After months and months of concentrating all our efforts on paying
down the first of two major credit card debts, we are ready for a change. For
quite some time, all of our extra money was devoted to quick, aggressive,
multiple payments to our credit card. For all our efforts, the payoff was worth
it. We paid down $14,400 in credit card debt within 6.5 months.
Some of this debt was eradicated by using savings, tax
refunds and bonuses from work. If we had extra money coming in, it was just as
quickly sent back out in the form of electronic payments on our credit card.
Things were moving along swiftly, but that method didn’t leave us much to apply
toward savings or other expenses.
In fact, many of our incidental or “splurge” spends were
funded from our savings account. It was very important to us – more important,
in fact – that we erase the credit card debt before worrying about the state of
our savings. Credit card interest is something that can increase your overall
debt balances as well as increase minimum payments. Paying that off was first priority.
Now that our first credit card debt has been eliminated (bye
bye!), we’re focusing on our second – and notably larger – credit card debt
that was converted from a home equity loan. Transferring a home equity loan to
a credit card – even a zero percent interest card – can be dangerous ground.
The terms of the card allow us fifteen months to pay off the entire balance
($22,000) and that’s no easy task. This limited amount of time forces us to be
aggressive, once again, with our payments, or face the impending interest that
will be accrued should we not bring our balance to zero in the allotted time.
There are two options if the card isn’t paid in full, in
time. The first will be to assume the remainder of the debt with interest and
keep plugging along until the balance is paid in full. The second option is to
once again transfer the remaining amount to another credit card offering
zero-percent interest. That option depends on a few different factors, the
first being the availability of such an offer. Availability is based on your
credit worthiness, available credit resources and the assumption that a viable
offer will be presented in time.
All things considered, we won’t stress about our payments or
deadline. Instead, we’ll continue to add to our minimum payments with maximum
effort and see where we’re at in about a year. At that time, we’ll analyze our
situation and create a plan based on current circumstances. We’ve gone back to
the cash envelope system – a method that will allow us to budget ourselves with
cash and avoid unnecessary credit usage. I’ve always been a fan of the cash
envelope system – it’s a great way to allocate appropriate monies toward the
categories you decide are highest priority. Although using cash envelopes will
slightly take away from our previous system of putting every last penny on
debt, it will allow us some breathing room and the ability to focus on the big
picture, rather than anxiously race toward the finish.
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