My Husband is out of Credit Card Debt

When I was running the numbers for my update post, I realized something. The two credit cards we have remaining are both in my name only. So technically, on paper, my husband no longer has any credit card debt.

We didn’t really plan for this to happen, and it’s all my doing anyway. He doesn’t deal with the day-to-day finances or payment plan, and I devised it based solely on interest rates. When I opened our 0% Citibank card last fall, I used my name only because it was easier, and the money transferred was from the one card that is in his name only. So now that the Discover card is paid off, he has no more credit card debt.

His interest rates were only a few points higher than mine, and that’s most likely due to his student loans, which are 3 times larger than mine are. That and my obsession with calling my cards and negotiating lower interest rates, which he does not share.

Now my husband has a head start on me in improving his credit score, which is going to come in handy pretty soon…

Independence Day Challenge Complete! (Mostly)

One more credit card down!

A few weeks ago, I challenged myself to run a 5K and pay off $5K of debt by the Fourth of July. Unfortunately, I have fallen off the running wagon. Again. My dad hurt his ankle in the week following my original post and, without my running partner, I let the training slide.

But on to better news: yesterday I paid off our Discover card! I have been chipping away at the balance all month, and still had $1907.22 left to go. I planned on using part of my husband's next paycheck, due to arrive on July 3, to sneak in the final payment and wipe it out. However, I was surprised to find that my commissions last week included a bonus that I thought I hadn't qualified for. After some calculations in Quicken, I sent off the last payment. We are now free from this credit card!!

Our newfound financial freedom is particularly gratifying when you consider the original cause of this debt. We opened the account in October 2005 based on a 0% balance transfer offer. All of our other credit cards were maxed out and at that time we didn't have a lot of resources. We decided to take the 0% offer and transfer part of another balance to the new Discover card. Only it didn't end there. Before we knew it, we had charged up to the limit of the Discover card and the original card. So we were worse off than before.

If you think of debt as a hole you're stuck in, the Discover card was a false step in the right direction. We were trying to climb out of the hole, only to find that the floor was falling out beneath us. I am so excited to finally be one step closer to complete debt independence.

Tales of a Cashier - Store Credit Cards

The Tales of a Cashier series relates my experiences at my part time job in a retail store.

At our store last weekend, our manager announced a new initiative: to push the store credit card. We are now supposed to ask every customer who comes through our line if they would like to put their purchase on their store card. If they showed any interest we should then spout off the benefits:

• 20% off today's purchase
• Gift certificate rewards
• Special coupons & events
• Special gifts.

Of course, nowhere in there do we mention any of the pitfalls of opening store cards, the biggest of which is the horrible interest rate: 21.99%! This is fairly common for retail stores. The fees and billing are pretty awful, too - you can't even pay your bill in store or online, and the expedited phone payments to avoid a late fee cost $15.

When I heard we were to start promoting this, I balked. I told the boss that I wasn't going to ask every one of our customers if they would like to go into debt, regardless of the "benefits" of the program. The only way I will even mention it to anybody is if they have a huge overflowing carriage and saving 20% on everything will make a BIG difference ($50+). Other than that, no way. I know that every person should be responsible for their own way, but I don't need to show them the door to debt. If they want it that badly, they can open the door.

SB at Be Thrifty Like Us discussed the many disadvantages of store credit cards recently as well. What do you think about store cards and "helpful" clerks who ask you if you want to open one? Leave a comment and let me know!

I May Have Ruined My Husband's Credit

I made a mistake. This seems to be a theme recently. Back in November, we transferred one of our credit cards to a 0% offer. The old credit card, my husband's Amex, was paid off! Rejoice! Champagne flowed from the heavens. I then deleted it completely from my memory.

Which was a very bad idea.

Two or three times a week, I open up Quicken (aff.), download my transactions from my checking account and pay my bills. I update my credit card balance in Quicken once a week or so, as I'm not using the cards for anything. Or so I thought. Turns out, I forgot about one teensy little detail. The automatic payment for tolls I had set up long ago in the days of yore on the Amex. Back in the days when all payments for all things were set up on credit cards. They slowly migrated over to the bank account, but our toll payments were like a weakly, sick herd member. Irregular. Unreliable. Fell right on through the cracks.

After paying off the Amex in November, I didn't open it, look at it, think of it until last week. We were signed up for paperless statements, so nothing comes in the mail. When I did log in to the account, much to my dismay, there was a balance of $171.97. Consisting of some residual interest (that I forgot about), two toll charges (that I forgot about) and two late fees. The computer demanded $74.04 past due! Pay now! I paid the past due amount last week and the remainder today. And felt like a horrible person pretty much ever since I found my error.

The Amex is the only card that is entirely in my husband's name. I have one in my name only as well, to keep some aspects of our credit histories and scores separate. If this were my credit card, I wouldn't feel quite so bad. At least then my mistake would affect my credit. I have never had a bill this far past due (over 30 days), so I have no idea what this is going to do to his credit. Amex already shot up the interest rate from a so-so 16.99% to an astronomical 29.24%. I will be checking our credit reports in the beginning of February, but I have no baseline to compare to. We'll see if the late and overdue balance is included in his credit history.

The take-home lesson here is: don't forget to check your cards that have been paid off. My new version of Quicken automatically downloads all our account at once, which will prevent this from happening again. That and the fact that I already switched the toll payments to our bank account.

All Fired Up to Keep Paying Down

I was finally going through our files today and organizing and purging them. I was throwing things out left and right, using this list as my guide. It was nice to be getting rid of some old files, like electric bills from our old apartment and random condo association newsletters. Then I came to the file where I put all the receipts from our wedding.

This was the thickest file in the whole drawer. As I was going through it, it was like going back in time to when I spent money recklessly, without a care in the world. I always knew which credit card had the most available balance, because that is what I used to buy everything. I look at all the money we spent on the wedding, borrowed from credit cards, lines of credit, and family and it makes me sick.

We bought a lot of things we didn't need. Of course, the argument can be made that all you need to get married is the piece of paper and a trip to the courthouse. But there were just superfluous purchases made here and there that all added onto our debt. I really look forward when I can think of our wedding with only happy memories and not reflect on the mistakes we made. (Not in marrying my husband - that was no mistake and the best decision I ever made. More on that in a minute.)

So of course, all these receipts made quite a big pile. I'm looking at them and getting bummed out more and more. My husband asked me what was bothering me so much. When I told him, he suggested getting rid of them - we've already dropped that spendy mindset and there was no need to keep them (except the wedding ring receipt). Since we had a nice little fire going tonight, that's where they all ended up. Burnt to ashes. It felt really good to get them out of my file cabinet, my house, my life.



I still felt like an idiot for making the purchases in the first place. Until my husband said to me, "You're only an idiot if you don't fix the problem. We're already solving the problem. So this (referring to the flaming receipts) was just a mistake." He's pretty good at saying the right thing and never just what I want to hear. Mistakes I can deal with. Everyone makes mistakes. The trick is to only make it once, and learn and grow. Or burn and grow. :)

October Round Up

Even though we're 1/3 of the way into November, I shouldn't neglect poor old October just because I've been busy. So onto the wrap-up!

October, being a long month, is pretty challenging. Add on to that the fact that My brother, brother-in-law and sister have birthdays within a week of each other at the end of October, and the budget gets a little strained. But, fortunately, we have a little stretch in our budget.

This month we paid $1836.29 towards our credit card debt, which is $934.71 short of our goal. However, we made huge mental progresses and paid off our worst debt, that we've been working on since February. At the end of October, we have paid off 57% of our total credit card debt, up 4 percentage points from September. Our motivation has really picked up as well.

My income was finally over for October (by $658.30, thanks to extra hours and commissions), which will be extremely useful in keeping our November numbers on track. Our gas expenses were over by $30.87, which is essentially one fill-up and due to some bad timing of getting gas on Halloween. Should have waited one day! Our groceries were over by $19.53, and our fun money by $22.28, which totally disproves my theory of fudging the budget. I guess that's what happens when you try to cheat the system.

As for the emergency fund... I set up a high interest bank account, and then never transferred the money over. It's still waiting patiently in my checking account. This is a high priority on my to-do list this week.

While the numbers look OK, I'm pretty disappointed in myself. We pay a lot of money toward our debt each month, but nowhere near our goal of $3000. I have $2771.00 budgeted toward debt payment each month and try to make up the difference, but the last time we hit our goal of $3000 was in June. Not that much has changed in our finances that we shouldn't be getting to that number. I think we were just burnt out from being in super frugal mode that we rebelled a little. Not to mention a few mistakes along the way. Paying off our line of credit and transferring to the 0% card were huge for our motivation and will get us back in the fast lane. Same old story and I need to put my money where my mouth is. November is off to a great start with the extra paycheck and already making a big payment, so I am feeling very positive moving forward. Hopefully planning ahead for Christmas will prevent any bumps in the road.

Expensive Report

There are times that we have to front money for work reasons. I have done so occasionally, for parking or ink for my printer in our satellite office. Nothing more than $40 or so, and they reimburse me pretty quickly. My husband has to operate a little differently.

He works for his own company, which is growing and expanding rapidly. While they're still developing, we front some of the expenses for his travel. Usually it's no big deal, he'll submit his receipts and we get the money back before the credit card comes due. September was a big travel month, so he was home only 1 week of the whole month. During that week, he was going absolutely crazy preparing for the next trip and wasn't able to file his receipts. So everything is carrying over.

We're not talking about $40 in expenses anymore. With round trip flights for two separate business trips, hotel, and various client dinners, the bill on the credit card totals about $3500. Ugh. To top it off, the credit card he uses is the only one we have paid off completely. Since we're snowballing our debt, we paid off the credit card with the highest interest rate first. So the interest rate on the card is... 27.99%. Yowza.

My husband will return home 3 days before the credit card bill is due. Even in the best situation, we won't be able to get the turn around time needed to pay it off this month. Doing the math, the interest charge for floating the balance this month should be about $40. I'm not sure if this will be considered reimbursable by the company or if we're going to have to eat it.

These expenses are undesirable. Usually, we don't incur any permanent personal charges. Eventually, we won't have to front the money at all. I have come up with the following plan to get through the time until then.

• Look on the bright side. Hey, at least it's a points credit card. We get a $25 Amazon gift certificate for every 2500 points. ($1 = 1 point)
• Minimize the damage. Believe it or not, 27.99% is the improved interest rate. It used to be 29.99%. I intend to keep calling them every 3 months to try and lower it even more.
• Prevent when possible. With shorter trips, he can file the expense report and get reimbursed before the grace period is over for the credit cards. This time, the timing was just plain bad.
• Don't let it affect motivation. Putting a balance back on that card just plain hurts. I know it's only there temporarily, but I hate seeing a balance. I hate that credit card. We worked our butts off to get rid of that beast. Just seeing another huge negative in my Quicken feels like a setback, even though it's not.
• Git 'er done. No screwing around. Once he gets back, he'll be filing the receipts the next day. As soon as we get the check in our grubby little hands, it'll be in the bank account and turned over to the credit card the second it clears. Our interest is calculated on average daily balance, so the sooner that balance is zero, the better.
  

The Value of Interest

Interest can be a good thing. No, I'm not talking about the interest you earn on your investments or in your savings account. That's a great kind of interest, of course, and you hear everywhere about the miracle of compound interest. I'm talking about the APR on your credit cards.

I know what you're thinking: this lady is crazy! But hear me out. The interest you pay on your cards is a motivator to pay them off and move into a debt-free lifestyle. I can honestly tell you that if my cards and debts had 0% interest, I would continue paying minimum payments forever. I would most likely use the cards every day instead of paying in cash or my debit card. I would probably rely on them in an emergency and use them to fund my retirement. My (future) children would inherit my debt and need to sell my estate to pay it all off.

Now, a more likely scenario is that I would still eventually figure out the whole personal finance thing and build up wealth. But I would bet that I wouldn't do that for some time and lose years of earnings. The interest on our debts is what motivates me to pay them off. I feel sick to my stomach when I think of how much money we're paying in interest. And that keeps me aggressive at paying down the principle.

I feel so strongly about this that I turned down my parents when they offered us a low interest loan to wipe out our credit card debt so we could pay less interest overall. I told them that we needed to pay the interest. This is our penance. We did the crime, now we're doing the time. Of course, I have continually lowered our interest rates and if I could find a 0% balance transfer offer that had no fee, I would jump on it. Right now, this interest is helping us financially in the backwards manner. Soon, we'll be using interest to grow our money!

Conclusion to the Late Fee Fiasco

Well, it's all over. I feel like I lost. I originally incurred a late fee on my Bank of America account, then I called and had it removed. They removed it for me. Twice. So I called and had them adjust that. They told me this would also adjust my minimum payment.

The bill is due today and the minimum payment stands at $171, which is $39 more than usual. The original late fee was... you guessed it, $39. I called them and their automated service also says $171.

I just paid them the $171. I'm afraid if I try to fight this anymore, my payment won't be processed in time and it will be late again. That's the last thing I want.

I am kind of angry at myself for even mentioning the $39 they gave back to me that extra time. I could have kept my mouth shut and earned $39. It's not like I haven't paid them many times that in interest charges. Grrrrrr.

Things will be so much easier when all the debt is GONE!

Junk Mail

I went to our mailbox today and picked up our mail from the past two days. There were two credit card statements, my bank statement, a Netflix and seven credit card offers. Between two people. In two days.

This is preposterous! Can you imagine how many credit cards I could open if I applied for all of them? If the past two days were average, I would receive 910 offers in a year. Not counting Saturdays.

They all have a special promotion, of course. Zero percent until 2008! Pre-approved for $10,000 limit! Free balance transfers! You lose a little credibility, however, when there are two envelopes - one addressed to me, one to my husband - each claiming that I met a special qualification. You mean living at this address?

So I go through them, every day, sorting out the real mail from the junk, taking out the actual applications and shredding them, throwing out the inserts. Today I got a little fed up. I don't want them anymore! I found a website, www.optoutprescreen.com, and removed my name from the list. They ask for your social security number, but I chose to leave that out.

Hopefully this makes a difference. I only put my name on the do not mail list, not my husband's name. The website states that it takes 5 days to process and then I should receive no more offers. I'll be counting how man I get and how many my husband gets to see how well this works, but I have high hopes. Aside from the annoyance, think of all the paper! And if you're easily tempted to open new accounts, this is a great way to remove the forbidden fruit.