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Headline: Dorkus Strikes Again!

December 20th, 2006 at 02:48 am

As a side note, let me just pause to laugh at the fact that I have watched an old movie where the girl was named Dorcus. HAAAAAAAAAAAHAHHAHAHAHAAAA! And it wasn't supposed to be a joke, that was just her name!!!

OK, sorry...

Anywho, in the dwindling hours of 2006 I'm still waging the war on what to pay off when, and how much to throw at it in 2007. I think I have an established order of what bills in what order, but I wondered if the $550 I had allotted every month was the 'sweet spot' as they say.

And here's where Dorkus strikes again...

I calculated the amount I might throw at debt every month, how much interest it would 'save' me, and the how much interest it would cost me since I wouldn't be earning my 5.25% compound interest in my GYD account. And then I figured out what my 'total cost' would be for each monthly amount.

Dorkus...

Of course the highest amount I calculated had the lowest over all cost involved, but after that, it got interesting. Compound interest does work both ways, after all!

BTW: that total cost column is actually calculated as interest paid PLUS interest lost, as opposed to what it shows in the picture. DOH! Sorry!

2 Responses to “Headline: Dorkus Strikes Again!”

  1. Lau Says:
    1166627854

    Scenario # 1 seems to work the best. Obviously, the quicker you pay off a debt, the better. The debt is paid off faster, you pay the least amount of interest and lose the least in interest... Now, is an extra $750 a month feasible for you?

  2. tinapbeana Says:
    1166630484

    well, i had anticipated using $550 per month for debt reduction because that is what fit easily into my existing budget, but for this exercise i decided to review what things would look like $200 on either side. i chose $200 b/c i could 'find' it if i cut the grocery bill in half. basically i was wondering would i be better off paying $600 each month instead of $550, that sort of thing. well, obviously $600 isn't the way to go!

    i still anticipate using the base of $550 per month (which is the number 3 scenario out of 9, and a very easy and comfortable amount for our budget). $750 would be GREAT, but it would make things a bit tight. knowing my DH, i want to get this done with as little impact to comfort as possible, makes it easier for him to go along with it. but, now i don't feel the urge to scrounge up another $50 in the budget to make it a nice round $600 (or the temptation to take $50 off to make it a nice round $500).

    the bad news is there's a $770.68 and 5 month difference between the best case ($750) and what i have budgeted ($550). the good news is march and august are 3 paycheck months for DH. since i only budget for 2, those will likely make up the difference!

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