Starting Block

Step 1: CRUSH DEBT!!

Though it pains me to say it, I'm in debt. And it's not a little credit card balance we haven't been able to knock off because of a few emergency expenses. Nope. It's a lot uglier than that. I could make some rationalizations for it and tell you the reasons why we did what we did, but when it comes down to it, it's UGLY. 

So how ugly is UGLY?? It's $16,000 ugly. Yep. And that's not even the really ugly part. When you're living semi-frugally, as we have in the past, $16,000 can be knocked out in a year. Want to know what's really, really, really ugly? The handsome interest rate that we willingly signed up for, and the loan period that we agreed to. It's hard to even look at myself in the mirror knowing I put my signature on this thing. But one thing I won't do is pretend to be a money superhero here. I don't think that helps anyone. But what I will do is be open and transparent about where we're at. Because I know that in spite of the crazy money mistakes I've made, I can still be successful. Why? Because we're crazy rich, remember?

So here it is: I signed up for a $16,000 loan at 17% interest to be paid over 10 years.

If I were to take my time paying this loan off for the next ten years, I would end up spending almost $30,000. Seriously, how dumb could I be? I recently took a look at our statement online so that I could begin paying it down and I got to see how utterly ridiculous this loan is. For a $281 payment, $233.77 went to interest, and $47.63 went to principal. That means every month I have this debt I am throwing over $200

a month away. Since I started paying on this loan, I've already thrown $1,144 away. 

How in the world am I going to CRUSH this thing? To begin, I recently made my first crushing payment of $3,500. It's a bit of a cheat, because $2,500 of that came from LeAnn's student loan money (yeah...haven't mentioned that debt yet...but that's IT, I promise ;) ). We could discuss the ethics of this decision, but it's one that we're comfortable making right now, although I'd be interested in hearing your thoughts on it.

So that leaves our current balance at $12,430.70. My next move is to draw a $10,000 loan out of my TSP (Thrift Savings Plan) money. The TSP is basically the government's version of a 401k program. 

What's awesome about a TSP loan is that they charge a $50 fee to take out the loan, and then force you to repay the loan with a tiny interest rate (about 

1.3 %) to yourself. So the only interest I have to pay goes straight into my pocket. Obviously, this isn't an ideal situation because I'll be losing all of the possible gains from those investments for the year that I'm paying myself back. But the chance that I'll make more than 17% interest on it is pretty small. So I'll be able to cut my losses with this loan to a minimum. The final $2,480 left on the loan can be paid from our emergency fund, because yes, debt is an EMERGENCY!!

FYI: The $16,000 loan was used to purchase a time share. We could really cut our losses by dropping it altogether, but it's a decision we made as a family as an investment in family vacation time. There will definitely be a post dedicated just to the pros/cons of owning a time share in the future.