Opposite of Frugal

[mnmarty03]

Today I took 2 steps towards working on paying my debt off and I wanted to share with you all.

1. I opened a credit card with a 0% introductary APR until April 2009. I opened it because the car I had (American Express) had it's 0% APR expire this month and with my low paying job (I make $7 an hour), even a good rate from them was still more than I wanted to pay. I am closing my American Express Card as soon as I have the balance transferred though, so that I won't just rack up more debt once it is "paid off".

2. I froze my credit cards!!! I currently have two, the above mentioned American Express and a Visa. Both are in baggies filled with water right now in my freezer! YAY! I've been meaning to do this for weeks because I have a "I'll just put these groceries/house supplies/etc on my cc to make sure I don't spend cash I need for bills" attitude that is getting me in trouble. Now I can't say "I'll just put it on the cc, I deserve it!" Because if I don't have the money, then I don't deserve it!

So, there you have it. I know opening another credit card and borrowing money to pay off borrowed money is a dangerous slope, but as soon as I get the new card I am transferring the old balance onto it, canceling the old card account, and freezing the new one in my freezer! Then I'm going to make that my priority to pay off, so that I have it paid by when the APR of 0% expires...then I can cancel it and go back to having just my one credit card.

To pay off my debt by April I'd have to make $200 a month in payments, but at my current wage of $7.00 an hour, that's not doable. I will make the most I can however. At least what I can pay will all go towards the debt, instead of also getting interest on there as well. This fall I will (hopefully) be getting a job with better pay, so I will be able to make larger payments then. If I can't get it paid off by the APR end, at least I can make a dent in it to save on interest later.

Here's to not accumulating more debt!!!

[Greebo]

So you balance transferred the AMEX card to the new card to maintain the 0 % interest, right?

So the AMEX is paid off in full right now?

Good - cut it up and get rid of it. DOn't freeze it, burn it. You don't have the income to afford more debt, no matter what "emergency" happens. Your plan is good, but you're leaving yourself an out. Don't do that, or you will find some reason to take it. Leave yourself NO OPTION but to get out of debt by removing the ability to go further in.

Stop paying extra on debt, save up $500, lock it away safely somewhere, then start paying extra on debt. Teh $500 is so you don't get tempted by any of the cards "on ice".

My $0.02.

[Wendy99]

I agree with Greebo, get the EF right away .. our EF helps me to sleep better at night knowing that if something happens I'm not in more debt. I can't wait for it to get higher, but that won't happen anytime at all before the fall. I also agree about not getting into more debt, but I think once you have that EF you will be better off. Once you get the $500 aim for $600 etc ... you can never have to much

[mnmarty03]

Thanks for the replies!

The American Express card is currently in the freezer because it still has a balance and I don't want to take the chance that I use it again until I can transfer the balance. When I opened the new card yesterday (a discover card) they said I can't transfer the balance until I get my card in the mail. As soon as I do, the American Express is getting cut up & the account is getting closed. The new discover card will get cut up as well.

As far as an EF goes, I do have about 200 in savings right now, which is a start at least. On my pay I can't afford much of anything right now, unfortunately. I do work online that amounts to about $20 a week or so, which I plan on leaving as my EF and not spending. At that rate it'll be slow building up my EF, but it's about all I can afford right now - my income from my job only covers my bills with barely any extra.

As far as the cards go, I can only afford to pay about $5 extra above the minimum every now and then.

Ah...the joys of being poor. But the position I have is great for my career, so it's one of those trade offs. And latest in the fall I'll have a better paying job.

[Greebo]

Thanks for the replies!

The American Express card is currently in the freezer because it still has a balance and I don't want to take the chance that I use it again until I can transfer the balance.

...
As far as the cards go, I can only afford to pay about $5 extra above the minimum every now and then.

Read those two statements above, again, please.

My point stands - you do not have the income to afford ANY MORE DEBT, AT ALL, NO MATTER WHAT HAPPENS.

That's not a debatable subject, that is a fact. You can not afford more debt.

Therefore, you have no rational (yes, that's a strong word, I know) justification for keeping the AMEX card, at all. If Discover rejects the balance transfer, you still can't afford more on the AMEX card. If you do the balance transfer, you still can't afford more on the AMEX, and you CERTAINLY can't afford any additional debt on the Discover.

I know you feel like you are keeping your options open by keeping the card, but you aren't. The only options you are keeping open are options that lead to total financial ruin, as opposed to NEARLY financially ruined, which is where you are now. ($5/month extra in the black keeps you out of the "ruined" state so count your blessings.)

Please, please, please, for your own sake: Destroy the AMEX card AND the Discover card as soon as the balance transfer is complete. Destroy all records of the numbers. Pay em off as fast as you can - and if that's only $5/month extra, so be it but DO IT. You've got a fairly small chain on you right now - don't leave the option option to have even larger ones later.

[mnmarty03]

Greebo - I see your point and I understand how those two statements you quoted sound. But please, read them in context. In that post was also the following:

When I opened the new card yesterday (a discover card) they said I can't transfer the balance until I get my card in the mail. As soon as I do, the American Express is getting cut up & the account is getting closed. The new discover card will get cut up as well.

So, there is no need to plead with me to cut up those cards, that will be done as soon as the balance transfer is complete - which I had already said. Then I will make payments as much as I can until it is paid off. I don't plan on getting into more debt, no matter the emergency.

I appreciate your help, and I know you meant well. All I wanted to do with this post was to share how proud I was that I finally froze my cards (something I've put off for months) and that I found a way to save myself $183/month in interest during the next 10 months. I did not want or need to be reminded that I'm in "near financial ruin." I have plenty of reminders about my situation and am working on changing it.

[suki]

Good for you! You are taking some really positive steps. It feels amazing to take control.

I have a suggestion... when you get the better job in the fall. Try living on your current budget and rolling the extra into your EF or on your debt. Do that for a while with every increase until you feel a bit more in control, then increase your budget as needed. You'll be really surprised how this can add up! When I was in my early twenties I accumulated over $8,000 in four years just by doing this.

Good luck to you!

[Marie78]

You should be proud of yourself. In my early 20's I worked 2 low paying jobs and felt very poor. I struggled for 3 years and then evaluated every aspect of my living situation and I was just living too far above my financial means. I moved from a nice one bedroom to a studio apt., I stopped buying myself anything because "I deserved it" that was my weakness. I typically had a bad day in the jobs I worked (customer service) and I would "treat" myself to items that I knew I couldn't afford at the grocery store. Then I realized that I was digging a hole I wouldn't be able to climb out of. I was so fortunate that last year: I found a decent paying job with benefits (more than the two low paying job's take home combined). I satisfied my college and my car loan (my two largest debts each month) and I've learned to live well under my financial means. Now I have extra money to put towards my cc debt each month and like you I move it to 0% cards to save on interest (I just make sure I don't use the card either). I hope to be free of CC debt in the summer of 2009. I also make sure I keep at least $500 in an EF at all times. One of the hardest things I have learned is that it's impossible not to use your CC card when you need 2 root canals and have no dental insurance. An EF can really help when you have an emergency like that. I could take the bus if the car dies, but there is no way a person can ignore severe tooth pain.

I wish you luck and you are so smart for realizing that not using the card will be the best for you in the long run. I know it's hard for you now, and I really hope you do get that better paying job by the fall, if you don't though you have got a great head on your shoulders and you will survive .

[3tomboys]

Good for you for taking the steps you are taking to take control of the debt and not make more of it. It is a step in the right direction.

[Greebo]

Greebo - I see your point and I understand how those two statements you quoted sound. But please, read them in context. In that post was also the following:

Ah, i see why I misunderstood. I read this:

The American Express card is currently in the freezer because it still has a balance and I don't want to take the chance that I use it again until I can transfer the balance.

As meaning that you intended to defreeze the card after doing the balance transfer, and forgot what you'd said in the OP. Sorry for the confusion! You're doing good!

[mnmarty03]

Suki - Thanks for the suggestion, I will have to try that!!! As far as expenses go, they are all constant, except that I may have to get a car in the fall (I don't have one now, but I can't bike in winter in the north) and hopefully I'll move to a cheaper apartment. I only have a lease on the one I'm in now until October. When I moved here I had a week to find a place, so I had to take what I can get. Now that I live here finding a cheaper one should be easier. If I do have to geta car though, I'll have to get a 2nd job to pay bills.

Marie - Thanks for your story and the self-esteem boost. If for some reason I don't get a better paying job, I definitely will survive. If my financial resources aren't enough, I have a fiance and parents who are willing to help me get by. My fiance is more than willing to help me pay bills (he's saving quite a bit right now), but we will need a lot of money next spring for our wedding, so I am trying not to have to ask him for it.

Our plan once he's living with me (we are long distance now) next year and has a job is to use one income to live off of and the other one to pay my debt down! Of course, we'll get an EF built up first. If we could put $1000 towards debt each month, I could pay off my cc and two smallest student loans within 2 years. Of course, we'll have to wait and see how much his pay is, where we'll living, and what expenses there are when he's here to find out how much we'll actually be able to live off of one income. But he won't have any debt, so the only things that will increase in cost when he's here are health insurance, car expenses, and food. Electricity and gas shouldn't increase all that much when he's around. And hopefully the apartment I'll have at the time will have utilities included.

So, things are looking up in the near future. Even if we can only afford $500 towards debt each month, I can still pay off my debt within a few years. My biggest student loan I'm not too worried about paying off right now - it's huge and I know it's not bad to have student loan debt. I'm actually in the middle of deferring it for 12 months due to economic harship. Once my smaller loans are paid off, we'll pay extra on this one. But that's down the road a ways, first I have to survive through the next months until a better paying job/my fiance and I get married. One day at a time!

[Greebo]

Question: Have you read "The Total Money Makeover" by Dave Ramsey? There's a lot of good info in there for managing money and eliminating debt that you and fiance may find beneficial going forward.

[nodmicks]

Great job! We did many balance transfers while paying our cc debt off to get a lower apr.

[Frugal Nurse]

Mindy - great job. Positive steps for sure.

Recognizing a problem is the first step.
Doing something about it is the next step.
chugging right along.
It won't be easy to pay off the debt - but let the pains of the debt teach you to never do that again.. .Phhhhht

There!

So, you plan sounds workable. I like Suki's idea. Live on your current income when you get a better job. I understand that a lower paying job is sometimes necessary to get the bigger job. Darn it.

Is it possible to room with someone? that's what my kids do so I don't have to pay all their rent. (oh.. wait.. there in college and rent off campus)
If you room - you'll have less extra bills. Food.. minimal. (I think I lost a lot of weight when I needed to scrimp so bad.


Bike. I live in the northeast and it's still possible to bike in the winter. It's cold- sure. But it's possible.
Warmer bike wear.
A head light and tail light essential.

I do it all the time.

Wasn't it nice of Greebo to admit that?

[freebs]