I’ve Paid For This Twice Already…

Archive for the ‘33 days’ Category

So what my post this morning failed to address and NCN asked on Day 8 of his 33 Days series is how hard is it to live without using a credit card in our increasingly electronic/digitized world?

Actually, really, not too hard. All because of the debit card. I know that a debit card is theoretically not as secure as a credit card (although many banks, including mine, are closing this gap rather rapidly) and the rewards are not as great (although I am just glad I get rewards with my debit card now) but in day to day life, there is really not much difference in how I operate. I use my debit card for just about everything. I do have three credit cards, as I have mentioned before, and for a while I carried them around in my wallet “just in case” but honestly, just in case never happened. Even things like renting a car when my unoccupied car was hit in a parking lot or having a locksmith come to fix my car when the lock broke I could do easily with my debit card, no problem.

I do make one concession that I might not make sans debit card. I have a very low interest earning savings account at my brick and mortar bank attached to my checking account for overdraft protection purposes. Not to protect against me causing an overdraft exactly (although it can do that too), but in case I needed more money than my checking account had in it, I could very quickly (even through my cellphone) transfer money from my savings to my checking. Although I have the rest of my money in ING Direct savings accounts, I keep my emergency fund at the brick and mortar savings earning very little interest. My emergency fund is small though, only $1000, so the losses in interest are not spectacular. I don’t intend, even when all my debts are paid, to have a larger emergency fund in that account. The 3-6 months of expenses account once I am out of debt will be in a high-yield online savings.

It may take me a year to earn a $25 Target gift card through my debit card reward points plan but for now I am very happy to have the peace of mind that I am spending my money that our family has already earned, and not a credit card’s loan.

~J

I have used a credit card once in the past almost 4 years, and even that once is still making me cranky (it was paid off immediately, it just wasn’t worth the hassle for a free gift card I think). I plan to use a credit card one more time, within the next 5 days, to complete a balance transfer of my remaining credit card debt to a card with a 0%-interest-no-balance-transfer-fee offer, and then I’m not sure I’ll ever use one again. Maybe. Maybe someday when I’ve decided I behave responsibly with money. I never ever want to be in a position again where I have to pay credit card interest. I know there are rewards with credit cards when used responsibly and paid in full every month, I’m just not sure for me it is worth all the stress I have created for myself with them in the past.

What’s your tipping point? If you are one of the people who have had trouble with credit card debt in the past, what was your tipping point where you realized that you couldn’t continue to use credit cards and make any forward progress financially? I remember mine very well. I don’t know why it was the tipping point, for it wasn’t the first time I’d been in that situation, but it was.

I was sitting down to pay the monthly bills, and again, I didn’t quite have enough money to go around. I had two credit cards, and one had a huge (~$11,000) balance, and the other I had just finished paying off, again. It was a vicious cycle. I would pay off that card, then the next month end up writing a convenience check on it to pay the minimum payment on the other card, pay it off the next month, and run out of money and end up doing it again. We were no longer actively using the cards, which had gotten run up during my spouse’s unexpected unemployment, but we weren’t getting anywhere in paying them off either. This time, somehow, it was different. Maybe because I had just recently found out I was pregnant with our first child. Maybe it was because I’d had yet another discussion with my spouse about why we were short and I needed to use one card to pay the other. Whatever it was, this time it worked. That convenience check was the last one I ever wrote. Every month since then, I found a way to pay all the bills without resorting to moving credit debt around. Sometimes I was seriously holding my breath until payday, but we made it work. At first I was only paying a dollar or two over the minimum payment, but slowly the credit card debt started to shrink. Not quite four years later, we are currently at less than half of that high balance and going down faster every month. I hope to completely pay off that debt by this time next year.

I never ever want to be in that place again. I never want to feel trapped by debt and like I was drowning under it. I won’t say I will never use a credit card again once we are no longer in debt, but if I do, it will be paid off in full every single month and it will be in a responsible manner that adds to my life, not subtracts from it. We’ll see if I decide that the possible rewards are worth the risk.

What was your tipping point?

This post is inspired in part by Day 8 of NCN’s 33 Days series. Combined with the rumblings in my brain lately as my balance transfer date looms near.

This slightly exaggerated but rings all too true account of my introduction to the Debt Snowball idea is inspired by Day 7 of NCN’s 33 days and 33 ways to save money and reduce debt.

You mean to tell me that once I finish paying off a debt, I take that money and add it to how much I am paying on another debt? I don’t just get to do whatever I want with it and improve my standard of living? Isn’t the whole point of paying off my credit card so I have more money available to spend and less bills to pay? You mean it isn’t? I’m not just paying off my credit card so I can buy more cool stuff? What? I should pay off other debts too? Huh?

But I had *plans* for that money. That $200 could totally buy me some sweet stuff… every single month! I could get some new furniture and a nice car stereo and maybe take a vacation…

You don’t think 7% is a good interest rate to just let slide for a while? My student loans, they’re on a payment plan! They’ll be done eventually. 15 years isn’t really all that long, right? I mean, someone’s got to know what they were doing when they signed me up for the program, right? Right? Someone did, but it wasn’t me is what you’re saying? Remember though, student loan debt is GOOD debt. That means I want to have it, it’s good for me! Think about the tax advantages! So the 7% interest rate cancels those advantages out and then some, eh? Are you sure? Remember, GOOD debt. Sallie Mae loves me, they are my friend. They’re not? They’re always telling me nice things about what an awesome customer I am. Because I keep paying them money… wait a minute…

Dang. But I had *plans* for all that money…. :sigh:

I did eventually see the error of my thinking, and I am totally on board the debt elimination train now. I still daydream about all the things I could be doing with that money though….

On Day 6 of No Credit Needed’s 33 Days and 33 Ways to save Money and Reduce Debt Challenge, the challenge is to share your personal finance story, and if you already do (via a personal finance blog), then talk about why you blog about personal finance. So why do I blog about personal finance?

The answer actually relates back to the No Credit Needed blog. I’ve been working inefficiently at getting out of (credit card) debt for several years. As I got more committed and serious about it over the past year or so, I started to do more and more research, and also look for more ways to keep focused and motivated through the long dull unmotivating paydown time. I know that some people will pay off small debts first to keep motivated and feeling accomplished, but I had no small debts. Nothing I owed, at the peak of my owing, was under $10,000, so none of them were going away fast. One of the things I did to stay motivated was join an online debt support group messageboard. One day one of the regular posters there put a link to No Credit Needed in a message, talking about how his story inspired her, and I followed the link and started reading his blog. By this time he was long out of debt and on to accumulating wealth, but I quickly was hooked on the whole story. I read his entire archive in about 3 days (there is a lot there, I was just interested!) and the whole idea of blogging about getting out of debt seemed so empowering. I decided to start my own blog to keep myself motivated and accountable, and also so I would stop talking nonstop at my spouse about my different ideas and theories and thoughts about debt reduction, he could read it all at his leisure instead and we could have shorter more focused discussions because I’d already brainstormed everything to death. I never imagined anyone but my spouse and I would find it interesting enough to read it.

But people do and I’m glad. It is great to share ideas and get feedback and *that* keeps me motivated and focused and on the right track. Even when the debt numbers are still huge and the dates for payoff seem far off. Thanks!

~J

Day 5 of NCN’s 33 Days and 33 Ways series is to eat out less. Eating out can be a huge money drain, but as NCN points out, not just for dinner. Lunches out at work can very very quickly add up too, especially as a regular occurrence. My spouse goes to work every weekday, and only very rarely for a special occasion does he eat out for lunch. In fact, I can only recall once in the past year, for a goodbye luncheon for a coworker. We have incorporated steps in our nightly routine to make his “brown-bagging” it as easy and tasty as possible. If it isn’t easy and doesn’t taste good, no one will do it, so we worked out a system that makes a homemade lunch even better than going out to eat!

1) Make tasty meals for dinner that are easy to reheat in the microwave, and then make twice what you need for dinner. I incorporate a lot of “one-dish” or casserole meals that are easy to reheat in one step at a later date. You don’t need to do this every single night, but at least 2-3 nights a week is ideal at first.

2) While dinner’s cooking, prepare your tupperware. Put a label on each lid (I use medical tape that is easy to peel off later) with the name of the meal (“Cheesy beef, broccoli and rice” for example, it doesn’t have to be terribly creative, just descriptive) and the date. Match labels to containers, usually we have 2-3 for each meal. As you do this more often you’ll get a feel for how many lunches a particular meal will provide.

3) When you’re dishing out dinner, dish some into tupperware. At the same time you’re filling everyone’s plates, have the pre-labeled tupperware dishes out to dish a lunch-sized leftover (I call them lunch-overs) into.

4) Stow some in the fridge and some to freeze. I look at how many lunch-overs are in the refrigerator already, and if there are already two, I pop the new ones into the freezer.

5) Nights you don’t make a dinner with lunch-overs, check the fridge and defrost if necessary. On nights we have a meal that isn’t lunch-over friendly, I look in the fridge and make sure there is a lunch-over ready for the next day. If not, I pop the oldest out of the freezer and into the fridge overnight to thaw. You can take them to work right from the freezer, but my spouse has found they don’t microwave as well that way.

6) If you build up too big a stash, have a lunch-over dinner night. If we get too many in the freezer (some weeks one-dish things are all I cook, my spouse likes them so much), I’ll defrost two and make them into a dinner with a new veggie or starch side to liven it up. Makes a really cheap dinner which saves money as well!

I hope some of these ideas help you to be able to incorporate brown-bagging lunch an easy and yummy part of your routine! This takes almost no work in the morning, simply pop the lunch-over into your bag with a granola bar or piece of fruit, and go!

~J