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I know this is a bad plan...

November 6th, 2008 at 06:52 pm

but I don't know what else to do. It's purely emotional but here is what I plan to do:

Effective immediately I plan to stop all contributions to my 401(K), cash savings, daughter's college savings and individual stock purchases. The 401(K) + cash= 10% of my gross income. My daughter's college savings= ~3% and the stock purchases ~1%.

This has nothing to do with the current stock market. I have some debts I would like to pay off once and for all and I am tired of the snail's pace. Here's what I have left:

One credit card: $7677 at 0% interest set to expire in July '09. This balance represents my old car loan which I transferred to get the 0%.

Student loan: $9995 at 4.25% interest.

By stopping those contributions and throwing everything I have at the debt then I will be debt free this time next year excepting my home mortgage.

I will then have a third of my gross income free to save and invest. My plan after that is to contribute enough to the 401(K) to get the company match(it doesn't kick in until July anyway) and with the rest I will build up my EF. If something extraordinary doesn't happen like I lose my job, then I think it should be okau.

9 Responses to “I know this is a bad plan...”

  1. NJDebbie Says:

    I completely understand your reasoning and if it gives you peace of mind, I'd say go for it. I don't think a year is a long time and being completely debt free provides just that. Good luck and hope to be able to see your "Finally out of debt" next November.

  2. Merch Says:

    Sounds like a good plan to me. In fact, Dave Ramsey recommends that is the way you should do it. Of course you need to set up a budget and try to squeeze even more dollars at it.

    Good luck!!!

  3. cptacek Says:

    Are you sure you want to miss out on your company match? i agree with everything else if that is what you need to do for your peace of mind, but missing out on a guaranteed 50% or 100% is silly to me.

  4. asmom Says:

    the company match doesn't start until I've been there a year and that won't be until July.

  5. Koppur Says:

    I think that sounds like a good plan, plus you have a good backup plan. Good luck!

  6. Ima saver Says:

    Good plan!!

  7. cptacek Says:

    Then I agree! (until July)

  8. Broken Arrow Says:

    Well, I don't have a problem with this plan. Certainly, any way you go at it, it's still financial progress, and in the end, that's what matters....

    However, may I recommend leaving the money destined for the 0% credit card at a savings account first? It won't accrue interest regardless of how you plan to pay it off, and leaving it in liquid helps you to better cope with emergencies should one pop up. You might even earn a little bit of interest on the side.

  9. creditcardfree Says:

    I like your plan too! I do hope that you get it paid off even faster than you expect!! Keep us posted about how it goes!

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