I’m embarking on a new mission with my family to simplify our lives and get out of debt. We’ve somehow managed to drive our credit card debt well into the 5 figures, and that’s not sitting too well. We are working on becoming aggressive towards our debt. Here are the initial steps we’ve taken to eliminate this burden.
- Stop using credit cards
- Move cc balances to 0% interest account
- Kill debt with savings
- Consolidate subscriptions
- Question purchases
This is where we’re at after an initial paydown, and the consolidation in progress.
Stop using credit cards
This has been a huge shift. Enticed by my REI dividends, I’ve been using my REI card for years. At first I had the intention of paying monthly, but then a large expense would hit, and it would carry. The balance would cascade and build and then everything else was a drop in the pan. Credit card is out of the wallet now.
I used my credit card to pay my subscriptions and have online for the Apple store, Amazon, Playstation Network, Google, and others. It’s how I paid my gym membership, Netflix, and just about everything else. Everything is being moved to our account at our credit union. Almost everything is there now, but there are still a few lingering.
I use Mint to see what’s still hitting the credit card, then seek and destroy.
Move cc balances to 0% interest account
Since I’m not going to be able to annihilate my credit card debt in one fiscal quarter, I decided to take advantage of some 0% balance transfer offers. For 3% of the total balance, I’d be off the hook on interest for a year. 3% is $300 for every $10,000 in debt you’re carrying. The credit cards run around 12% give or take, so that same $10,000 costs about $100 per month. So I transferred everything I wasn’t confident that I could pay down in 3-4 months.
Kill debt with savings
This one might be a bit controversial, but the interest on a savings account is much lower then the interest on a credit card. So, we’re paying down the debt with savings. I guess if we’re struck with an emergency we end up going back to the credit card, or hitting a retirement account. But I think it’s key to eliminate this debt, so the snake will be eating its tail for the next year.
We’re investigating ways to consolidate our online subscriptions. For example, we both splurged on spotify accounts. We now share one account, saving $10/mo. We also share a kindle account. Now I need to figure out how to share our google account.
Still working this one out, but we’re taking a stronger look at our discretionary expenses. No more “hey, this magazine looks like fun” types of expenses. So far I’ve managed to cut this fairly dramatically, but still looking at drawing the actual numbers out of it.
Well, I’d like to let the waters settle from these initial actions and make sure that we’re taking advantage of our new patterns. But, my hope is to simplify our lives, and the space we live in. Take an aggressive stance towards paying down the debt over the next year, and reign in expenses as a lifestyle.