Thursday

Financial plan for 07

I know it's a bit early for New Year's Resolutions, but while it's on my mind...

I have approximately $9,400 in credit card debt spread over 4 cards that I want to get rid of. (I also have some student loan debt slowly accumulating, but I'm still in grad school, so that is not a priority for me right now.) Let's focus on the shizz that is costing me some serious change.

Scooter: $430.00 at 24%
Chase: $300.00 at 29%
WAMU: $1440.00 at 0%
MBNA: $7210.00 at 0%

Currently, I pay about $500 per month to the credit mofos.

I effed up on some of my payments to Chase this year, so the interest skyrocketed to 29%, up from 11%. So, I transferred as much as I could to 0% cards. I'll be able to pay the remaining balance off in December or January. After that, I am going to snowball that payment onto the scooter payment which will be paid off in January or February.

The challenge comes to pay off the other two. I plugged my numbers into Bankrate's Credit Card Debt Calculator and I would have to pay $865 per month to have it paid off in December of 07. I think it will actually be a bit less than that, because I didn't account for Dec - Feb's payments in the balance totals.

Anyway you look at it, though, I am going to have to make some serious payments to get the other two paid off. I would like to have it done in a year, but unless I get really creative, it will take 18 months to pay it all off and that's not including interest. (Currently, both cards are at 0% and they start getting interest in 08.)

Any extra money that comes in, I throw at the cards, but it's not constant.

Here's what I am doing:

  • I have picked up a PT tutoring job that pays $200 per month; unfortunately, the hours fluctuate.

  • Next, my gf and I are looking at taking in a roommate in March 07 (long story about why we are waiting), but we are not so sure about that (strangers in the home?). However, we have an extra room that is not getting used, so it makes sense.

  • Additionally, I may get some money from my mom (this year, I dropped about $2000 on the cards for her cats.) after she starts her new job; however, I am not counting on it, since she had a rough financial year and has to play catch-up herself.

  • My gf has offered to contribute money, but, again, it's not constant. Right now, she gives me about $50 per month.

  • I will be getting in some loan money, but I really would hate to use that.


  • So that's for the credit cards. Unfortunately, this is assuming I live in a vaccuum and don't have any other financial concerns. We all know that doesn't happen.

    First, my emergency fund is miniscule. Second, I have a very sick puppy who may need some serious care in 07; this is also why my EF is so small now.

    I am thinking that, after I pay off the interest cards, I will pay only the minimums on the other cards and put the rest of the "payment" in an ING account*. That way, I can build up a cash bank, earn some interest off of it, but still have money for the cc. I am a little wary of this, though.

    Any thoughts?

    Clink

    *Shameless plug - if you want to get a $25 gift for opening up an account, send me your e-mail and I'll refer you.

    4 comments:

    D said...

    Yes, I agree, put the money in a high interest account like ING. Keep up your minimums and make some money all at the same time.

    You need to be diligent though. Don't go on a spending spree when you see the money there. This is a personal problem of mine. I don't go spending, but I feel the push to do it when things are paid off or money is in the bank.

    Clink said...

    Thankfully, I'm a spendthrift.

    I manged to put all that money on the cards with a cross country move and back again. Add a sick animal (to the tune of 2K), no EF and there you have it.

    But, you are right to caution. For me, the little splurges like going out to dinner and cheap jewlery add up.

    Thanks!

    Debt Hater said...

    Thanks for visiting and commenting on my blog!

    And I have to disagree with your current strategy.

    I think saving, at this point, is going to distract you. You may never have enough cash to save, pay down debt and take care of incidentals.

    Focus on paying down the debt. If you haven't already, create a budget and consistently spend less than you earn. After a few months, that should give you a sufficient cash cushion in case of emergency (or the munchies). You may also find some money to contribute to paying down the debt.

    If you're expecting any big lump sumps in the future, such as from a tax refund, put that in a savings account if you'd feel more comfortable with some money saved. I took a tax return and a gift and put it away as my $1,000 EM Fund.
    Then I focused completely on the debt.

    Then, hit the MBNA card (MBNA+Scooter+Chase payments) and finally the WAMU (WAMU+MBNA+Scooter+Chase payments).

    You may or may not be able to do it in a year. Strive to, but don't feel terrible if it doesn't happen.

    I can send you the Excel file I created to help me do that with my cards. It's been working like a charm so far (except for a number of hiccups).

    Clink said...

    DH,

    I would appreciate the file. My e-mail is coinsonthepavement@hotmail.com.

    For the most part, I agree with you regardin paying down the debt. However, I know that I have been very grateful this year to have what small amount of money I did have in my EF. Otherwise, I would have had to put MORE on the cards.

    This is THE question that those of us in debt face, no - to save or pay down debt.

    Thanks for the comment. I really appreciate it!