October has been and gone, and what a massive month it was for us! Some good things have come our way this month, with my wife being promoted. This will definitely increase our ability to pay down debt faster. Her job has a high degree of variability, so I have taken the lowest possible increase into account for our future forecasting.

As part of our fire journey, I like to share my monthly updates with the Australian Financial Independence community on Reddit. From my September Update thread, I received some constructive feedback regarding our situation, specifically around our ‘need’ for such an expensive vehicle. At first, I began to rationalise away the feedback, defending our position. But after discussing the feedback with my wife, we agreed that the feedback was warranted, and worked through how we could sell our current vehicle and what a cheaper option may look like.

We began our search with the goal of finding a vehicle for less than $10,000. As we searched we continued to question our needs vs wants. We again lowered our target to $5,000. I must admit, the search was painstaking. It seemed every time we found a vehicle, some one would beat us to the punch. Annoyingly our bank had some system errors that led our applications to restructure our loans being delayed by a whole week. Cars we liked were being sold within the day of being listed.

Eventually we received approval to restructure our finances, and had $10,000 to work with. I wanted to have some additional money left in the kitty as we had $2,000 worth of medical expenses in October as well.

Our search for a new car took a couple of weeks, and in the end we found a fuel efficient 2009 model that had been very well looked after, with all the features we wanted (ABS, electric windows, Bluetooth) for only $5,600. A little higher than our revised goal, but we are very happy with the outcome. We listed our old car and were able to sell it for $17,000 within a week.

As such the structure of our debt has greatly changed, and we are really excited about where this puts us. Below is our original forecast for October:

Projected Oct Car Loan $ 17,248.60 Consolidation Loan $ 12,007.03 Personal Loan $ 4,903.09 Credit Card A $ 0 Credit Card B $ 5,989.96 Credit Card C $ 6,014.22 Total $ 46,162.89

And here is the new structure:

Actual Oct Consolidation Loan $ 25,615.27 Credit Card A $ 0 Credit Card B $ 5,854.09 Credit Card C $ 5,817.00 Total $ 37,286.36

The new structure puts us $8,876.53 ahead of where we wanted to be. I am happy that we received the feedback we did and realised how irrational our approach was with the expensive vehicle. This is a very good result for us, considering the medical expenses we had this month. I really wasn’t looking forward to the October post, as I thought we’d be behind our forecast, so this is very pleasing.

The new structure has some considerations. The consolidation loan has an interest rate of 10.90%. I have crunched the numbers and believe we can pay this off in its entirety by the end of July 2019, saving us 4 years and 3 months on the loan term, and only paying $1,074 interest over that time period. Credit Card Cs interest free period lapses in November 2019 and Credit Card B in March 2020. By my calculations we should be able to pay off Credit Card C by the end of September 2019, and Credit Card B by the end of November 2019, finally freeing us from the shackles of debt!

If we achieve this result, the restructure will have saved us 7 months from our original forecast of June 2020. Over the next month there will be a lot more certainty around our income and expenses as the dust settles from this restructure and the wife’s promotion. I will be revising our forecasts more thoroughly to account for the changes.

I hope you’ve enjoyed reading this update as much as I did putting it together.

I’d love to hear how you rationalised expensive purchases, only to change your mind later on below!