Plasic Pinch Update for June
I know it’s almost the end of July and I have put this off long enough because I was scared of it. It is time for me to suck it up and deal with it though. I feel like I got kicked in the financial gut last month. This is a blog about paying off debt and then I went and spent money I didn’t have and that set me back. Part of the issue was I didn’t properly budget in advance to handle the car insurance bill, which was paid in full, but everything got tight. Unforeseen expenses early in June drove me to the point of using the EF to hold us over until I got paid and then correct it. At any rate, here’s the ugly truth on the credit cards:
| Credit Cards | Balance | Credit Line | APR |
|---|---|---|---|
| Bank of America | $4,148.90 | $5,500.00 | 17.24% |
| Associates | $1,323.89 | $1,700.00 | 18.99% |
| Citi Dividend | $5,200.00 | $8,700.00 | 9.90% |
| Zales | $1,100.86 | $5,000.00 | 9.90% |
| Totals: | $11,773.65 | $20,900.00 | |
| Debt-to-Credit | 56.33% | Change | -1.85% |
My Citi Dividend card is going to get even uglier because I used it to replace my wife’s stolen sunglasses. There are also some auto charge things that end up on that card, so I’ll beef up the payment to that account since those charges should be paid instead of charged. On a positive note all the other balances on the plastic are lowering and my payment on Bank of America has rapidly dropped by about $30 that can be refocused to other debt. I think for a short term goal, I would like to pay off the Zales account. Currently I pay an inflated payment anyways but if I were to double or triple that amount, it could be easily knocked out by the end of the year. In an attempt to reduce some of the comments, I have already taken the credit cards out of my wallet and now the only plastic I have is my debit card.
Starting with the lowest balance and paying that off will definitely have a motivating effect.
Also, I would keep your minimums always the same even though the bank reduces them, that way you are throwing more money at the same card and will pay it off faster. The snowball process only works if you are able to pay off a card and apply that payment to another card.
Thanks Maria. Actually what I have been doing is paying the same amount like I don’t notice it, but the extra goes to the smaller balance. I’m also thinking about putting my high interest card balance on a 0% offer if I can find one with no fees to transfer. Once the lowest balance is paid, that 0% card would become my focus and two cards could be destroyed this time next year.
The problem I have when it comes to paying more towards debt is having less cash available. My wife and I still have issues when it comes to how we go about spending money. She is getting better and I am lightening up when she needs things like hair care products and I used to flip out. I think we might try a more simple approach of how much money we spend per week and see if we can break it down that way to stay on track. If I can get the issues resolved from her purse being taken and accounts used, that money will come back to us. I thought about making a bigger payment using the EF until that money comes back since it’s going to go to that purpose anyway. We’ll see what happens.
Have you tried using bankrate’s debt reduction calculator? It could really help you set some firm goals. Why did you use the credit card? I think you should cut them up.
transferring the balance onto a card with an interest free period would give you some relief for a few months. i am thinking about doing this to reduce the interest charges. I have cut up the card so there is no temptation. My husband and i also are different when it comes to spending, he is a latte drinking yuppie who like that lastest toys and i am much more careful with money. to stop arguments we both have $50 a week to do what we want with, i save mine her spends his. otherwise we would argue over his luxuries. good luck!
When it comes to the EF, I have always refrained from touching it(except for my recent withdrawl for my grandmother’s funeral) in lieu of “future money.”
Let the future take care of itself. Pay what you can at this moment in time.
As for tracking, it does help to understand where every penny goes and I just know that your wife will get on board soon. Keeping my fingers crossed!
And another thing, I disagree about “cutting up” your cards. Eventually you will need the numbers to close the accounts. Just put them on ice or something so they are hard to get at.
I used the credit card for our anniversary weekend expenses and then her purse got stolen and quickly replaced things. I’ll get that back down to where it was, but it will take a few months of extra payments to pull it back under control. I’m going to shred them as I pay them off so it feels destroyed.
We also try to do the spending money per week, usually $20 every week. I have a tendency to only take my $20 every two or three weeks though and pay extra on my credit card. The way I look at it is I’ll brown bag lunch for a week to pay $20 extra on a credit card. What happens when you stop eating out? You lose weight! I’ve lost about 25 pounds over the past couple months and my wife noticed I didn’t have a gut anymore. Guess the credit card debt is beating me into shape as I kill it with cash.
We are proud of you, your not doing too bad! don’t worry, the debt will go away, just keep making some payments… patience is key to everything in life!
Yeah, life happens. It’s a bummer when you have to charge those credit card beasts again. For a person trying to pay them down it hurts.
I hope things improve for you soon, interest is a pain.
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