February 12, 2010

Kicking it to the Curb

YES! Just paid off the second credit card. There’s progress! I’m still working on Matt’s 75%/25% plan, I haven’t actually managed to incorporate that yet.

April 20, 2009: $403,438.14

February 12, 2010: $372,062.35

Difference: 31,375.79

Yes, that’s 9,044.92 down from last month.

How? We used the largest portion of my husband’s bonus to pay down debt. We also got a few things (the snow blower and an HTPC — which is totally worth the $325 or so we spent — we do not pay for cable, so everything is either online or via Netflix ). We also used our tax refund towards debt reduction.

However… and I seriously understand why this might have been a mistake… we also bought stock in my husband’s (privately held) company. Here’s the logic:

1) We’ve always wanted to buy stock but our finances were too muddled to do it.

2) We believe in the company, my husband has been there 15+ years.

3) It will pay dividends which we can use toward debt.

4) We think it will have a higher return than paying off debt.

Is it a mistake? Maybe. We also have funds there via profit-sharing (company contributes on his behalf). You’re not supposed to put all your eggs in one basket, I know. But it’s medical software, which has done pretty well even in this recession, and there are a lot of new requirements out there for hospitals and health care providers. The company is growing (yes, hiring!) and having stock also looks good for him with the company. The money is semi-liquid — he can sell it back if necessary and we’ll get a better return on it than in any checking or savings account.

Is it still a mistake? I don’t know. We’re looking at it as savings and our reward for paying off two credit cards. And in my fancy spreadsheet it only changes the dates by a couple of months…


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