Savings & Debt: Monthly or Lump Sum

I need help...

Jordan and I have a budget date coming soon; and we will need to decide if we should approach paying off the Line of Credit and our Savings (including planned spending) monthly or lump sum as well as if we should count on rent in the budget; or use it as surplus to pay off the LOC early.

If we attacked it lump sum; the repayment/saving schedule would look something like this:

This plan assumes that we will be able to incorporate about $500/month into our annual budget for the first six months of 2014 from our new roommates.  The Emerg fund would see a lot more money then in our plan; because at the end of the year; everything extra would go to that.

Monthly, would look something like this:

This plan does not assume any income from renting out a couple of our rooms.  The monthly plan would see us reaching all of our goals; at the same time, in December, 2014 rather then reaching goals all throughout the year; every couple of months.  Each month we would apply the rent to the Line of Credit to help reach that goal faster - but would not assume/count on the money to reach our goals.  The end of the year would see some cash left over and unaccounted for currently without a plan.

I would really appreciate comments/suggestions/challenges to either plan.

Part of me really wants to 'set it and forget it' and not have a bunch of manual transfers every month - the other part of me wants that debt gone and pay as little interest as possible.  

Jordan doesn't want to count on the rental income; but I think that income is income and we should count it.

What do you think?


  1. The risk is twofold: if you don't count the rent as income, it will melt away like chocolate in the sun, and your friends may find their new home earlier than planned, leaving you counting on income that does not materialize. How did it work last year, knocking the goals off one at a time? Did you get that extra satisfaction or energy to keep going? What will work for you? You are the one doing the work.

  2. I'm really torn on what to do...it's why I through it out to the blog to see what other people thought. I didn't like one goal at a time for saving because then it 'stopped' when you reach the goal, also, I didn't like it b/c we might need some of the $$ before we even start saving for that goal.

    I don't like it for debt 'cause I like to hammer that away...but then I do because you can 'set it and forget it' and not have to do transfers every month and worry about forgetting.

    See...I don't know what to do.

  3. I would do Option 1 with the lump sum but I like paying stuff off as fast as possible. However, I would back it up one month and put the money from January in your EF on case something comes up.

  4. Ohhh, did you get a raise? Congratulations!

    Personally, I'm with Jordan and wouldn't count on the rent money as you never know what may happen. Especially as it's not affecting the main goal, which is to pay off our line of credit by the end of Dec.

  5. No Raise for me; well Jordan got one that was a big mess and has 'apparently' gone through after three months of fighting so I'm not holding my breath. The budget I took a screen of was from January when I get paid 3x so it looks a bit inflated.

    It's tough 'cause our goal was actually to pay of the LOC by this December; rather then next December...but then we decided that family was more important then interest and had a great summer hanging out with my mom and aunts camping. We're also now paying for jordan's new teeth and an investment in shares at my work which is also affecting the original LOC plan.

    It's true though; that counting on that money is a risk b/c...well, who knows what will happen.

  6. I feel you would be happiest with the monthly approach. But I agree with NDChic, you need to pad your EFund a bit, in case of unexpected expenses. With the rent money, pay extra on the LOC if you have it.



Hi! Thank you for stopping by and leaving a message.


Links ♥