Debt to Dreams

We are off to a good start for 2007. We didn’t win the Lottery yet but we did a good job of controlling our expenses in January. 2007 will be a year of financial basics with an emphasis on developing good finanical habits. Like a lot of Americans, our income is relatively fixed and any gains in Net Worth for this year will be directly related to our ability to maximize our savings rate.

Overall I am happy with our results for January. A gain of $4786.46 is very good for us. Most of this gain came from the retirement of credit card debt rather than new savings or investment gains. The really good news is that this represents income available for future investment once our debt is under control.

February Balance Sheet

Things to Note:

• The slight decrease in our cash/savings was due to the expiration of one of my O% credit card balance transfers and the resultant payoff of this debt. Unlike some other personal finance bloggers, I accumulated my credit card debt in true American fashion through overspending. I have since reformed my ways and look forward to being free of credit card debt by the end of the year.
• Our educational debt is slowly being paid off. The bulk of my loans are in deferment which I will continue until I am finished with Residency. With 4 different loans with 4 different interest rates between my wife and I we need to develop a well thought out plan for repayment. The interest rates on 3 of these loans exceed anything that we could earn in a savings account and should be paid off as soon as possible.
• We are focusing on building our cash savings as an emergency fund over the next few months. Our goal is to have 3-6 months worth of expenses readily availible to prevent another cycle of debt.
• The question remains for the next month or so of whether we should take the bulk of our cash savings and max out our Roth IRAs for 2006 before the April deadline. I am very hesitant to invest a lump sum of money at what I feel will be close to another stock market peak.
• Regardless of what I decide to do regarding our 2006 Roths, we will begin contributing to our 2007 Roths next month.

One down 11 more to go.

This entry was posted on Saturday, February 10th, 2007 at 1:04 PM and is filed under Goals and Monthly Updates. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.