My Financial Recovery

Credit Card Situation Update

Posted on: April 23, 2009 by Matt 4 Comments

Earlier this week I posted on a discussion my girlfriend and I had regarding paying off my credit card debt. Since I posted on Monday a lot has changed and I thought I would provide an update.  As of right now the $1900 in credit card debt is now down to $601.  This came after applying most of what I had for expenses in my checking account along with some money from my savings.  After thinking about interest rates a little bit I opted to move money from my online savings (which currently earns 1.65% APY) and apply it toward my credit card balance (interest rate of 13.40% APR).  I figure that not paying the extra in interest every month is well worth not having all the cash in savings. In addition I believe I will have the card paid off between one more transfer from savings and the remainder of my checking account balance before the end of the month.  I find this extremely exciting!

Of course we still have normal living expenses and a vacation that I had budgeted for based on my checking account that still need to be paid for this month.  We discussed these items last night and came up with a game plan to work on reducing expenses this month and next month by:

• Cutting back on food expenses: Paying better attention at the grocery store and cutting back on dining out.  We have been steadily getting better here but there is always room for improvement.
• Cutting back on gas expenses: We like to go places and get out of the house.  In our area we drive to a number of different towns to do things.  Aside from vacation we can try to stay closer to home and I can start walking or riding my bike to work.
• Let my girlfriend cover more of the vacation: She has space in her budget to pick up some of the vacation.  I had planned on covering it and intended to pay out of my checking.  However she seems to be committed to fast tracking debt repayment as well and asked that I let her cover more of it.  I have a difficult time letting her pay but I suppose a little growth in this area will not hurt.

My credit card will probably get used before the end of the month and new charges will be incurred but I also anticipate being able to pay them off next month as well with our new plan.  So having the credit card paid off puts me ahead of the goal of getting the balance paid off by October by about six months! I may not be paying it off in full and never using it again as my original plan had entailed but I am working toward that and by not carrying a balance month to month I will not be paying the interest fees! I should also be able to replenish my savings account fairly quickly (within 2 months) to the level it was at before paying off the credit card so that will be available again as well.

I am already looking forward to my next goal of having my car loan paid off (August if I stick with my current payment schedule) and then I will be down to my student loans.  Unfortunately the student loan that needs the most attention is about $20,000 and stuck in collections.  I will simply have to keep moving forward with one step at a time.