Although my goals are to get out of credit card debt and I haven’t been too happy with the way some companies have been treating their customers lately, I do see times when you can use them as a tool to get a better deal.
I know some people get good rewards by putting purchases on a credit card and paying off the balance each month. To make this work you need a good rewards card plus the discipline and cash to pay them off each month. You also need the discipline to make sure you don’t spend more than you normally would when paying by cash just to get more rewards.
Today, I was doing some shopping at Sam’s Club and saw an offer saying they would give me a $40 gift card if I applied for a Sam’s credit card and spent $100.00 with it the same day. My purchases were going to be more than a hundred dollars anyway so I decided to do it. I have some cards that pay rewards and I’d have to spend a whole lot more than $100 to get $40 back, so this seemed like it was too good to pass up.
The balance will be paid as soon as bill arrives so I won’t be paying finance charges and I may never use the card again.
At the beginning of the month I wrote that I would be trying to us several of the “102 Ways To Generate Extra Cash” that I read about on SavingAdvice.com to make some extra money to put toward debt. I’ve been trying them, but haven’t posted about them until now.
I was planning to do #9 “Sell your junk on eBay, Craigslist, Amazon or any of the other good used marketplace websites”, but I haven’t decided what I want to sell. A few days ago an opportunity fell into my lap.
I have an MP3 player I bought about 2 years ago. A few of coworkers liked it and bought the exact model. One broke his and I found a good cheap used one on Ebay for him to replace it. One of my other coworkers knew about this and came to me to ask if I could find another one because he had a friend who lost his.
He told me how much his friend was willing to pay and I started looking on Ebay for one. Then I had a thought. Why not just sell him mine? I rarely use it and it’d be a good start to my monthly goal of raising extra money.
I sold it for $75.00
I also renewed my membership with Sam’s Club and had a coupon for a $10.00 gift card with a renewal. That card doesn’t exactly count as extra cash, but I can use it for food or gas and use the $10.00 cash that I save to put toward debt.
I’m counting that as $85.00 so far and I still have a lot of ideas to try.
Today I received a letter from a credit card company informing me that my Annual Percentage Rate would increase from 16.24% to 27.99% unless I reject the increase. By rejecting the increase, I will be unable to use this card anymore. If I do use the card again, the rate increase will go into effect then.
There are still seven debts ahead of this on my debt snowball schedule, so I will only be making minimum payments on this account for quite a while. I definitely do not want any additional finance charges added, so I immediately called and rejected the offer. I had no plans to use this account any longer anyway.
The rejection process only took a couple minutes and was handled by the automated phone system, so I never talked to a person.
To make sure we don’t use this card, I have shredded the cards we have.
I finally completed updating my spreadsheet for the month of March. Some of the categories I am tracking are: Total Minimum Payments Due, Total Interest Paid, and Debt Snowball Balance.
The Total Minimum Payments Due is the bare minimum I would have to pay each month to avoid any late fees. This includes all my Mortgage, Car, Credit Cards, Utilities, Insurance- any bill that arrives that says you have to pay this much by this day.
When I started this spreadsheet in January the minimums added up to $3920. Last month the minimums added up to $3177. That’s a difference of $743 per month. When I was trying to pay $3920, I was coming up short and having to go further in debt to pay for other needs like food and gas. There was also a lot of borrowing from one account to pay another. Needless to say there wasn’t anything extra to pay down the debts. That $743 dollar difference makes it a lot easier to pay cash for everything and apply extra payments toward debt.
Total Interest Paid is just what it says: A total of how much of my payments are going just toward the interest. When I paid $3920 in January, $1642 of that just paid interest on my accounts! What a waste of money! Through refinancing and paying down debts, I reduced that amount to $1030 in February. It went back up to $1069 in March due to some balance transfer fees, but those transfers will lower interest for the next 12 months. I expect this number to be under $1000 from now on. The lower I get this number, the more my payments go toward principal instead interest and the quicker I get out of debt!
Debt Snowball Balance is how much I still owe on all my debts other than my mortgage. That number dropped from $36353 in February to $34676 in March thanks to some large payments my tax refund allowed me to make. I have updated my NCN Network pie chart in the right hand column with that amount and will continue to update that at the end of each month.
I wish I had started tracking all these numbers years ago. When you have to stare at them every few days, it keeps you focused on the goal. I used to just stuff the bills in a drawer until it came time to pay them. I had no idea what my total balances were or how much interest I was paying. It’s amazing how much progress you can make in just a few months of diligently paying off debt. All of a suddent it’s easy to make the minimums and then all you have to do is decide what to do with the extra money. That’s a lot more fun than trying to figure out where to get the amount you can’t pay!
One of the blogs I follow regularly is SavingAdvice.com and last week I read a great article by Jennifer Derrick titled “102 Ways To Generate Extra Cash“. After reading through the list, I was inspired to try several. I have decided that I will begin on April 1st and track how much extra cash I can generate. I can already tell some of the extra cash will be basically stuff I already own, but will require some effort to turn it into cash money I can send off as a payment.
I will track this extra cash and make an extra payment to one of my debts at the end of the month.
I really need this project to keep motivated. Since I have my debt snowball organized and I have a set amount going toward debt each week, it’s almost like my debt reduction is on auto-pilot. It’s going so smooth, that it’s almost getting boring. I spend a lot of time each day trying to think of something I can do to speed the process up.
I’m on the lookout for other ideas and am thinking of some myself, so if you have any feel free to post them in the comments to this post.
It’s been two months since my last revision of the debt snowball and I’ve decided to update it.
Here is a spreadsheet showing the current status:
When you add all my minimum payments they add up to $984. I have made it my new goal to pay $1000 per month toward debts (other than the Auto Loan) so I’m adding $16 to make my minimum payments each month equal $1000. I have the Auto Loan deducted from my account as soon as my paycheck is direct deposited into the account every Friday. I’m so used to that money not being included in my check, that I don’t miss it any longer, so I am concentrating on the part of my check that I control. I will set aside $250 from each paycheck to be paid toward debt. In the months that I receive 5 paychecks, I will either put extra money toward debt or place the excess in savings. I will make that decision when the time comes, but I think the $1000 per month will get me to my debt free goal soon enough.
The accounts in red have already been paid off. Their minimum payments equal $300 dollars, so now my goal is to pay $327 ($300 from the snowballed payments + $11 for “Gas Card 2’s” minimum payment + the extra $16) toward the account I call “Gas Card 2″. It will be paid off in less than 2 months and then I can start making $341 payments on ‘Credit Card 8″. The next few balances should get paid rather quickly so I should have a lot of momentum built up by the time I reach the large balances.
The payments keep getting bigger until they reach $1000. That won’t happen until everything except the Medical Bill and the Auto Loan are paid off. The Medical Bill is already less than $1000, so the $1000 payment will mostly be added to the Auto Loan payments. The reason I have the Medical Bill down at the bottom is because there is no interest charged on this debt, so it’s not costing anything extra to just keep making minimum payments.
