FPU Update #2

We managed to make a zero balance budget for April.  The idea is that you designate where each dollar will go as soon as you get it.  This is a little tricky if you have an irregular paycheck like JD does.  There is a pretty big difference between working 50 and 80 hours a week, so we have to guess at how much he'll be getting in each check.  We decided to base our budget on 50 hours, and anything "extra" will go towards property taxes until we have that amount stockpiled.  The budget thing is tricky because we keep thinking of extra things that we forgot to account for (like Ryleys piano lessons).  Also, our school auction is in April, and we like to support that by bidding on some things, so now we need to decide on a dollar amount that we can't go over.  I'm pretty sure that things won't be perfect the first month, but I'm expecting that we'll be pretty close to our target amounts in most areas.

We watched the 4th lesson, Dumping Debt, the other night.  It took a little work though because our DVD player decided not to work and the disc was stuck inside.  JD had to take the DVD player apart to get the disc out.  A new DVD player is not in the budget, so we'll be watching the rest on our computer.

We have completed Baby Step #1 which is to have $1000 put away in an Emergency Fund.  The Emergency Fund is not to be touched unless it absolutely needs to be.

Baby Step #2 is paying off all debt except the mortgage.  This will take us awhile.  Right now we have a car loan, a personal loan, and a HELOC (home equity line of credit).  We're going to be doing something called a Debt Snowball.  The Debt Snowball works by putting all of your debts in ascending order by total due (not by interest rates).  We're going to include Reagen's braces in our D.S. because, although it's not technically a loan, we are going to have payments for another 9 months.  The braces are at the top of our list, followed by the personal loan, the car loan, and the HELOC (we used this to build our garage, so sadly the garage isn't part of our mortgage).  We'll be making the normal payments on everything, and if we have extra money, it will go toward paying the braces off earlier (the extra payments won't start unless we have stockpiled all of our property tax money).  When the braces are paid off, the $115 payment will not disappear; instead it will be added to the personal loan to pay that off sooner.  It won't make much of a difference because the personal loan payments will be done a month or so later anyway.  Next will be the car loan.  The amounts for both the braces and the personal loan will be put towards the principal of the car loan, and if we did our math correctly, it will reduce the time paying off the car by about 12 months.  We will then put the monthly amounts that we were paying for the braces, personal loan, AND car all towards paying off the HELOC which will take a few more years.  We understand that things will probably come up that cause us to pause the Debt Snowball from time to time, but here's hoping they don't!