After talking about how to deal with money and family yesterday, it is now time to take a serious look at my options in order to pay off the loan from my parents at the end of the year. Gathering such an important sum of money will require a solid plan, discipline and probably a bit of luck as well!
As I previously mentioned, in May 2009 our life took a drastic step back when my wife quit her job to take care of our children. Since then, our personal finance has been somewhat difficult to manage as it was filled with new challenges.
Things have been back under control recently with the deposit of my big bonus cheque in the bank account. Now that my financial situation has reached stabilized, it is time to figure a way to pay my parents back.
What I have so far:
My biggest “savings” is held in the form of my employer’s stock purchase plan. Directly from my pay, I put $475 per month (including my employer’s contribution) aside. So far, I have $5,000 in this account. If I contribute until the month of October, I should be able to put another $4,750 on the table. This would make a total of $9,750. Out of it, I can withdraw up to 75% of its value twice a year in order to keep my privilege. So if I take up to this percentage, I should be able to withdraw about $7,300 in November 2010.
So I now have 10 months to find $22,000.
Whoa, this doesn’t sound right at all… It is actually quite discouraging L. But, there are a few things I should consider:
I have about $5,000 available on my line of credit and I am paying $500 per month in capital. Therefore, in 10 months, I should be able to get another $10,000 from my line of credit. While it doesn’t really count as a paid off debt since I am transferring from one creditor to another, at this point I wouldI rather owe the bank money than my parents!
Now down to $12,000…. Still a huge challenge!
For the last $12,000, I will have to run with the big dogs in the big world of “what if”. Here are a few possibilities that could help me pay my parents back:
– I am currently looking for a bigger client portfolio, which would increase my annual income by $10,000. While taxes must be paid on this amount, I should be able to put about $3,000 aside from this salary increase (as long as it comes in the first months of 2010….).
– By November 2010, I will know how much my next bonus will be. If it’s similar to this year, I should be able to pay an additional $5,000 to my parents. While this money will only be available in January, it will be confirmed before the end of 2010 and I will be able to guarantee my parents that they will receive the money.
– Speaking of my bonus, since it is paid in January, I have to pay the maximum contribution in pension and insurances. Therefore, I will benefit from a higher net pay faster this year. I will probably be able to put this money aside and have an additional $2,000 by the end of November.
– I will certainly have more equity in my property that should be appraised around 335K by the end of the year. I could probably be able to refinance my property and get enough to pay my parents. However, this is not my first plan as I would prefer to pay this debt off as much as possible rather than switching from my parents to the bank.
– The last wild card I have in my pocket is how well my online company does. It has been a tremendous end of year and the month of January seems to continue on the same path. I just hope it will continue to grow so I can take a few more thousand out of it by the end of the year!
So as you can see, I will not be able to gather the full $31,000 in cash by the end of the year. However, I have enough options to make sure my parents get paid and that I don’t have to deal with money issues with my family.
I must admit that they have been pretty smooth with me and they told me that I didn’t have to pay them back this year if I couldn’t. However, I just can’t spend money thinking about the fact that I owe money to someone I love and respect. Once this debt is paid off, it will be a huge relief for me!
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