this next method, but they will both get your debts paid off in the same amount of time. 

The other method is the avalanche. You use the same snowballing method, but apply the effort to the highest interest loans first. You won't get the satisfaction of seeing each individual debt disappear quickly, but you'll pay it off in the same amount of time at the first method, but the bonus here is that you also save money in interest. This is our method of choice. 

I found a website that explains the methods better than I can and an Excel spreadsheet to download (if you'd rather me just email it, then let me know) that made it so easy to figure out how the different methods compare. On the second tab it tells you your payment plan and lets you insert "snowflakes" (one time extra payments, say your tax return) and apply it to your payments and see how it will affect the plan. I found the spreadsheet through the DoughRoller website which has useful articles like this one on 23 Powerful Tips and Tools to Eliminate Debt. This is also where I originally read about the Excel sheet.