“Credit Cards” Archive
For the new readers, I’d like to give a quick recap on my debt specifics. As you can see from the info on the side bar, I started this journey with a lot of debt. I still have a lot of debt but I was able to pay off the little ones and then obtain a consolidation through a credit union signature loan. Then my husband moved out on Labor Day weekend and my debt was further reduced by a car loan going with him and the selling of my newer vehicle got rid of my car loan. We divorced on Dec 14, 2012 and I was left with what you see in the debt column. That was my pre-marital debt.
The three debts break down like this:
$13,210 USAA @ 11.9%
$18,110 Bank of America @ 12.9%
$9,844 credit union @ 11%
I have an excellent income that I’m working hard to use more responsibly than I have in the past.
So if you’re new here…welcome! I have a long way to go but the new year has motivated me to get even more focused on being debt free!
I started to put together our numbers for this month and YUCK. I don’t like what I am seeing! We WILL do a better job next year of budgeting for Back to School. Wow. That really took a toll. Then we had the emergency fund take a hit with catching up on the mortgage. That stinks and can be a real motivation killer. And…don’t yell too loud…but I used the Discover card. Gulp. For my resale shopping BUT I have the full amount due set aside to pay before any interest hits. I think it is on the budget for next Friday, September 7. It was a partial slip in the sense that I just wanted to use a credit card! That’s weird and surely the sign of some sort of addiction. I promise it will be paid off. Details coming this weekend.
We just got word that our rent will not be increasing this year. That’s one box checked. Now we will contact our renters and find out if they will be extending the lease, looking to buy or…gulp…moving out. At least we got the good news today that our rent will remain the same. We are entering our third year in this house and the rent has not changed. I am thankful.
All signs are that our tenants will want to extend another year. I threw out the idea to Steve that we propose a two year lease on both sides. Given our debt reduction plan, it would be nice to have a constant on the housing side. I’m not sure our landlords or our tenants would go for that but it never hurts to ask. That would get us to credit card debt free without having to think about whether or not the housing cost will increase.
Finally–it is August 16 and things aren’t looking great on the debt reduction for this month. All minimums are made thankfully but I don’t see as big a dent coming and that is discouraging. It seems that even with some looking ahead this back to school month is brutal. In addition to regular school stuff we have registration fees for things like Faith Formation at church and after school programs. I guess the bright side is we definitely have the money to pay the fees. Unlike in the past when we would be scrambling to find the money because we had no plan.
Once or twice a year our credit union will pre-approve us to skip the monthly payments on all of our loans. They offered it for July and after discussion and some math–we took them up on it. The interest rates on all three loans with the credit union are significantly less than our other debt. (2.9% on both vehicles, 11.9% on the signature loan). We were able to send a larger payment to Bank of America (the lender I hate more and more every day) today ($1200 instead of $580), pay extra to the smallest balance card ($100 instead of $50) and free up some cash for the inevitable vacation spending (so that we didn’t incur more debt while on the trip).
This time I write to inform…not seek opinions to act. However, I always welcome feedback (the good, the bad and the ugly) on this financial decision. I’m here to read these this time and won’t be replying due to current time constraints. Did I mention I had work travel this week? Overnight Wednesday to late last night. I’m a walking zombie at the moment. Note to self: mark myself “unavailable for travel” the week after vacation! Bring on the weekend!
As some of you know, we used a signature loan from our credit union to pay off the Discover card. I called Discover prior to calling our credit union to see if they’d do anything to reduce the obscene 18.2% interest. They would not budge. So, of course, it felt great to pay off the $7300 balance and have the power back in our hands. Since paying it off about 2 months ago the offers have not stopped—not surprising since I know they’d love to have me back to take my money.
We’ve ignored the offers because they include lots of fees and would negate any interest savings we may get…until the offer we just opened. We want your thoughts on this one. Here’s the deal: If for the next 5 months (July 2012 through November 2012) we spend $3,000 each month on the Discover card, we get $500 cash back in December. We’d use the card like we should use the card–for regular monthly expenses paying off the balance when the bill arrives (if not earlier!) We’ve read and re-read and will do so again and call to ask any questions before we commit, but right now we are wondering if you’ve seen this and what your thoughts are.
I like the timing of this in the sense that it would be a great challenge with a $500 pay off at the end. On the other hand, I think that’s a lot of record keeping and potential for fees/interest if we slip and pay it off late or just make a misstep of some kind. It would take discipline though and that is very appealing at this point. I also love the idea of getting free money from them…but also realize it is like playing against a dealer in Vegas. Ultimately they know more than I do and hold more cards. As I type this I am more excited about actually accomplishing this than I am about the $500…..hmmmmmm……
So, what do you think?
Here come the 0% balance transfers from Discover card. Remember they would do nothing to help me knock down that 18.4% interest rate just a few weeks ago? I found out about this offer b/c I got an email saying they were going to debit my account for the “minimum due.” Well, with the balance at $0 I hopped onto the website to figure out why there was a minimum payment at all.
After sign on, a big opening page with “0% for 12 months on balance transfers” showed up. The credit available on that card is $8,000 so I did some quick calculations to see what we would save if we moved the two smallest credit cards over. It worked out to be a $205 fee for the balance transfer and we’d save $230 in interest. Just not worth the hassle to me AND there is always the risk that we don’t pay it in 12 months and then that criminal interest rate of 18.4% returns. So that was fun to look into for a minute…but more importantly…to have the power for a change.
I had to call to talk to a rep about the $46.00 interest charge. I was told that was interest from those days where the balance remained-from the last pay cycle end date to the payoff date. Thankfully Discover did the right thing this time and waived it when I asked. And kudos to me for asking…there was a time that I would not have done so!
First of all–thank you everyone for the great feedback on last night’s post! We are still digesting info and will report back with our decision. We do know that we have much work to do on defining our budget items. As of now we have no defined budget for a lot of the items mentioned. It was a huge step to just define a lump sum 5 months ago to stop the bleed. Now it is time to tighten up the spreadsheet.
I am very excited to share that we have a plan. Here it is:
December 2013 is our goal date for credit card freedom-that is, all debt except for the car loans. That is a very aggressive goal but I want to outline it for you. We are using Mint.com to monitor our progress. We will be paying off cards in the order of highest interest rate to lowest interest rate. Below are payments to be made through December 2012.
I hope to be able to report June 1 that the $245 credit card is gone. The debt to dad will be down to $305. The rest play out like this:
Credit Card 7 (15.7%) $1,607 payment in June, balance of $774 in July.
Credit Card 11 (12.9%) $560 payment in June, $1,325 in July, $2167 beginning in August and continuing through December (and beyond).
Credit Card 10 (11.9%) and Credit Card 6 will remain at the minimum payments for the remainder of 2012. That is $268 on #10 and $50 on #6.
We have decided to pay $650 per month on the $11,000 signature loan beginning in June. This puts that debt on track for December 2013 payoff.
If you are curious, this plan pays $1,917 on top of the $1,233 in minimum payments for a total of $3,150 per month going toward credit card debt. Now…go ahead and excuse yourself to go vomit as you think about that!
A comment just came up that is perfectly timed. “Unlike many folks, you guys are very fortunate to actually have the earning power to dig out of this deep hole relatively quickly by throwing not hundreds but thousands of dollars per month at it.” Thanks Joe! We are very fortunate and are determined to be better stewards of the good fortune.
My DebtLarge Graph
- Current: $31,490
- Paid: $66,611
- Original: $98,101
- Emergency Fund: $1000
- IRS Savings: $
- Broken Down:
CC #1: $0 ($64) CC #2: $0 ($240) CC #3: $0 ($650) CC #4: $0 ($785) CC #5: $0 ($1,500) CC #6: $0 ($1,886) CC #7: $0 ($1,984) CC #8: $0 ($2,135) CC #9: $0 ($7,145)
- CC #10: $12,570 ($14,561)
CC #11: $0 ($24,388) Credit Line #1: $0 ($182) Credit Line #2: $0 ($182) Auto #1: $0 ($16,579) Auto #2: $0 ($25,819)
- Cons. Loan: $18,920 ($20,000)
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