Update: Getting the snowball rolling

7. oktober 2011

Two and a half years ago I posted an entry called “Getting the snowball rolling“. I also promised to keep you updated, and here goes.
Main events that took place:
Since my last post our life has made many new turns.

After 15 wonderfull months in San Diego my family and I moved back to Denmark. We did this with huge regret, but the financial situation in California and the lack of jobs made it impossible to stay.

Coming back to Denmark we found out that the job situation was similiar to that of California. My wife had occasional consulting work and I managed to land a job at 7-Eleven and a grocery store. Times were tough.

I eventually landed a consulting gig in my field and things started looking better.

A year after returning to Denmark we managed to sell our apartment in a market still going down hill. This freed us of a great deal of debt. 

A new job allowing me to work geo-independantly caused us to move away from the city to live in the woods in a very rural area of Denmark. 

Living in our summer cabin relieved us of the cost of rent or a new mortgage, but winter was challenging. Over a period of 2 weeks we were snowed in, and the kids were home schooled almost the entire month of December. We really enjoyed living in the woods, but in the end the municipality wrote us a note that zoning laws prohibited the use of a summer cabin for year round living. We therefor now live in a rented house.

All the time we have been focused on reducing our debt. Below is a comparison between the situation 2½ years ago and now: 

Debt Principal           
  May 2009          October 2011  
Mortgage I 286,667 Payed off  
Mortgage II 178,333 Payed off  
Mortgage III 159,667 159,667  
Bank loan I 101,000 119,500  
Bank loan II 64,333 Payed off  
Bank loan III 58,333 Payed off  
Private loan I 1,833 5,000  
Private loan II 33,333 2,500  
Total debt 883,499 286,667
As you can see our debt has been reduced substantially. Out net equity however is negative, being around -20,000..
We havent been abel to pay off the small private loan. This friend loan is a pain, but the combination of hard times and this friend being a very good friend, asking us not to pay, has caused us to put the repayment on hold.
Selling our home, allowed us to repay the two big mortgages. The third one is a mortgage in our summber cabin. It is interest only (1,6%) for another 7 years. 

As a part of the sale of our home, the three bank loans were consolidated into one loan and partly repaid. For a period of time we made extra payments towards the principal and we hope to do that again. The loan is a 8 year loan, but during the first two years we have almost gained an extra year through those extra payments. 

Our plan going forward:

  • We are considering selling the summer cabin to reduce our debt further
  • We have decided to start saving for a down payment on a house.
  • We will continue to pay all we can on the bank loan.
  • The private loans will be payed in case of a windfall or when the bank loan is gone.
I will appreciate your comments

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