Credit Card Debt Update – $6,699

We were able to pay another $300 towards our debt, bringing today’s credit card debt total to $6,699. I wasn’t really planning on paying more right now. I was going to wait until later in the month. But in times of uncertainty, I tend to try to take control over something. Right now, that would be our debt total.

I guess I am feeling a little uncertain about the economy right now. I want to get our credit card debt paid off so we don’t have to worry about that looming over our heads if something happens to our income. I cringe when I say this, but in a dire situation, it could be helpful to have available credit. Trust me, though…it would have to be a VERY dire situation for us to go into credit card debt again. I don’t like thinking about that much since I definitely don’t want to go there.

Of course, the best thing in a dire situation is a hefty emergency fund. We’re talking at least a year’s worth of income in the bank. In light of all of this, I think after our credit card debt is paid off we will plump up that emergency fund big time. It will take a while to do, but it will be worth it.

Posted by Tricia on December 13, 2008 at 1:34 AM in Debt Updates | 10 Comments »
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Rob in Madrid responded:
Posted: December 13th, 2008 at 2:23 am
Trent in his weekly reader mailbag made an interesting comment about his debt snowball. Instead of the traditional way of increasing payments, he made only the minimum payment and saved up enough to pay it all off in one shot. This really surprised becuase he’s never mentioned that before. The wife and I are doing much the same, keeping alot of savings in the bank and then paying off a bunch of debt.
Rob in VA responded:
Posted: December 13th, 2008 at 11:13 am
I have been following your blog for a while now and just wanted to say congratulations! I’m sure every little bit of encouragement helps! I’m in a similar situation and have thought about what “Rob in Madrid” had commented previously. At the moment I do the snowball idea…pay minimum on everything, and pay everything extra on form of debt, and then move on to the next, but that leaves me feeling worried b/c I don’t get a chance to save as much as I like. I’m not sure if there is any extra benefit in paying a little over the minimum, stashing any extra cash in an online savings account and let it grow a little interest, and then pay of big chunks of debt at a time.

Which truly is the better method in your opinion? (or anyone else that reads )
Stephanie PTY responded:
Posted: December 13th, 2008 at 11:22 am
I think the big thing that would help (in getting rid of that credit card debt) is getting rid of the obligation of that minimum payment. Freeing up that money every month… sweet!
Kris responded:
Posted: December 13th, 2008 at 11:54 am
I suggest that you banish even the 2% of your brain that would consider debt again. There’s never a time that credit card debt is worth it. I firmly believe that even in “dire” times people can find ways to get through without credit card debt if they choose. First, we all need to be living below our means regardless. If someone is living on the edge or unable to save, then then of course they will look to debt in hard times. Second. you need to be willing to do whatever work you can find if you lose a job and have a hard time finding another. During gaps between jobs, I’ve always been able to make money doing babysitting and other tasks for people. I’ve also had a an array of jobs that some people would think were “below” them, but the jobs were just temporary ways of earning money so that I didn’t need to turn toward debt.
Da Big D responded:
Posted: December 13th, 2008 at 2:18 pm
Work more hours. Do what ever else you can for the next 6 months, and this won’t be a problem. If something happens in the next 6 months and you lose your job, you are pretty much out of luck. Save that money during the next 6 months and pay off what you can, take the rest and put it away. If you thinking you will need 1 year of saving, you are a few years away from that.
Tricia responded:
Posted: December 13th, 2008 at 3:03 pm
Rob in VA – for us, we’ve paid off debt, saved some, paid off debt, saved some more, paid off debt. I think a lot of it has to do with motivation. Depending on what was happening in our life, we switched gears for a while. I am highly motivated by seeing our debt dwindle down so right now we are picking at it when we can.

Kris – we’re talking very dire, like massive job losses and everyone is scrambling to keep a roof over their heads and food on the table. These are times where little jobs may be scarce because no one else has money so they do those things themselves. That’s what I mean by dire. I have done some jobs that would make some people cringe. But I did them because we needed the money. I don’t have a problem with doing that if it means providing essentials for our family to survive. But if all avenues for income were exhausted, I wouldn’t hesitate to use our credit cards for shelter and food.

I don’t ever want to get to that point, so that is why it is so important right now to get the last of our credit card debt paid off so we can start saving again.

Da Big D – yeah, it’ll take a few years to get one year of savings in the bank. Right now I can’t work more hours unless I am needed to work more hours. But I’m thinking of getting a part-time job to get my foot in the door at another employer. Just in case things at my current employment go south (which it has for a few people already). We need our eggs in more baskets.
amaranta responded:
Posted: December 13th, 2008 at 3:30 pm
I like Rob’s comment, it seems like it kind of helps both avenues (saving and paying debt). although what if you saved and paid it all off and THEN lost your job? i think the way you’ve done it so far is good.
Tabitha responded:
Posted: December 13th, 2008 at 3:41 pm
I heard a similar tip somewhere – keep $1000 extra and everytime it reaches $1000, use $500 to pay off a big chunk of debt. Then, keep building till it reaches $1000 again. That way you know you’ll have $500 on hand at all times. Personally, I am trying for $1500 with $1000 in reserve at all times.
Bill m responded:
Posted: December 13th, 2008 at 10:38 pm
I started following your blog and I know how hard it is to pay off debt. I at one point racked 50k in cc debt and I am down to about 16k. you can never look back and just pay it down, i get $100 dollars i send it in to keep me motivated.
danielle responded:
Posted: December 14th, 2008 at 8:14 am
Great job, Trish!!!!!Don’t worry about the economy. It goes up and down. A radio DJ last night was saying that the most expensive mall here in town was crazy packed yesterday, and every time I drove home past a major mall on the freeway, there was a traffic jam from people trying to get in. I say don’t worry about the economy, but still be aggressive about debt reduction.