Completed: Family-7

Today, I — or I should say my wife and I — completed task Family-7, which was to pay off $3000 of our consumer debt.  In fact, without revealing details, we paid off significantly more than $3000 in our debt, and we did it in one fell swoop using our income tax return. That tax return was unusually large due to the tax credit given to families who adopt, which we received because we came home with P. in 2007.

We had planned over the last few years to take the adoption tax credit we got from L’s adoption and apply it to P’s adoption; and then take the credit from P’s adoption and bankroll it, saving it for a lengthy trip back to China when the girls are in their teens to help them learn firsthand about their cultural heritage. We may still do that trip. But tactically, we decided the best move for our family right now is to eliminate our debts. So we took very nearly the entire tax check and applied it to just that.

With that portion of the tax return, we were able to retire fully 1/3 of our outstanding non-mortgage debt, and virtually all of our credit card debt, in one shot. Now, the only major item we have to pay off (other than the house) is the minivan we bought a couple of years ago. This represents a major leap forward in getting our family finances back on track. And it frees up a significant amount of money per month which, until now, had been going towards monthly payments on our credit cards. Using Dave Ramsey’s debt snowball approach, we can now use that extra money to accelerate payments on the van and get it paid off, and hopefully within a couple of years we will be debt-free except for the mortgage on our house.

Of all the completions so far, I think this one is the one that feels best.