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Saturday, 16 August 2008 6:46 PM MDT
Back in May, regarding my goals to get out of debt and save, I wrote:
"What's embarrassing to me is that if I add up all my credit card debt (unsecured consumer debt) and add to it my RAV 4 auto loan balance, I owe about 65% as much as I owe on my mortgage (a 15-year mortgage)."It's been nearly four months since writing that. And there's been a lot of progress. Whereas before I owed in total credit card and auto loan debt about 65% of what I owed on my house, I've been paying that down as much as possible, and now I've got it down to 55% of what I owe on my house. In fact, within a few more months, I'll have my RAV4 paid off in full, which will free up nearly $600.00 in cash flow each month (no more car payment!) to apply towards other debt, and eventually to savings. (And it will feel incredibly wonderful to own my vehicle free-and-clear!)
Yay! I love, love, love the progress thus far. Now I just need to renew my commitment, since I've noticed that I've slacked off in trying to live more frugally in the past few weeks.
With all the price increases in food and energy recently, having my vehicle paid off and the benefit that comes from that, namely the added montly cash flow not tied down to a specific payment, has reduced my stress levels considerably.
But I know I'm not out of debt yet. My next target is a credit card with about 14% of my unsecured debt riding on it. It's a higher interest rate than the rest of my debt, and it's also the smallest balance.
In an ideal world where I (or someone else paying off debt) have (or has) perfect discipline, it's best to apply as much prepayment to the debt with the highest interest rate first, as that results in the quickest payoff. However, psychologically, it may pay instead to apply the bulk of prepayment to the smallest debt first instead. Even though doing so may slow getting completely out of debt, the person so doing gets the immense satisfaction (a psychological reward) much sooner, which acts as positive reinforcement to help one remain on task working towards the goal.
So I guess I'm fortunate that both of these options point to the same card. I get the benefit of both worlds! *grin*
I'm not paying off my debt quite as fast as I could optimally. I've set up some automatic transfers out of my main account into a savings account because I don't really have an emergency cash fund like I'd like to have.
And I did splurge last month a bit, delaying the payoff of my vehicular debt by a few extra months (I'd otherwise have it paid off fully next month). I raided my prepay money and some of my savings to buy some ZION and WFC stock (I'm a buy-and-hold guy, not a trader) shortly after both hit extremely low (in my inexperienced opinion) prices last month, to the point that both financial stocks looked like bargain basement buys to me, so much so that I couldn't resist and I bought shares of each.
Now I completely understand that the credit crunch and housing crisis is far from over, and these stocks, though up considerably since I bought them (as of the closing price yesterday) may tumble well below where I bought 'em. If that happens, I'll most likely hope I have more cash on hand to buy more at bargain prices, so long as I believe that the fundamentals of each company shows some strength. And I'm willing to wait 5, 10, 15, or 20 years before I sell.
It's wonderful to make progress!
And now for a complete change of topic: Lightning! Last night, a thunderstorm built up and rolled through the St. George, Utah area, with lots of lightning and thunder, but very little rain. It was fun to watch the light show in the sky and listen to the thunder rolling across the desert.
In the darkness of night, lit frequently by cloud-to-cloud lightning strikes punctuated now and again with a powerful ground strike, I could hear oohs, aahs, and wows from my neighborhood. The storm drew many of us outside to our front porches (and these stucco homes don't have much of a porch—a feature I like and want in whatever next house I live in) to watch the fireworks show.
I grabbed my camera and set it for long exposure times, and taking many shots, managed to capture a few bolts of lightning. Unfortunately, I don't really know how to control or use it very well. I should have closed the aperture quite a bit on the long exposures so that close strikes didn't totally wash out all detail due to overexposure (the photo ends up mostly blank white). Then I could have cranked up exposure time to the max, camera on tripod pointed at the sky, and probably come up with some really spectacular shots.
Included in this post are the three that managed to catch some of the action going on in the sky.