Sunday, December 2, 2007

Getting serious about debt reduction

As you can see from my newly updated monthly totals in my debt roundup #10 post, I am not making a whole lot of progress here. It is frustrating to say the least. It seems that just when I think that we are gonna get ahead of the game something happens like needing new tires or the check engine light comes on and so on and so on. It is really never ending. And sure, people say that is why you need to have an emergency fund so that when things like that happen it does not set you back. Well, what happens when you do not have any extra money to put into that emergency fund? What if you can't save $50 a week by cutting back on Starbucks because you do not drink Starbucks to begin with.

A lot of debt reduction resources seem to be tailor made for people that are spending frivolously regardless of their debt load. JW at Need to Be Debt Free is not a frivolous spender, from what I can tell, and he seems to be having some similar issues to mine. Only I think his might be a bit worse. We do not benefit from the "latte factor" principle because we have already cut back every possible expense that we can.

So, what option does that leave?

The only conclusion that I can come to is that you have to find a way to make more money. Period. Or you will never get ahead.

If you look at my alternative income for November post you will see that I listed making around $1400 last month in online income. I actually made about $2200 doing some online reviews where I won't get paid until this month. That will be reflected in next month's update though. The point is, I have been getting up for work and going to my computer first thing to try to make some money online. Then I go to work and get a little overtime. Then I come home and spend the night working online to make more money. I spend almost every waking hour at the computer but it looks like it might start to pay off.

I am getting serious about debt reduction as of now. Sure, I started this blog back around March as a way to keep track and motivate myself to pay down some debt. I had some victories and some setbacks but am practically still at the same place. Well, that is all about to change.

Here is my debt reduction plan -

By July all but one of the credit cards will be paid off. Here are the list of cards that will be paid off in that amount of time, interest rate and minimum payment:

target.......................959.23............. 19.24%.............. 26.00
orchard bank .......1,781.18............. 22.65%............. 55.00
capital one ..............490.02 ..............5.99% ..............15.00
priority visa .........2,442.47 ...........27.49% ..............45.00
american exp .......1,595.68 ..........18.24% ...............20.00
ba visa ..................3,483.78 ..........29.99% .............162.00
capital one ..............300.00 ...........0.00% ...............15.00
capital one ...............785.52 ..........16.90% ...............35.00

And here is the one card that will be left to pay off after that:

ax blue ................17,511.50........... 12.24%............. 349.00

So, that is the plan. I looked up a debt snowball calculator last night to see how quickly they could be paid off if $2000 extra was applied each month and it started counting in January and said that they could be paid off in six months. Where am I getting that $2000 extra? The online income. If more than $2000 is made then it will all go towards the debt.

Now, here is the good news. Both of us have a decent possibility of getting raises next month. And if that happens then the extra cash will all go towards debt as well. So, that means that the debt could be paid off sooner than six months. Well, all of the credit cards but the one. Then that will leave the car and the student loan. And in the event that anyone gives us cash for Christmas is can go towards debt.

We also have some monthly prescriptions where we are going to play the free gift card game each month. This past month we transferred to Kroger for $60 worth of grocery gift cards. This month we are doing CVS for $50 in gift cards. And I already have a thing for Kroger for January for another $40 in gift cards when we transfer back. This is what will help us to stay on track with the budget.

After all the credit cards but the amex blue is paid off the next effort is on the car. The plan is to pay it off, sell it for somewhere between $7000 - $10,000 (depending on how long it takes to get it paid off) then buy a car no more than $3000 and bank the rest towards debt.

Then the amex blue is to be paid off and then the student loans.

And that is it. This is a declaration of getting serious about reducing and eventually annihilating debt. It gets serious next month (because I have too many outstanding things this month).

4 comments:

Our Debt said...

SO GLAD TO KNOW I'm not the only one in debt!!!

Jennifer said...

I wish you the best of luck in your effort to become debt free. I am on the same path.

Kris said...

Sounds like you have an awesome plan!

Our state limits how many times you can transfer a prescription. :( That was a real bummer - 3x in 12 months is all that's allowed.

Good luck!

mapgirl said...

Very interesting to see what you have out there. You might want to call Capital One and combine all three of your accounts into one single account. That will reduce the number of payments and perhaps you can ask them for a reduced rate to 5.99%?

Have you considered consolidating all your credit cards onto one card with a low rate? Sometimes there advantages to that if you are paying over 18% on your cards (which I see you are on a few of them).

Good luck! Yes, making more income definitely helps with the debt reduction plan. Sometimes, there isn't anything left to cut.