Thursday, February 4, 2010

Credit Cards, Seriously

An anonymous response to my last post called my credit card debt "disgraceful."

Uh, tell me something I DON'T know! It is indeed a disgrace, and I have to settle down and get serious about eliminating it.

I have six credit cards, with a total of $24,125.06 in debt. The interest rates range from 0% on two cards to a high of 13.24% on one card.

I try to follow Dave Ramsey's snowball, paying minimums on all the cards with the exception of the lowest debt (in my case, a credit union VISA on which I owe $1763) where I pay more than the minimum.

Given that this year I have a car payment, and a significantly larger mortgage PITI payment, finding money to pay on the lowest card is going to be more difficult. I still don't know, and won't for another or so, if my wages will increase.

But I have no intention of retiring with credit card debt of any kind. Good thing retirement is not for eight years down the road.

My fallback plan, should I still have credit card debt in 4.5 years when my mortgage is paid off, is to then throw all of the money previously used for the mortgage toward the VISA/MasterCard indebtedness.

But who wants to carry around that debt for more than 4.5 years?

Certainly NOT moi!


Anonymous said...

It seems to me that you are only following PART of the Dave Ramsey plan. Yours is a situation where that plan in its entirety would really work. "Changing your family tree" would be as important a result as the debt payoff. Your grandkids would get much better lessons from doing this than they are getting from their largely useless parents.

So, I challenge you to adopt the Dave Ramsey plan in full for the remainder of 2010. Start by cutting up the credit cards and opening that $1,000 emergency fund account. Then sit down with the grandkids and their father and come up with a family budget. The father should be contributing most if not all of his net income because he and his children live with you. Adopt the envelope system and take those grandkids to the grocery store with you and let them help you make it work. Put them on the commission system for their chores so they can learn that work pays.

Then, put every available penny towards your debt snowball. I will bet you can pay off at least $6,000 by the end of the year if you do this.

How about it, Grace? Are you up to the challenge?

Carol said...

Aw, Grace. I'm sure you're doing the best you can. Reading your post just made me grateful I'm at your stage in life and debt-free. But I don't have your family obligations. Again, I'm sure you are doing what's right for you. And I very much enjoy reading your posts.

Anonymous said...

Grace-- Have you thought about going to a Dave Ramsey class in your area? Adult children are included in membership, so you could even go with one of your kids staying at your place if you thought they would benefit.

That might help provide more support and structure to really knock off those CC debts. Like weight-watchers, except I think it's easier to keep debt off than weight once you've got started.

Anonymous said...

Yikes! Years ago when my credit card balance was high I decided that I'd start to write the cheque to cover the credit card as soon as I charged anything. It's easier now with online banking; I just immediately make the credit card payment online when I use my cards. It does mean that I have numerous bank accounts because when I want to buy something I don't have the cash-on-hand for I start a new savings account and stash away money until I can cover the expense. It does mean delaying gratification but it works for me. That said, I'm fortunate to have paid off my mortgage and I have a gov't pension so I can manage to do this if I'm frugal with other things - which I try to take as a personal challenge.

Florence said...

Dear Grace, It is always going to be one thing or another. You want to take care of your adult children and their children more than you want to get your debts paid off. And that's not such a bad thing. I do think that it would be helpful to have a firm discussion with everyone about your limited finances. Everyone has relatives that will suck them dry and then move on to their next disaster without a backward glance at the person they just finished using. It's hard to realize that's just the way things are.

Shevy said...

Yes, it's a daunting amount of credit card debt but you're working on it. And, I really believe that *what* you charged counts too.

If you have $20k in credit card debt that was incurred paying for medical or dental bills, buying textbooks for a grandchild in school, etc. that's quite different in my book than if you ran up the same amount buying shoes, eating at fancy restaurants and having your hair "done" every week.

I think that much debt at your age is unfortunate, not disgusting. I'll be rooting for you as you continue working to eliminate it!

Stephen @ ACE Financial Services said...

I've been into those situation too, but just almost half as yours. Dave Ramsey's snowball helped me a lot too and the first time I read about it, it doesn't make sense to me. Not until I read a lot of financial blogs talking about it. Like me, you can conquer that debt of yours too!

Living Almost Large said...

What can you do? Any plans for the CC debt?