I wanted to talk myself through how things would look during different months of 2016, so I knew ahead of time which ones would be inspiring and which ones would be difficult.
1 is January. So as of January 2, my balance should be $95,955.76 – I’ll be below six figures! Woohoo. Things get really exciting July 2 though. At that point, the balance will be only $23,041.93. After that, it’s just 5 months until I’m finished.
The worst months will be the early, slower ones. January will be easy b/c I’m with my family in December for the holidays. But February and March will be boring. April, I can probably pay an extra $2000 maybe from my tax refund (assuming it is even that high?), which will be nice. April 2, the balance will be $76,660. Not great but still far from where I am. May is when I’ll probably pay down the big lump sum. May 2 jumps me belowe $50k to $40,860. June I probably get the $6k bonus, which gives me another encouraging boost. But after that, the nitro boosts will be gone, and it’ll just be slogging through the home stretch during the hot summer months. July will be cool b/c I’ll be in Georgia for 2 weeks probably. August will be boring except for Burning Man at the end, which will absorb $$. September and October will be boring. But! My last payment will happen Monday, Oct. 31 – Halloween. Before my 32 birthday, I will be completely debt free! My net worth will probably be around $480k.
Of course, all this would be accelerated if I sold my yo-yo collection. If I got that done over the next 2 years, then by Jan 1 2018, I could have a net worth of $643k assuming no raise. An increase from today of 65%
Here’s a very simple model assuming no gains from investment.
The NW multiple represents years of spending that I would have in net worth. Once that number reaches about 33, I’m good. But the problem is that the modeled spending level assumes that I own the condo, and since the condo doesn’t generate any cash income for spending, if I retired at 33, I’d end up selling all my investment assets and eventually my net worth would be all in my condo and I’d run out of cash.
So to be safe, I really would want to depend on the multiple of my net worth outside of the condo. Sadly, at this point that isn’t all that large. But because I make a good income, if I invest most of it, then by age 38 I’ll have a net worth over $1M, and at that point I’d be safe to stop working.
If I don’t sell the yo-yos though, then I’d be delayed until around age 40. Also, having a kid complicates things, especially if the kid requires additional housing. But if I marry someone with a decent income, then they can probably cover the cost of the family, and I can still start a business by age 38.
From a practical POV, getting rid of my books and yo-yos would (1) save me storage costs and (2) save me moving costs. Let’s look at what would happen if I cut back on most everything.
If I cut back on everything and live like a monk, then by 36.5 I’d be covered. I’d only have like $900k instead of a million, but my expenses would be lower so it wouldn’t be a big deal. 36.5 sounds a lot better than 40, if I have to choose one… That’s a real five year plan.
Hokay. So I’ve done pretty well with saving in 2015. Let’s go check out the total…
According to my savings sheet, it’s about $43k. $67,600 was the max. Big expenses that got in the way:
Furniture – $8600
Travel – $5000
Amazon – $7000
Flooring – $4000
= 22,600. $67k – $26k = $43k
Yeah, so that seems like it’s about the shape of my deficiency this year. Rules for 2017:
- No Amazon (close account? give account password to someone else?)
- No big home improvements
- No furniture
- No eating out
- Bring home food from work
- No Steam
It seems clear that travel costs from Edisto and BM could well delay the payoff by 1 month… although I’ve included $6k cushion in the emergency fund. A lot of the travel involves relatively long period of seeing friends and family, so I don’t think I should cut those out, even if it delays me.
It also seems pretty clear that the first 6 months of 2016 are both the most difficult and the most important to get right. If I can just get to July 4, then I’ll be in a position to kill the loan fairly quickly almost no matter what.