So I’ve been doing the math – a lot of math – and I’ve decided it can be done. If everything goes according to the latest plan I have worked out, I can pay off $305,000 of debt in less than 2 years.
That’s a really big number.
A really SCARY number.
And honestly, I’m tired of looking at it.
I’ve made a lot of progress over the last 2 years since I’ve started to understand and tackle my debt. But I’ve been working my ass off and frankly, I’m tired. And I have no interest in continuing to work this hard over the next 11 years while I repay these parent plus loans.
So how in the world can this be done? Of course, winning the lottery or inheriting a butt load of cash would do the trick. But since I can’t count on either of those happening, let me explain my proposal:
It starts by selling my house. That wipes out $153,000 instantly. And assuming I can find somewhere to rent for $1000 a month, it will reduce my housing expense by approximately $635. Maybe more, depending on whether utilities are included or not. It will also eliminate other expenses such as home owners’ association fee, lawn maintenance, repairs, etc. But those will be icing on the cake because I’m not factoring them into this scenario.
That leaves me with $151,351.40 in parent plus loans to tackle. Notice there are 7 loans and not an 8th loan for my son’s final year of college. I estimate his tuition will be about $38,000, and he has received $25,000 in grants/scholarships and $13,000 in loans. I pay his rent from my part time job. The only thing left is his living expenses, and I’m hoping he can cover those either by working, taking out more loans himself, selling his body – I don’t care as long as it means no additional loans for me yay!!!
If I take all of the equity from the sale of my house and throw it at the loans, I can knock out the five smallest loans and almost half of #6. This could be a bit optimistic since I’m basing my potential earnings on a Zillow.com estimate. And just like everyone else, I feel like my house is worth a bit more than their estimate because it has features that most homes in my neighborhood don’t have. However, I know I’ll have to give allowances at least for new carpeting, and maybe more. There’s probably a couple of gotchas I’m not considering (realtor fees, costs to move, etc), but even if there are I don’t think they’ll total more than about $10k.
That brings my loans down to about $65,000. In addition to the sale of my home, I will have about $28,000 in bonuses this year, lowering this number to about $37,000. Continuing my current monthly payment and adding $635 to the amount I’ve been paying, and now I’m down to one loan of about $26,000 at the end of 2016. BAM! That’s more than $275,000 gone in the next 6 months.
The remaining $26,000 is easy because at that point I’ll be throwing $2,200 a month at the debt, and even easier if I receive pay increases or a bonus next year as well.
Why would I not do this???
One reason is I’m a little afraid of change. I like my house, I’m proud to own my house, and moving is a lot of work. Luckily, I’ve already begun the process by reducing clutter, painting, etc., but it’s still a monumental process.
My other concern is that if I use ALL of my equity, I can kiss buying another house goodbye for a few years. But, it really would be just a few years because I can save $2,500 a month toward a new one starting in 2018 at the latest. Or I can rent forever, which certainly has its own merits for someone like me who doesn’t have time or desire to maintain a home properly. It’s all I can do to get laundry done these days.
What do you think of my plan? Can I really do this? Should I really do this???