New year, new strategy

I've been working to pay off my debt for a year and a half. Based on my latest estimate, I have 2 years to go. Then I will be debt free.


I got through my second Christmas without charging any gifts or expenses on a credit card. So, there is no post holiday remorse or added financial stress to deal with this month. I didn't really make any resolution for the start of the year, but I did set some goals for the year. I reaffirmed my goal to work my debt payoff plan for the year.

This month I will pay off my sixth debt. Five more to go.

As I've posted before, I have been using the debt snowball method to pay off my debt. I can see why some financial experts, particularly Dave Ramsey, recommend the method for its emotional benefit of seeing some balances go to zero quickly. I needed that reinforcement. I needed a few wins, even if they were small, pre-season wins.

Now, 4 of the 5 debts that are left are all within a few hundred dollars of each other. I plugged the numbers into a couple different debt-reduction calculators which show that whether I pay the smallest debt or the one with the highest interest rate (sometimes referred to at the debt avalanche), the time it will take to pay off my next debt and all the debts are about the same. What will change is that I will save a good chunk of money on interest.

I want out of this mess as quickly as possible, and I want to pay this crap off as quickly as possible. And I really like the idea of paying Chase as little money as possible, since they are charging me the highest interest rate. I'm still a bit angry and bitter about that. I look forward to closing that account as fast as possible.

The debt I will get paid off this month is actually the second highest rate of interest. Neither creditor has budged on their rate. It will be good to be done with them both. But in an ironic twist, an apparent sign that at least one of my creditors is not assuming I will default, one credit card send me a notice this week that they were raising my credit limit. That follows an offer a few weeks ago from the same creditor that was offering my a loan of up to $25,000.

I won't be taking them up on the loan offer. I will, however, stretch out the interest I will pay them, because of their lower interest rate. That now looks like it will be the card I pay off last. That payoff has been penciled in on the calendar for January 2014.

But I will be doing my damnedest to push that date up earlier if at all possible.

So far so good. I am ahead of the calculation originally made in 2010. I have two more debts paid off than I was expecting to have paid by this time and my final payoff date is now projected 4 months ahead of that original estimate. The debt snowball has grown.

Now it's time to start an avalanche.