Ok, so I am revising my strategy a bit, and just wanted some opinions. I am snowballing on my debt, stressing paying off the highest balances with the highest interest rates first on the snowball.
Here is my strategy as it stands. I will be debt free when I retire, including my mortgage. I will have a railroad retirement pension that replaces about 60% of my income. I will have 401k savings that will take me to at least 90% of my pre-retirement income.
In terms of getting debt free, right now I am concentrating on revolving debt. To get debt free, at least on the revolving debt, I stopped contributing to my 401k, and instead am putting 10% of my gross towards debt payment. I figure that eliminating debt is just as important as having a retirement savings. Besides, I have a railroad retirement pension which will replace approximately 60% of my income, so I am looking for my 401k to supplement my pension, not be my primary retirement income.
My question is on how to best handle the balances that are not snowballed yet. I don’t think paying the minimums is a great idea. I was looking at using the federally required minimum payment warning amount. I am thinking that using the three year minimum payment as a minimum payment is the best level of payment until that debt is in the snowball phase. What do you think?
The next target will be my student loans, then finally I will work towards paying off my mortgage in full. All this while helping my five kids go to college!
I’d also be interested in hearing some other strategies that worked for others. My primary interest right now is to reduce or eliminate money going towards interest.
I also am wondering how to pay for some urgent dental work that needs to be done that will cost about $15,000 in total. We don’t have the cash for that, and I think it needs to be done in the next 12-24 months, or it will be too late.