Just like the importance of history to know where you’re going, you also have to know and be honest about where you are. I was actually surprised at how little I am bad off. The payments hit me hard every month, and I was expecting at least $10k in credit card debt. The fact that I don’t know the exact number is really indicative of why I’m having problems in the first place. At any rate, I’m now very motivated by the fact that since it isn’t even as bad as I thought, I can do this.
Basically, my credit card debt totals $8,486.40, with an interest rate range from 19.99% to 32.24%. My car note is around $10,000 left, but at an interest rate of 4.9%, since it’s under my father’s name. I’ll be working on credit cards first, then student loans, paying the minimum on my car note, since it will be the least interest rate the whole way. I do not have my student loans consolidated, and do not know the total amount, but I plan by the end of this year to have them both consolidated and have a plan to repay them quickly. As I said before, I do not have to worry about them quite yet, as I’m back in school and no longer need to make payments each month. And oh yeah, not consolidating them while I was in school initially was a bad mistake.
As far as good things I’ve done along the way, I have started donating to a retirement IRA, at 3% employer matched funds. The balance is up to about $6,200 right now, which means around $60k in retirement dollars, at easy levels of return. That was a good decision. Even though that 3% would have helped a little towards my debt, an extra $20/month is not worth missing out on getting an extra $20 and starting a decent retirement cache, especially at a young enough age to really make the interest work for me down the road.
The bad things I’ve done are mostly from being stupid, lazy, or procrastinating. The main one being that as I’ve analyzed my current state, I see that fees comprise about 28% of my total income. Meaning that because of overdrafts, late fees, NSF fees, checking account fees, and so on, I have wasted several hundred dollars every month. Right now, I don’t need to focus on making extra payments to the cards, I need to focus on making the minimum payments on time, to get my budget in order. To do that, I need to cut spending, and also from analyzing my payments I can see that eating out takes a big chunk of my money.
My goal for June is to start cooking more at home, and eat out rarely or never. I need to do whatever it takes to make my minimum payments on time. I have already enrolled in auto-payment plans with my credit cards, but in order to make that work I need to cut spending so I don’t overdraft. If I can have one month with no extraneous fees, that will be a giant step forward into figuring out how I even can budget to get rid of this debt. From calculation, it looks as if I will be able to initially put $300 extra toward repayment.
Each month I will make a new post, as well as update my debt ledger. I will also blog about the tools I’m using to accomplish this, along the way.