The interest rate was not particularly good on these loans and we really didn't want to have another required monthly expense when our overall expenses would likely be rising with the addition of a new family member.
Putting so much money toward paying off these loans means, of course, less spending in other categories, and we spent a little time looking over our budget to see where we could cut back.
We mapped out how long it would take us to pay off our loans and decided that we would be willing to entirely eliminate a few categories from our budget for the months that we were paying off our loans. That meant no spending, on either of our parts, until our loans were gone in the following categories:
- Entertainment. We would not go to any movies or concerts or rent movies during this time period. We would use redbox codes or the library to see any movies or watch things online (like Lost, which is available for free from abc.com). We aren't huge movie watchers anyway, so this wasn't a major sacrifice.
- Eating out. I like to cook and it costs nearly half our weekly budget to go out to dinner at an even low-end restaurant. Bart has a number of dinners that he goes to for his job anyway and I don't usually get enough satisfaction from a restaurant meal to justify the cost, so this was pretty low-impact for us.
- Our allowances. I mentioned in an early post that Bart and I both have an allowance of $50 a month. This money is ours to spend as we will, although realistically, since we don't have a clothing budget, this money generally goes to that. We decided to freeze this category until the loans were gone, so no money would be accruing in these accounts during this time period.
Of course, the categories you'd be willing to give up for the short-term might be different than mine. You may hate to cook or need a weekly dinner out for mental health and the idea of not going out to dinner for six months is beyond intolerable. But you might be willing to give up your cell phone for a year. Or you might be willing to get rid of cable for six months.
What categories would you be willing to freeze spending on for a few months in order to put that money toward something greater?