canadiandebtgirl

Posts Tagged ‘Debt Reduction Plan’

Approaching 50% of Credit Card Debt Paid Off

In Uncategorized on November 4, 2010 at 8:00 am

A milestone is near.

I will soon be halfway there: halfway to credit-card-debt-free that is!

When I began this journey, I was more than $30K in debt. And that is if you only counted my credit cards. I also have student loans, a car loan, and a mortgage that don’t get included in my debt tally – yet. Once my line of credit VISA is paid off, you will see them added into my debt repayment plan.

In only 19 months (since May 2009) I have cut that number in half. The official anticipated date for paying off Credit Card #2 will be December 10, 2010, and I will be down to one credit card balance on my line of credit at a measly rate of 5.65%. Though the remaining balance is the highest, this card has the lowest interest rate. I’m looking very forward to seeing quick progress on its repayment once I’m paying more than the minimum.

I owe all of my debt repayment calculations and motivation to this Debt Reduction Calculator. If you are only just now beginning your journey to debt free, or would even just like to see how long it really will take to pay off your mortgage, I highly suggest you go download this free Excel spreadsheet now.

I’ve got some other things I would like to give credit to for my debt repayment plan working, but I’ll save them for a separate post. 🙂

Check Your Credit Score & Report

In Uncategorized on November 3, 2010 at 11:27 am

Today I invested in my credit rating. I bought my credit report and score online. Normally I request my free credit report in writing, or by phone, every year from each of the credit reporting agencies (Transunion and Equifax). I have them on a rotation so that I get a credit report mailed to me every six months. It keeps me feeling like I have a finger on the pulse of my credit. Fun! (and someone yells ‘nerd!’ from the crowd)

But today I spent the money and got my FICO Score. I haven’t done that in about two years. It is better than it used to be, but there were a few things I needed to attend to, and one thing on my report that I didn’t know was there!

An old joint account that had three missed payments! Eek! FICO don’t like 90 days past due. It was one of those annoying cards that add the interest even though you paid off the balance in full. Then they neglected to send us any statements for months. When I called to confirm that they received the payment they informed me that the account was still owing $6.11. I was so stinkin’ mad. I paid the stupid $6.11 and called immediately to confirm. I got them to not only mail me a letter but also to fax a written confirmation that it was paid and the account was closed. That account is closed, but now I just have to wait for it to drop off my report. Shouldn’t be long now..

The other housekeeping items I took care of were two things: one account that doesn’t get used and has been paid off for over 4 years. It was revolving credit, so I called them up and closed it. They are mailing me a confirmation letter. Check! The second item is to close off some of my paid credit cards. I’ve decided to close off Credit Card #1. As you may or may not recall, Credit Card #3 was dropped to a $500 limit. I’ve decided to use this one as my regular use card.

Here’s why.

It has no annual fee. It has only a $500 limit. They will give me 5% cash back on groceries and gas purchases for the first 6 months, then 3% after. Once my cashback credit gets to $50 they send me a cheque. Who can say no to free money? This works well for me as I’ve been using Credit Card #1 as my gas card. I charge all my gas purchases to it and pay it off right away (weekly). So I’ll just switch that habit to Credit Card #3 and cancel out Credit Card #1.

I will also be closing, or at least reducing the credit limit on, Credit Card #2 – the one I’ve had the very longest. It will be paid off in full in only three more payments. I can’t wait. At that point, I will be down to one credit card, or line of credit and will be just that much closer to my credit-card-debt-free life!

Adding to my Debt

In Uncategorized on March 16, 2010 at 11:18 am

Despite where the title of this blog post might lead your assumptions, know that this blog has primarily been about my credit card debt only.

Until now.

I love to play with my Excel spreadsheet “Debt Reduction Calculator” from vertex42. It has single handedly kept me motivated to stay on my debt repayment plan. To enter a few numbers and see the resulting debt free dates pop up gets me excited. Lame, I know. There is also a sheet that outlines the payment amounts to make to each debt every month until you are paid off. Its great! You can also enter lump sum amounts to any debt and it recalculates your payment schedule. Neato. And you can play with your plan by ranking your debts in priority order. You can snowball the payments, pay lowest balance first, or highest interest first. And you can play with the options and it spits out how much interest you will be paying in total over the lifetime of your debts. Trust me, seeing that number alone will get you motivated to pay everything down as quickly as humanly possible!

Up until two weeks ago I only had my credit card debts entered into the spreadsheet. This is because they are my primary focus right now. I am dedicated to them until they are gone forever.

I decided to go a little wild. I entered ALL of my debts. I entered my car loan, my student loans, and our mortgage. I put in all of the interest rates, monthly payment amounts, and the debt amounts. It was fun!

Ok, well seeing my debt free date get pushed back 15 years (due to mortgage amortization) wasn’t fun, but I loved to see where I would be in 3 years, 5 years, 10 years, you get it.

I took the mortgage off the calculator though because we don’t know how long we’ll actually be in this house and we consider the mortgage better than rent. Plus, our home value is higher than what we paid so let’s just pretend it doesn’t exist right now, okay? *sticks head in sand*

Anyways. All of this just to say that I’ve added 4 more debts to my repayment plan and the outcome looks good.

Credit card debt free by July 2011.
Car loan debt free by February 2012.
Free and clear of all my student loan debt by April 2013.

And that does not include any extra payments I make, any future increase in salary, or interest rate renegotiations. Which I do regularly – about every 6 months I review what interest rates are at various banks/credit cards and call and ask for consideration to lower, or an opportunity to transfer balances.

So in at max three years I will be completely debt free except for our mortgage. Hurray!

Making More Money

In Uncategorized on March 15, 2010 at 12:59 pm

One of the things Gail Vaz-Oxlade always insists on when she helps people on her show Til Debt Do Us Part (my long-time TV show crush) is that to help get yourself out of debt, you need to make more money.

I’ve known this for as long as I’ve had my debt repayment plan in place. It makes sense. You want to pay off your debt as soon as possible, as fast as possible, so you pay the least in interest and get to your DEBT FREE DAY sooner.

Well, I’ve done it!

I will be contributing an extra $400 a month to my debt. My income increased!

It just goes to show that you CAN get what you want, but you do sometimes have to suck it up and ASK for it. I sucked it up, and I asked for it, and I got exactly what I wanted.

My salary is substantially higher now, and it fits into the bracket I was at 2 years ago when I left my old job to start a new career.

Two years to climb back to where I was? Not bad!

If you recall, I posted about my D-Day back in October 2009. Back then, I was hoping I would be getting this raise, and with those hopes in place, the plan I had would have me free of debt by November 2011. You’ll see below that I have moved my debt free day up to August of 2011: a whole 3 months sooner than planned! This was as a result of the aggressive payments I made to clear Credit Card #3, and the negotiation of a lower interest rate for Credit Card #2 (from 18.5% down to 11%), and now the increase in my salary.

Credit Card #2:
Old Repayment Date: January 2011
New Repayment Date: August 2010

Credit Card #4:
Old Repayment Date: October 2012
New Repayment Date: August 2011

Old Debt Free Day: February 2012
New Debt Free Day: August 2011 – less than 17 months away!

What I Did with Credit Card #3

In Uncategorized on January 22, 2010 at 3:12 pm

For the time being, I’ve left Credit Card #3 open and decreased the limit to $500. The thought behind this is to keep the amount of credit available to me at a minimum without closing the account entirely. Once I’ve paid off Credit Card #2 to 75% of its limit, I will cancel Credit Card #3.

I’m really hoping that come May when I check my credit score it will be in the higher bracket. I don’t have a number to compare it to as I simply just order my free credit reports annually from Equifax and TransUnion and they don’t come with a score. But once I do get my score, I will keep track of it yearly to watch it slowly climb up higher.

My Credit Cards

In Uncategorized on January 14, 2010 at 8:00 am

You’ll notice, if you ever visit the actual blog and scroll way down to the bottom, that my credit card total amounts have changed slightly.

Credit Card #1 was paid off back in May and is now just used regularly for gas purchases paid monthly.

Credit Card #2 is a VISA, and the card I’ve had the absolute longest.

Credit Card #3 is my newest card, and was opened to transfer some higher interest debt on a balance transfer offer of 1.99%. Unfortunately, that ran out in December 2009 and it still wasn’t paid off. I still had $2,899 left. I don’t want to pay their insanely high regular interest rate of 19.9%.

Credit Card #4 is actually a LOC and is last on my debt repayment plan as it has the lowest interest rate.

For months prior to December, I was calling Credit Card #1 to see if they had any balance transfer offers I could use. Nadda. I really REALLY don’t want to apply for ANY NEW CREDIT if at all possible, so new balance transfer offers on new cards or any LOC’s are not an option.

This left me with a balance transfer to a lower interest rate card that I already have.

This means the new debt on my Credit Card #2 is now what was remaining PLUS the transferred balance from Credit Card #3. This will actually save me about $300 over the life of the balance versus just leaving it on Credit Card #3. Figured it was the best option I have available.

BUT, this means I can now close Credit Card #3. Hurray! (Maybe?)

Question: should I cancel Credit Card #3 now, taking a temporary dip in my credit score, or should I lower the limit to the lowest possible and wait until I can get my two other cards to 75% of their limits (which increases your score) before cancelling it?

Debt Update

In Uncategorized on January 13, 2010 at 11:19 am

It’s been awhile since I updated my debt, and this blog. For that I apologize. I don’t have any reason to give you other than that I’ve been busy (typical excuse) and that I have not been motivated to write.

My current credit card debt sits as such:

Starting Amount (April 2009):
$30,032.47
Paid Off: $9,155.12
Current Amount (January 2010): $20,877.35

I’ve paid off $9,155.12 of my debt in 9 months, or reduced my debt by 30%, on a salary of $42,000. I also contribute to our mortgage and housing costs (50%) and make regular payments on my car and student loan in addition to contributing to savings.

That makes me feel good.

Update: November Goals

In Uncategorized on December 2, 2009 at 12:54 pm

How did I do for November goals last month? Not too bad. Not amazing either. Here’s the November Goals post.

My goals were
– Make 50% of my Christmas gifts by November 30th.
– Decrease debt by $1000.
– Come under budget this month.
– Save money into tax account for small business.

Here’s how I did:

– Make 50% of my Christmas gifts by November 30th.
Nope, did not make half of my gifts. I still have about 80% to go!

– Decrease debt by $1000.
This might have been an ambitious goal. I reduced my total debt by $724.31 and my credit card debt by $526.78.

– Come under budget this month.
I did come under budget, but I haven’t formatted my budget to a way that allows me to share the exact numbers. I promise I will be setting this up for the new year so you can see where my money goes.

– Save money into tax account for small business.
Saved $627.97 into a tax account for my business taxes once I get around to doing them. I will be adding $150 to that this week.

I think I can improve upon my goals from November as well as add a couple small financial goals to them for December. Primarily my goals will centre around Christmas spending and travel since our families are both out of town.

Major Fail: My Car Loan

In Uncategorized on October 20, 2009 at 4:01 pm

One thing I haven’t addressed on this blog, and I think its because I’ve been focused on my credit card debt reduction plan, is my car loan.

Last year, I was just about finished paying off my previous car loan. The car was a 2002 sedan, and in great shape albeit minus a few things that went wrong frequently but nothing major – mostly just squeaks and vibrations. It did however have higher mileage on it since my job involved a lot of driving. On a whim, and really, it was a whim, I decided I wanted a new car.

MAJOR FAIL.

Yes, insert all the reasons why this is so wrong here. And yes, insert the typical reason so many people are in debt here. Ugh. I’m a textbook case. Believe me.

It was my anger of my debt that started my search for a new car. I wanted to sell off the old one and buy an old clunker for cash. But, a shiny new car was just so much more appealing to my shallow, ‘money-doesn’t-matter’ side and since I hadn’t reached the stage where I HATED MY DEBT, it was easy to get convinced. My monthly payments would be the same! My mileage would be better in a newer, more efficient car! This one was more utilitarian because I could fit more in the trunk! … and so on with the excuses.

Now, I would give anything to go back and slap myself. What was I thinking?!?

My new (used) car loan is at an 8.9% interest rate! But I don’t know enough about car loans – can you even re-negotiate the rate? I just took what the dealer gave me (just to add to the MAJOR FAIL). My budget works for the payment, but I know I am overpaying in interest in the long run. It would be pretty sweet to not have that car payment and just be stuffing that cash into a high interest savings account for when my old clunker broke down. No such luck now.

Am I going to trade in the new shiny one? Unlikely. I really like having a reliable car. *sigh* But the question remains… SHOULD I?

Is this something I should think about once I’ve got my credit card debt under control? I just don’t know what to do about it. Sometimes it does keep me up at night.

D-Days

In Uncategorized on October 10, 2009 at 8:00 am

My dates of debt repayment according to my current plan are as follows:

May 2010 – Credit Card #1
Feb 2011 – Credit Card #2
Jan 2013 – Credit Card #3 (LOC)

DEBT FREE DAY (D-DAY): January 2013

If I increase the amount I repay per month by $40, I can move the dates forward like so:

May 2010 – Credit Card #1
Jan 2011 – Credit Card #2
Oct 2012 – Credit Card #3 (LOC)

DEBT FREE DAY: October 2012

My hopes are that my salary will be going up in four months allowing me to increase my monthly debt reduction payment by $340 in total. This would get me out of debt by:

Feb 2010 – Credit Card #1
Aug 2010 – Credit Card #2
Nov 2011 – Credit Card #3 (LOC)

DEBT FREE DAY: November 2011

I’ve decided that I definitely need to move my debt free day up to November 2011, especially if we would like to start our family next year.

Now, keep in mind this payment plan does not include any snowflakes or additional payments I make. Every month I make additional payments on my debt from any income I bring in from my side-hustle (part-time small business). These make a significant impact on my debt reduction and every month I play with the plan (you can use the same spreadsheet as me, found here) adjusting the dates, interest rates, and balances. It is motivating to see the numbers change, the balances go down and the interest rates go down as I re-negotiate my credit card accounts and transfer balances as needed.