Week 2 of 80 “Not Impressed With Our Debt” – The Rules

credit-card-bill

Last week I wrote about the Plan for eliminating a big chunk of our debt. This week I want to write about the Rules I have set for us along this journey.

Plowing large amounts of money into your debt each week can get pretty intense and if you don’t have rules set up for yourself you will definitely fail.

When I was coming up with this plan I gave myself these following rules:

(RULE #1) As I am paying off one of the credit cards (right now its the Old Navy) I will pay only the MINIMUM monthly bill on the other two cards. I understand this is traditionally not sound advice and the experts would say pay the card that has the highest interest rate first.

I think that advice is stupid. Why? Because for me it’s all about cash flow. If I can get the lower or no interest rate card paid off first it frees up money quickly that I can put into another debt faster.

(RULE #2) While I am paying off one card I can still use the other cards in very small amounts.

Again not a good idea say the experts.

(RULE #3) If at any time we have an emergency, like the hot water tank goes or the car needs repairs I can take the amount we would have put towards the current debt for the week and use it for that emergency. Now, If I have a REALLY big emergency like something in the thousands I can take that amount for a month and just add that on to the end of my plan. So instead of 80 weeks to pay off my debt it may take me 84 weeks.

Does that make sense?

I know this plan is not fullproof and the experts say to have an emergency fund of six months salary or some other advice but realistically could I even save that much?

Also the experts say to pay more than the minimum each month on your credit card. I have paid more than the minimum for YEARS and it has done nothing for me. I called the credit company on one of my cards one time and asked…”I have been paying $200 over the minimum for over 2 years. Why has my cash advance balance not gone down in that whole two years?” You know what they said to me? “What you pay over your minimum payment is not enough to make up for the interest charged” What?? I don’t even own the car anymore I took the cash advance out for!

So I am done paying more than the minimum for the other two cards. Lets see what happens if I pay a lot on one card and the minimum on the other two.

As far as the emergency aspect of this plan, Let’s just use an easy number like $500. If I pay $500 a week into my Credit Card and an emergency comes up like the hot water tank goes and it costs $1000 to replace it, I would just take the $1000 I would have put into the credit card for the two weeks and pay the hot water tank bill. I wouldn’t charge it on my credit card and I would put the two weeks on to the back of the plan so it would take me two extra weeks to pay my debt. Not so bad, right?

Hopefully emergencies won’t come up very often but your never know.

Lastly I want to address using the other credit cards while I am paying off the one.

I am not talking about going crazy and buying a bunch of clothes and stuff. What I am talking about is while doing this “paying off debt” thing it can get pretty frustrating at times and instead of going on a super duper spending binge and blowing the whole plan, I am talking about blowing off a little steam and maybe taking the family to the movies some afternoon for $50 on the credit card. That’s all.

You have to give yourself some sort of reward every once in a while or you will have a breakdown and then you will give up.

I guess that’s just three rules but they are important ones.

Believe it or not I made my first extra payment to Old Navy last week and after paying the rest of the bills for the week I still had money in the bank account. That’s amazing for us! Today I will make another payment. Can’t wait to see what happens this next week!

Week 3 of 80 I will write about what is different this time around for us and why I think this plan will work. See you next week! -MM

 

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Week 1 of 80 “Not Impressed with our Debt” – The Start and the Plan

Credit-cards

Yesterday’s post laid it all out. “I am not impressed with our debt” “This is for the birds”

I said I wanted to tackle about $35,000 in debt in the next 80 weeks. Here is the starting number, give or take.

$35,924

The plan is pretty simple. We are going to take the majority of my husband’s paycheck and plow it into the debt each week and live off of my paychecks. I’ll talk about what we do for a living in another post. Now keep this in mind, we have, in the past, lived paycheck to paycheck so closely that most weeks even going out to the movies would break us. So what has changed? Again that’s for another post 🙂

Each week I will pay a large amount into just one of our debts. The first debt I am tackling is my Old Navy Card. This isn’t a store card it’s a Mastercard. With 28% interest!

Believe me I have tried for YEARS to get rid of this card and I swear it has never gone down, no matter what I tried to do. I called them to see if they would give me a better rate of interested and they flat out said NOPE. They do not give a lower interest rate, period. So I fixed them! I applied for a credit card through my local credit union and transferred the entire amount to the new card with 0% interest for 12 months. That 12 months is up in November and I want to get it paid off before the interest starts again.

The balance on that is about $6500.

Each month I will give you an update on the individual debt and the whole picture. Each week I will update you on how I am doing keeping the cost of living down for us.

I make my first payment to my “Old” Old Navy today. Wish me luck!

-Next week’s post will be about “The Rules of this Game” -MM

 

A Journey

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I hesitate in writing this post because if I fail, everyone will know it. I feel that I must though, because there has to be more people out there like us that have this problem.

Debt.

We have been plagued by it for the past 8 years. My husband and I were each going through divorces when we met and then we jumped into opening a bakery together. It was good and then it was bad. We still haven’t recovered from it.

So that’s pretty much the back story. We aren’t people that go on expensive vacations and buy tons of clothes. Most of our debt has just been living expenses. Surviving expenses more like it.

So why am I writing this post now? Because I have come up with a plan. A solid plan I think. It won’t be easy but in the next 80 weeks, that’s about 18 months, I want to pay off about $35,000 in debt which would leave us with just a home equity and a small balance on our mortgage.

A little scary right? Yeah I think so too but we can’t keep letting this rule us. We are young and have some living to do. This debt stuff is for the birds!

I plan on updating once a month on the progress we make in paying down our debt but I will post weekly about the steps we took to get there.

Take a deep breath with me.

The first post will come tomorrow. See you then. -MM

SAL Pretty Spring House #4

That was a fast three weeks! I have been working mostly on the white picket fence and flowers since my last update. I thought these four seasons projects would be quick but there is a lot more to these than I thought.

Here is where I left off three weeks ago:

Here is where I am now:

Lots of filling in left to do plus there is a surprise in the sky that I have yet to start.

It’s been a busy month for us. Just about three weeks ago our daughter and her husband moved to the UK for the US Airforce and it’s been fun watching her explore and get used to her new surroundings! To all of my English buddies, look out for Emili and Phil Schwan for me!

See you in another three weeks. -MM

Please go and visit the other members of our SAL to see what they are up to. Their blogs are linked below.

SAL Pretty Spring House #3

I definitely needed a change when I selected this project for my SAL this time. I am so much more motivated to stitch this one!

Here is where I left off last update:

And here is where I am now!

Not bad huh?

Please visit the other bloggers in this group and check out their progress on their stitching projects. You will be amazed what you see. Such talented people!

Avis, Claire, Gun, Carole, LucyAnn, Kate, Jess, Sue, Constanze, Debbierose, Christina,

Kathy, Margaret, Cindy, Helen, Steph, Linda,

Heidi, Jackie, Sunny, Hayley, Tony, Megan, Timothy

Also Happy Fathers’ Day to my US friends! -MM

June Garden Update

Hi all! Just a quick garden update for you today just click on the link below.

Lots to do still but I am pretty excited about how much we have gotten done so far.

Have a great weekend and I’ll update you again soon. -MM

**June Garden Update** click on

Switching it up for the SAL. Pretty Spring House #2

I have been working on my SAL Onions and Gourds all through the fall and winter months. I have gotten a ton accomplished on it but it’s time to put it away for the spring and summer because I need something light and fun to work on.

Last time I showed you Spring House by Brooke Nolan.

Here is where I started three weeks ago:

And here is my progress after three weeks:

Not a lot done but my garden has been calling me more.

I am not alone in this SAL, not by a long shot. If you click on the below links you will see some very talented stitchers! If you are interested in joining our group please contact Avis, the first link in this group.

See you in three weeks and Happy Memorial Day to my US friends! -MM

Avis, Claire, Gun, Carole, LucyAnn, Kate, Jess, Sue, Constanze, Debbierose, Christina,

Kathy, Margaret, Cindy, Helen, Steph, Linda,

Heidi, Jackie, Sunny, Hayley, Tony, Megan, Timothy