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Sliding Backwards into Credit Card Debt Again…

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Our credit card WAS paid off. Obvious emphasis on the past tense.

My husband is attending a bachelor party this weekend and the event required one credit card to book the trip for all five attendees (the bill could not be split). Most of our friends know about our recent credit card payoff (maybe shouting that fact from my roof and breaking into song was a clear sign) and naturally suggested that since we ‘had the room’ on our card (as if it were free), that my husband pay for the entire trip and be reimbursed later.

I’m not going to lie. I am upset.

Perhaps I’d be more trusting if this hadn’t happened before with concert and event tickets and in the end, we were always short. People conveniently ‘forget’ to pay or promise to pay later and then get annoyed when reminded. Plus, the credit card will be kept on file in case there are damages to the room or if alcohol is consumed.

When I asked why someone else couldn’t pony up a credit card, he told me it was because everyone is nearly maxed out but us. Um… isn’t that a good reason NOT to loan these people our credit card?

My husband and I rarely fight but this is a sensitive issue for me and I feel like we are opening ourselves up to a lot of potential debt.

Am I overreacting?


Info from a savvy reader…

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Last week, I talked about our next debt payment step and how we intend to pay off the truck loan rather than the student loan even though the student loan has a lower balance. Dave Ramsey suggests paying lower balances first but I decided to rid myself of the high truck payment instead just in case job loss is in our future.

Ann, a brilliant reader, also pointed out that if I paid off my student loan first, I would lose my tax deduction.

As someone who gets WAY too much joy from writing off the student loan interest, I am grateful to Ann for reminding me of this fact.

I’m sure a lot of you have student loans and this should be a consideration in your debt payment plan.

Thanks Ann!


Our next step…

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Now that our credit card debt is gone, a reader asked what our next step is going to be.

Dave Ramsey suggests paying the extra amount on your lowest debt (which would be the student loan) but the minimum payment on our truck is more 4 times higher than the student loan. Plus, the interest rate on the truck is twice as much.

Another good reason to pay more on the truck is to quickly rid ourselves of the hefty payment. In the event of job loss, a student loan can be deferred due to financial hardship – auto loans are not nearly as forgiving.

We’re hoping to have the truck paid off in 10 months or less.

Here we go!


Debt Update…

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Here are the current numbers (I’ll work on getting the sidebar updated):

Total Starting Debt: $38,495.86
Total Paid: $16,727.33
Total Remaining: $21,768.53

Breakdown of Remaining Debt –
Truck: $11,934.57
Student Loan: $9,833.96

We’re nearly halfway there. I got an updated payoff date according to our Debt Snowball Calculator on DaveRamsey.com…

December 2010.

We shaved off 4 months so far. Can I get a Woo Hoo?



Reasons to not sell our truck…

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Oops! Some readers have recently posed the question…

Why don’t you sell the truck?

I neglected to explain the reason we’re carrying the truck payment. It’s funny that no one noticed the debt on the truck earlier. It wasn’t until we paid down enough on the rest of our debt to make the truck HALF our total debt that someone asked about it.

My husband had a Chevy that gave out on us a few years ago and he’s one of those few people who actually need a full size truck for work. He tows trailers, fills it with concrete, moves landscaping, etc. A reliable full sized truck isn’t an option… it’s a requirement. We financed a Toyota truck for 26K two years ago and at the time, it was a great deal – or at least that’s what everyone likes to think after leaving a used car dealer.

Fast forward a few years, a few gas hikes, and a few construction related dents later and suddenly…

The truck is more than just a little upside-down – it’s hanging from its toe nails.

We’d MAYBE be able to sell it to someone for 8K… if we made them test drive it in the dark and promise them it got 58 miles to the gallon completely powered by canola oil. But since we’re honest folks, that’s not an option. Plus, we’d have to buy another full sized truck reliable enough to take the 25 – 30 thousand miles a year he drives for work.

Take the nearly 5 thousand we’d have to pay for our upside-down loan and add it to the cost of another truck and it just doesn’t make sense. I’d rather bite the bullet, pay if off by mid-year next year, and have a truck I know works for us.


Dearest Chase Bank

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I’d like to thank you for offering me a loan when I needed it — *cough* — I mean, when I WANTED it.

While our relationship has been great and I have appreciated your monthly letters of good tidings, I’m afraid I have to end things. You see, I recently met with my tax man and he told me we’re getting back a small chunk of cash which means… all the money I’ve been saving can finally be used to rid myself of you.

I know you have lots of friends like me and you probably won’t miss me but I’m sure you’ll miss the nearly two years of interest I would still owe you if we continued to be friends.

Please don’t take this personally, your service has been exceptional. We’ve actually got along quite well the past few years but it’s not you… it’s me.

I wish you the best in your future endeavors… none of which will involve me.

All my love, but none of my cash,

Rebekah