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 Post subject: Success in progress
PostPosted: Mon Apr 07, 2008 6:52 am 

Joined: Mon Apr 07, 2008 5:45 am
Posts: 178
I suffer from analysis paralysis, meaning I'll put off thinking about something if I don't like it. I've prefected this routine (to my own detriment) when it comes to personal finance.

I'm almost 32, married, and have three kids. I also have $32,000 in credit card debt and have no retirement savings. Yeah, that's what acting like an ostrich will get you.

Anyway, about four or five months ago I stumbled onto a blog about getting your credit cards under control. It had an interesting post about how to call your credit card company and ask for a lower interest rate. Seeing how I was the ideal candidate since I was so generous to them, what with all the money I gave them, I decided to give it a try. Lo and behold, I was rejected. "No," they told me, "30% is the lowest rate we can give you."

Needless to say, this made me very angry. Weren't they worried that I would take my payments and give them to another card at a lower interest rate? So I decided to look in the mail and see what kind of offers were available from other credit card companies. I was so incensed at being told I had to pay such high rates that I started accepting new offers. I got three new cards that week and another a week later. So I transferred my balances, all $25k of them. (I added another $7k on a "5% until it's paid off" offer from one of my former 30% cards to get a new furnace and air conditioner for the house a month ago. I wasn't thrilled about doing this, but it was better than any other financing option I looked at, including my bank.) I now owe no interest for a year on about $15k of that, and the other $17k is held between a pair of 5% and 10% cards. The interest-free-for-now cards all have "permanent" rates for two years between 10-12% when the first year is up. My monthly interest payments went from around $500 to $125. All that extra money is now going to pay off one of the cards. By year's end, my CC debt should be down to around $25k and hopefully gone in three years.

I haven't had the inclination to use a credit card again, despite the fact that I now have around $25k of credit just sitting there waiting for me to use it. And if they decide to jack up rates exhoribtantly again, I'll be more than happy to switch to another card. I have a mortgage with a comfortable interest rate, and both cars are paid off. So I have no reason to seek credit, and I'm not concerned about whether my credit score would take a ding by opening a bunch of new accounts.

I'll also add that I an extremely meticulous about paying my cards on time, a lesson I learned the hard way when I was late four months in a row several years ago. I now pay them all online through my bank as soon as the statements are issued. I'm giving them no excuse to raise their rates. Oh, I know they can raise them at any time as per the contract. But I'm just not going to give them a valid reason to do so.

My success story isn't in paying off any debt or saving any money. It's a paradigm shift in the way I approach my finances. You've gotta start somewhere, and this is as good a place as any to taste my first success. Now I just have to fight off complacency and make sure this sticks. So far so good over the past four months.


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 Post subject: Re: Success in progress
PostPosted: Mon Apr 07, 2008 11:56 am 

Joined: Tue Mar 11, 2008 12:19 pm
Posts: 1785
Location: Ottawa, Canada
Bronk wrote:
I haven't had the inclination to use a credit card again, despite the fact that I now have around $25k of credit just sitting there waiting for me to use it.


Haha, don't be tempted, Bronk! :) Great job so far, keep up the good work.

Bronk wrote:
Now I just have to fight off complacency and make sure this sticks.


Looks like getting mad enough did the trick. If you haven't heard of Dave Ramsey's "Debt Snowball," I'd encourage you to Google it and see how you can apply it to minimize the interest you pay to the credit card companies.

As for "complacency," I know the feeling. "The Automatic Millionaire" is a great way to keep yourself on track. Just set everything up to come out automatically (specifically, investments), and then you don't need to do anything. You can forget about it, or be lazy, and your retirement savings will automatically build in the background. Just something to think about once your credit card debt comes down.

Good luck! Keep us posted!


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 Post subject: Re: Success in progress
PostPosted: Mon Apr 07, 2008 12:46 pm 

Joined: Mon Apr 07, 2008 5:45 am
Posts: 178
kombat wrote:
Haha, don't be tempted, Bronk! :) Great job so far, keep up the good work.

No temptation here. Just the thought of not being able to pay cash for something makes me sick. I wasn't thrilled about having to finance the furnace and air conditioner, but the A/C died last fall, and the furnace is 30 years old. I had to talk myself into replacing them.

Bronk wrote:
Looks like getting mad enough did the trick. If you haven't heard of Dave Ramsey's "Debt Snowball," I'd encourage you to Google it and see how you can apply it to minimize the interest you pay to the credit card companies.

As for "complacency," I know the feeling. "The Automatic Millionaire" is a great way to keep yourself on track. Just set everything up to come out automatically (specifically, investments), and then you don't need to do anything. You can forget about it, or be lazy, and your retirement savings will automatically build in the background. Just something to think about once your credit card debt comes down.

Good luck! Keep us posted!


Thanks. I started contributing 3% of my salary to the 401k at work just this week. The company matches half, up to 8%. I know it would be mathematically better to contribute the full 8% to that while cutting back on the payments to the credit cards. But I'm just nervous about having that consumer debt hanging around my neck. I'd rather take the hit in lost 401k matchings for the peace of mind of getting rid of the credit cards faster.


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PostPosted: Sat Apr 12, 2008 7:32 am 

Joined: Sat Apr 28, 2007 9:37 pm
Posts: 99
Location: Ottawa
Sounds like you are on the right track, Bronk. Congratulations on getting your head out of the sand. :)


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PostPosted: Sat Apr 12, 2008 9:22 am 

Joined: Mon Apr 07, 2008 5:45 am
Posts: 178
Thank you for not saying my head was somewhere else. :wink:


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 Post subject: Re: Success in progress
PostPosted: Sat Apr 12, 2008 6:19 pm 
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Joined: Mon Apr 07, 2008 7:24 pm
Posts: 5
Location: Toronto, Canada
Bronk wrote:
My success story isn't in paying off any debt or saving any money. It's a paradigm shift in the way I approach my finances. You've gotta start somewhere, and this is as good a place as any to taste my first success.

Free your mind(set) and the rest will follow. Good job. :)

_________________
And lead us not into temptation...I can lead my dang self!


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