My debt reduction plan... so far

    Okay, so I made a spending record and made some cuts -- perhaps that really is a "budget." I am scouring the Internet for more tips on saving pennies here and there. I opened an HSBC online banking account for that 4.25% interest rate (4.8% promotional rate through April --if you haven't opened one of these bad boys yet, do it now!). I'm also looking for a part-time job or contract work. Hell, I might start babysitting or something!

     So now we're at the part where I take an axe to my debt forest.
       
    I did the math, and through all of last year I paid off maybe $500 worth of debt. I nearly cried. I know I spent double that on payments, but that was as far as I got. Additional spending was to blame mostly. So I took the cards out of my wallet and haven't used them for months. Besides that, I was running low on cash and had to pay other bills, so I cut back on the cc payments to pay those. In the end, I only made the minimum payments on a few cards while sending big payments to one card only to cut back on that later.

    That madness stops now. I have my debt on three credit cards. Two are intro 0% for the first year and the other is an American Express Blue with a great 6.99% rate. I also looked at my spending record (see how I keep plugging this?) and saw that I could put $525 a month on cards.
    With that, I devised this plan. I keep it in Excel: Download debt_plan.xls
    But here's the gist of it:
   This is the order in which I will pay off the cards. I decided to pay off the card with the lowest balance even though it's at 0%. I think it'll provide a psychological boost. Besides, the APR jumps very high at the end of the promotion in September. I'd rather just get rid of it.
    Chase Visa Balance: $775.64 Pay: $300/month.
    American Express Balance: $7568.33. Pay: min of $150/month (Bump to $450/month when Chase Visa is paid)
    Bank of America Visa Balance: $6726.31. Pay: min. of $75/month (Bump to $525/month when Amex is paid)

    By my calculations, I'll pay off the cards this way in nearly 3 years. I'd rather do it in two. This isn't etched in stone. As I get better credit card deals, I might move balances around to take advantage of lower interest rates. If I secure additional income, please believe that every penny is going on those cards.

    I'll update these figures next quarter (I can't believe I think in quarters now) -- the end of March. Depending on what my spending records show, I might be able to reroute money (like from canceled digital cable and tax adjustments) from other sources to add to this.
   
    Pray for me and wish me luck! I'll keep you posted. 

Comments

[Leanne]

You've got a good plan mapped out here. Great to think ahead to that when you have one card paid off, you don't have extra money, focus that payment onto your next card, you will make great strides this way. Keep going girl, you are doing great! Sorry I haven't been around much, buried under lots and lots of work, I'm reading, just not a lot of time for posting. :)

[mbhunter]

Great planning, and I certainly will pray for you! Thanks for sharing your efforts with us all.

Your posts would be great for the Carnival of Debt Reduction as well as other personal finance carnivals. This will give your blog extra exposure. My blog has details.

Also, the No Credit Needed Network was just started (http://ncnnetwork.blogspot.com); this might interest you as well.