Change of direction?


Well, all the excitement of paying off the CC debt has settled and we are certainly feeling we have achieved something. In fact, my husband is more focused on our finances than ever and I think he is starting to really see the possibilities of moving towards a more stable financial position.

As part of all that we have been talking a bit about how to approach our other debts, our saving plan and home ownership goal. This was stimulated, in part, by the decisions we have been making about what to do re: family debt. We have agreed that doing the the garden work is a great way to deal with the $3300. (BTW, thanks to Frugal Chick and Lynnae for their feedback about this plan!)

However, this projected change in our debt ratio has left us with an interesting scenario. Removing the $3300 leaves us with a family debt of $3300  … and guess how much we will have in savings (for our home deposit) by next week? That’s right, just enough to pay it out!

I was laughingly saying to my husband, `wouldn’t it be nice to use that cash to clear our family debt?’. To my surprise, his answer was `yes, it would!’. And then he got quite serious about it.

Now there are lots of reasons why doing this would be silly. This family debt is a no-interest loan. If we were going to do anything like this, it would make far more sense to put this cash towards our car loan and pay that off more quickly. But as far as mental imagery goes, there would be nothing better for our motivation than essentially wiping out two debts in two weeks. And I think it would be a nice gesture towards my father-in-law to pay him in a lump sum now that we have made that deal. In any case, family debts can be trouble and I think it would be good to be free of it.

Stick with me here, because we are just talking out an idea at this stage, not actually planning to do this yet ….

We talked a bit about the idea of not only paying out the family debt, but then contributing ALL our spare funds towards our last remaining debt … our car loan. We’re talking about ALL spare funds, including that currently allocated to savings. If we added the weekly funds that we had been putting towards a home deposit and the family debt, we would be putting more than $500 a week towards paying off the car. When I projected this, I calculated we could pay off the car in just over 6 months if we did it that way. Now, THAT would be cool …

Debt free in six months? Wow!

But there are some big negatives. In some respects, this plan will delay home ownership even longer for us. But given that we are acting as carers for my father-in-law, even if we had the money for a home tomorrow, leaving wouldn’t be as simple as just buying a house. Us being here is part of what is keeping my father-in-law in his own home, so doing up his garden isn’t much good to him if he can’t stay here (though I’m sure we’d find a way to ensure he could stay). In many respects, I can’t see us leaving here before I graduate anyway, as things are going to be too tight financially to pay a mortgage before then (thank God in my line of work there is 100% employment!).

And there are other factors. We recently talked about when and if we will have another child, and we are expecting it could be straight after graduation. Perhaps I will take a year off work? If we commit to a house in the short-term, I might be putting my ability to stay at home for that year in jeopardy … and I really want to have a year without stress to enjoy my children. I’m going into a career that is demanding, and though my hubby will probably go part-time to ensure they have a stable home life, I want to be very hands-on too.

On another level, one of the things I love about amassing savings is that if we HAVE to leave, because we can’t stand to stay here anymore, we actually can. It makes me tolerate the difficult parts about being here a lot more easily, knowing it doesn’t have to be that way. That probably doesn’t make sense. I have alluded before to some of the difficulties here but won’t go into it right now.

Also, I expect that when we finish paying off the car, we’ll immediately need to start putting savings away for another one (eg to buy a replacement cheapo car a few years after that), so even after this car is repaid, it doesn’t change that we will still have to set aside some money each week towards `car saving’.  

Anyway, it’s all very complicated and probably very hard for you to follow. At the moment, all this is just a thought. And I don’t expect anyone to tell us what to do, but comments and thoughts are always welcome!


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