To: Those with big cc debt
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| Fri, 04-22-2005 - 6:22pm |
Hi! I post occasionally about my quest to, if not completely wipe out debt, to at least get it way, way down to where I can feel much more comfortable every month. I posted awhile back about the possiblity of selling our house with the big first and second mortgages to move to something cheaper. Still working on that. My husband has totally come onboard but now it is just a matter of sooner (this summer) or later (next summer). One of my main motivations is I would love to actually "live," rather than exist to pay bills. You know, buy ski passes if we want to (we are in Colorado) or go on vacation or even see a concert without having to worry what week of the month it hits.
Anyway, my question to those with really big balances is if there was anything you did to really get things moving. My cc debt is about $35K. Scary. I have about $1,000 in a savings acccount supposedly for emergencies and so I won't overdraw my checking account (both accounts are with credit union) but I have dipped into it lately a little. I rarely use credit cards anymore. Most accounts have fairly low interest and I am just paying them down. Still, I just noticed for the first time my FICO score has gone down. It used to be excellent, now it is under 700. That really woke me up! I would kind of like to pay off a couple small balances with some of my savings but don't know if that is a good idea. I would close out the accounts so there would be no worry about using them again. I guess I need the psychological boost. I just found out from IRS that our accountant screwed up and our refund will only be about $35. I am so bummed because I had hoped to use it to pay off some bills, too.
Jenny

I had slightly more debt than you do when I started, and our annual income was under $30k. We did a few drastic things to get it under control--moved from our duplex to a cheap apartment, refinanced our car, sold a bunch of stuff, and I got a part-time job at night while dh could be home with our son.
But, still, it was VERY slow going at first. There is no quick, easy, and comfortable solution when you're that far in, short of a lottery win or an inheritance (and I can't think of anyone that I would like to lose just to pay down my debt!!!).
But don't lose heart! The first part is slow-going. But if you follow some of the methods talked about on this board, you may find that in a year or two your balances sink faster and faster and before you know it, they'll be nearing the bottom.
And why stop at "manageable balances"? Why not just pay them all the way down, and then start socking money away? Then you won't ever have to rely on a tax refund, inheritance, or other windfall to keep you in the black. You'll be building your own wealth.
Just so you know, we've been chipping at our debt for three years. Our income has increased, for which we are grateful, but mostly our debt has come under control and our spending habits have improved, to the point that I no longer have to work at night (I stay home with the kids and own a part-time business), we now own our own beautiful home with a yard, and we expect to be completely debt-free in approximately one year (depending on performance of my business, from which excess income goes directly to our debt repayment). Oh, and because we've also been putting money in 401k, emergency savings, and other investments, our net worth is in the black despite our debt.
So, it does get better. But you have to do the hardest part first.
Good luck and blessings,
Heather
I guess the biggest red flag that I spotted in your post was:
"I rarely use credit cards anymore."
The only way our balances started to really and truly go down each and every month was when we left the cards at home and resolved not to use them at all.
All my best,
Danni