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A Decision Has Been Made

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I’d like to thank everyone for alerting me to the new advice that Suze Orman has when it comes to building up your savings or paying off credit card debt. She used to tell everyone to pay off their credit card debt. Now she’s saying to save…save…save.

Her advice makes perfect sense. Credit cards companies have been unpredictable lately with closing accounts or reducing credit limits. If you pay off your balance, you may not have a credit card to use in the event of an emergency. I have a lot of respect for Suze for changing her stance.

I knew back in January that we were going to do our best to meet our credit card payoff goal date of May 2009. I wanted to do it without having to pull from our savings. But after crunching the numbers we can come up with $1,500 for sure this month.

Since we are so close, we are going to pay as much as we can towards our credit card debt and pay off the rest with our savings. I’m going to see how many tricks we can pull out of our hat (extra hours, selling stuff, etc.) to keep our savings as intact as possible. But as of April 30th, we want to be credit card debt-free and will pull from our savings as needed.

Let me just say that I do not recommend that you pull from savings to pay credit card debt unless you really think through everything. If it wasn’t for our business, we would more than likely have followed Suze’s new advice. As I previously mentioned, once our credit card debt is paid off I was going to retire from writing on this blog and a new blogger will begin with their debt story. The time that is used for this blog is really needed for our business to expand.

Our story is far from being over and I know some of you mentioned how nice it would be if I still gave updates somewhere. Well, you can change retiring from this blog to “semi-retiring.” I will not be posting daily, but I can post when the mood strikes when there is an interesting update. The posts will not be as detailed as before, but if our decision to use our savings to pay off the last of our debt bites us in the butt – you’ll hear about it right here.

I sure hope it doesn’t, though. The plan is to replenish the money that we end up “borrowing” the next month. We’ll kick our income into high gear and we’ll put off the home repairs that we need for a little bit longer. It will be all about our savings account for a while.

Nothing in life is ever guaranteed. You can budget until you turn blue in the face but life can never be completely planned. Taking everything into consideration, we think this is the best choice for us.


12 Comments

  • Reply Mr Plasectomy |

    Congratulations on accomplishing your goal BEFORE your target, that is impressive.

    I am of the mindset that as long as you have some savings even after you pay off your debt that it is ok to make that last payment to the credit cards and be done with it.

  • Reply Jan |

    You’ll get no argument from me! The psychological benefits of paying off the debt on time will be huge. If the payoff date were further away I’d advise you to hold on to your savings.

    This is so exciting!

  • Reply Another Reader |

    Congratulations on what you have achieved. Not just paying off the credit card debt, but also the financial knowledge you acquired along the way, and the ability to plan and make well reasoned financial decisions for your family.

    The business and the income it can produce will be instrumental in achieving your new financial goals. I look forward to hearing how you paid off the student loans, saved a large amount of money for major purchases as well as emergencies, and began investing for the future.

  • Reply Colleen in MA |

    Makes sense to me! It’s an obviously well thought-out plan. I’m so excited for you and happy to hear that we’ll still be hearing from you from time to time. Win-Win! :0)

  • Reply Betty |

    I emailed you a long time ago and I am happy for you to have meet your goal. I am curious about your business you and your husband have worked hard to mmet your goals. Take care of that little boy. We have an 11 year old grandson that we take care of and he is the most precious and important thing in our life. Any information you share about your business will be appreciated. I have enjoyed your story and good luck in the future.

  • Reply HS@ourdebtblog |

    I took money from our savings and paid off our credit card, we are now debt free from CC’S. I’m also going to use some of the money from savings to buy a new HDTV! The plan now is to save the money we used to send to credit cards.

    HS

  • Reply Neil at Debt Advice For Free |

    Congratulations on achieving your target.

    I think the bottom line is that you need to consider your own situation when planning your finances and not just blindly take the advice of any expert.

    Neil

  • Reply Pat |

    Tricia
    That is fantastic news! I would have done the same thing. Just knowing you are done with that and can build up your savings at “gazelle speed” will be worth it! I am looking forward to being where you are in three years or less. This new advice from Suzy has me in a quandry because our tax return is large enough for me to pay off one cc which means I could put that minimum payment on top of the minimum for another card and pay it off faster. We have 1K in savings and had to use almost all of it on auto repairs in March. Now I have to put part of our return into the savings. Just know that you are an inspiration and have made a difference in my effort to eliminate debt. I’d love to hear about your business as well – especially if it’s something others could adapt and do from home. Thanks again!

  • Reply Sarah |

    I’m so glad I came across your blog. We are going through a difficult time with paying off debt right now. Your blog is an inspiration and makes me believe it’s possible!

  • Reply emmi |

    Looks like you are leaving yourself a nice cushion, even with the payout. Doing it this month would have been pushing it. I hope it all works out, and I’m glad you are going to be checking in with us every now and then to let us know how things are going.

  • Reply Samantha |

    In regards to Suze Orman’s latest advice. I think eight months worth of living expenses is totally unrealistic. That would take me YEARS to save up! And more years just letting my high interest credit cards keep stacking up just seems like an absolute waste of money. I say save AND put money towards your credit cards. When the time comes and you need to rely on those cards during a job loss……what if they are close to the balance and you can’t use them anyways! Sheesh.

    Kudos to you and your success with debt reduction. I think your way was fantastic with building a small emergency fund at the same time as your major debt reduction. Now that you’re almost through you can put that money you were using for debt right into that savings account.

  • Reply RachelB |

    Great job reducing your debt! You have inspired so many people with your blog.

So, what do you think ?