Friday, May 27, 2011

Goodbye cards of summer

A new Discover card came in the mail today.

I didn't realized the old one was about to expire because it had been shredded months ago. I'm not sure it really was about to expire, because the expiration date on the new card is only about 18 months out.

So, I activated the card, which seems strange to do, since this one will just be shredded too. But I find myself just letting the card sit here, its new baseball-themed design staring up at me from the table.

According to my debt payoff plan, this card should be paid off in sometime around the time this card is set to expire.

Maybe I should just close this account to new charges. I had been keeping the accounts active, in the hopes that as my debt is paid down it will actually help me get a lower interest rate on the couple of cards that are charging insane interest based on their formulas that seem to think I will default, even though I haven't had a late payments in more than 4 years according to my latest credit report. But the Discover card actually has my lowest interest rate, and I don't have any reason to think it will get any better before the card gets paid off.

So, I don't know what's the best thing to do or the right thing to do on issues like this in my debt payoff journey. But I know if the cards are shredded they can't be used.

So, the pretty new baseball-themed Discover card has been processed through the shredder. Bye, bye baseball Discover.

Tuesday, May 24, 2011

I only cheated a little bit

I have not been faithful to my budget. I've been cheating.

Fortunately, I have not been using any credit cards. All my financial indiscretions have been committed with cash.   I haven't busted the budget completely, or burned through any funds needed for bills, but I've slipped up.

This month, I have had some extra money in the bank. And I've been eating out at restaurants and spending some money that I know I should be devoting to my debt payoff plan. The wasted funds don't add up to big cash, but it's allowing some old, bad habits to creep back in to my life.

I know a lot of the reason is that I'm bored. I'm just tired of not having a life in order to stick to the budget. I am seeing the progress of the last year of work. I no longer have to spend every penny I bring home just to make minimum payments and afford food. Now, if I only paid the minimums on all my accounts I would actually have some money left over to play with. And it's tempting to play.

Maybe it's because the weather has been getting better. I've felt cooped up for a long, long winter.

Perhaps in this next phase, in order to get all the way through the debt payoff plan, I need to find a no-cost hobby that gets me out and about a bit more. Or, maybe, if I'm going to stay cooped up, I could spend more of the time I spend in front of a computer writing more rather than staring at numbers in a spreadsheet. I know the number, though they are changing a bit more rapidly each month, don't change when I just stare at them.

Yes, I've cheated, and I'm not proud of that. But I haven't pulled out the plastic, in spite of the urge to splurge.  If I keep it up, in one year I should be less than 2 years from being out of debt.

Sometimes that seems so close. But far too often it all feels so far away.

Saturday, May 07, 2011

Year 1 in my war on debt

It was one year ago this month that I finally sat down to figure out just how much debt I had accumulated and try to figure out if there was a way out. One year ago, I wasn't sure there was, but I knew I needed to do something. Figuring out how much I owed was the first step. The second step was trying to learn how to do a personal budget and live on it.

There have been ups and downs, and there is still a long ways to go. I figure it will still be about 3 years before I am debt free, depending on what twists and turns life takes between now and then. That still seems like an awfully long time, and it gets frustrating, but it is good to have a year's worth of numbers to see that I have made progress. It's the one, solid thing that keeps me going and keeps me working the plan.

Today, I just paid off my 5th debt. The first four were all small, under $1,000 each. But this one was my first significant debt paid completely. I thought I would feel much more excited about it than I do, but the truth is, having just sent off the biggest chunk of money I have paid at once on a bill has left me feeling a little big sick to my stomach. It hurt to pay that much.

This one is on a credit card account that has actually been closed for years. I don't remember why I closed it for sure, just that I was feeling abused by the company at the time. Yet I have been sending them monthly payments for years now anyway. But not after today. Today that debt is paid.

Over the last year, I've reduced my debt by about $11,000, nearly $4,000 of that on the debt paid off today.

My debt snowball is growing, and that's good. It's going to take a while to pay off the next lowest debt on the list though. It's this next stretch that may be the one that test my resolve to keep as aggressive on my payment plan. The next 6 debts are all bigger. My goal is to try to pay off one more by about the end of the year if I can.

I got a check in the mail this week from sale of some stock that I had. That's what allowed me to pay off the one debt and will allow me to pay a chunk toward the next debt on the list. But I have to admit, that having the most money I've had in the bank, perhaps ever in my adult life, makes it awfully tempting to go spend some money on something fun or buy some things that I could use, like some new clothes. I also don't know yet, what the tax implications of the stock sale will mean yet.

One year into this, I now realize the year went pretty fast and I'm proud of how well I've been able to remain focused on the plan. I've got a confidence now that I can get through this and can actually be debt free. But it's still hard to fathom how I can continue to live like this for three more years. It's not that I feel a need to use credit cards again. But the lifestyle dial back has certainly been painful. There hasn't been much "fun" over the last several years, even before I really had a plan I just knew I was in trouble and needed to cut expenses.

The Federal Reserve reported this week that consumers increased their credit spending in March and that credit card spending increased for only the second time since August 2008. I'm glad I'm not one of those increasing their personal debt. But I understand the desire to spend some money.

One year ago, I was still hoping for a miracle. I was still hoping someone or something would step in and save me financially. Now, I know, that this process of learning to manage my money, live on a budget and sacrifice over a long haul should all serve me well in making sure I never get myself back into a mess like this again.

The End Debt Daily