Finance and Fat » Credit Cards

You Just Realized You’re Spending More Than You Earn: 4 Things To Do Today

Eden — Mon, 27 Jul 2009 13:03:15 +0000

My financial turnaround began when I realized I was spending more than I earned each and every month. That’s pretty much the only way you can pile up more than $25,000 of credit card debt in a year (that’s about the rate I was going). For me, it came down to stupidity and lack of attention really.

If that sounds like you right now, here are four things you can do TODAY to stop the bleeding and begin to gain control of your financial life.

Stop using credit cards – Those little plastic jerks are ruining your life and you know it. Chop ‘em up! They aren’t cool, you don’t NEED them, and what good have they done for you so far? Life is possible without credit cards. I haven’t had one for more than a year now and I never miss them.

Make a budget – Honestly, making a budget is like getting a raise. It’s amazing what a little detail work can do for your finances. It’s hard work though. It takes time and practice to successfully budget. Don’t give up after your first try and don’t expect to get it right in the beginning. Just trust that it will work and give it a chance. This step alone will dramatically change your financial life.

Sell some of the stuff you bought that you knew couldn’t afford anyway – Video games, DVDs, golf clubs, whatever unnecessary junk you bought that you don’t need. Face it, almost nothing that we buy is truly a NEED. Be ruthless. Start listing some stuff on Craigslist or Ebay. It can be a pain, but consider the hassle to be part of your therapy. This will put some cash in your pocket quickly and give you some small victories on the road to turning your cash flow positive again.

Create more income – This could be overtime at your current job, finding a part-time job, or my personal favorite- finding some freelance work of some kind. Anything that allows you to use your existing skills to provide a valuable service for someone is your best bet for some quick side money. This is the best choice because you’ll start to get a taste of how to create your own path to income in your life.

These are just a few tips and there is more you can do, but you have to start somewhere and this is as good a start as any. You need to dedicate extra time to working right now, but don’t neglect education. Read some blogs, and read some books. Start talking to your friends and see if any of them are trying to change their financial lives too (you might be surprised, this is more common than you probably think). Try listening to the free Dave Ramsey Show podcast (or his radio show if it’s on in your area). The podcast is only 40 minutes long, it’s free, and it’s a great way to get a daily boost of inspiration and keep fighting the battle with debt.

Even if you can only do one thing today, it’s a start (if I had to pick one, I’d start with budgeting). The most important part is realizing there is a problem and starting to take action as soon as possible. Once you get the ball rolling, this will get easier. Good luck!

You Just Realized You’re Spending More Than You Earn: 4 Things To Do Today

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Credit Card Debt Update, June 2009

Eden — Wed, 15 Jul 2009 12:55:41 +0000

It’s been a while since I updated my credit card debt payoff progress. That’s probably because I haven’t been focusing on paying them off very much lately. Of course, I’m not using the cards, so even just paying the minimum payments is reducing the balance. However, I’m not paying much extra so the progress has slowed quite a bit lately.

My starting balance was $25,559.82 when I started this blog in September, 2007. Through the end of June, 2009, the balance is now $7,876.90. The total paid off so far is $17,682.92. That’s about 22 months, for an average monthly reduction of $803. I was doing much better with that, but over the last few months I’ve only paid a couple hundred dollars toward the debt.

I started 2009 with the goal of paying off the credit cards completely. I’m no longer on pace to make that happen, but I’m still hopeful that it can be done. If I can cut out some more spending and find some extra sources of income it might still happen. At the very least, I want to finish paying off the smaller of the two cards, which has a balance of $2,905.70. Getting at least that much done shouldn’t be a problem.

Credit Card Debt Update, June 2009

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Credit Card Debt Update, February 2009

Eden — Mon, 02 Mar 2009 23:21:35 +0000

As of the end of February 2009, my total credit card debt is down to $8,969.87. This means I have paid a total of $16,589.95 from the time I started this blog with $25,559.82 in credit card debt.

My pay-off pace has slowed a bit lately, but I expect to be making a rather large payment in the next month or two and possibly eliminating the third credit card of the four that I started with.

It won’t be long until I’m done with credit cards for good!

Credit Card Debt Update, February 2009

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Credit Card Debt Finally Under 5 Figures

Eden — Fri, 02 Jan 2009 13:33:00 +0000

This is a great way to start off the New Year! As of the end of December our total credit card debt is finally under $10,000 ($9,776.07 as I write this). The balance has been just over $10,000 for about 2 months now, but I have slowed down payments recently as we may be facing some uncertainty with jobs and other things.

One of my goals for 2008 was to pay off all the credit card debt. We didn’t accomplish that, but I knew it was a rather lofty goal and not hitting it isn’t so bad. The good news is that we paid off $8,728 and eliminated two of the four original credit cards—including the highest interest rate card (was about 11%). Our remaining two cards are both locked in at under 5% interest.

One of my goals again for this year will be to eliminate the credit cards entirely. We’ll have to come up with a little more money than we did last year, but with more hard work and a more intense focus on frugality I know we can do it.

Credit Card Debt Finally Under 5 Figures

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Looking Back on a Year Without Credit Cards

Eden — Mon, 08 Dec 2008 13:30:00 +0000

I started this blog in September, 2007 with about $25,000 in credit card debt. As I write today, I’m down to about $10,000 remaining. I did not add any new credit card debt and I focused my efforts on paying extra on my credit cards before any other debts. Along the way, I have paid for some car repairs, dental emergencies, and two new computers. All with cash of course!

So how did I, a credit-card-crazed-consumer who had spent $25,000 beyond my means, make such a great change?

I made a decision to stop living beyond my means.
I made a budget and started to follow it.
I destroyed my credit cards (all but one) and I don’t carry the one remaining card in my wallet*.
I used my budget and extra income to reduce the debt.

You may think you can’t get through life without credit cards—I admit that it was a little scary and difficult at first, but it is entirely possible. I’ve stayed in hotels and rented cars without credit cards. I’ve booked airline flights and handled unexpected car repairs. All you need is a debit card and actual money and you’ll be just fine.

Credit cards are tightly woven into the typical American lifestyle these days. Surely the banks would like us to believe they are necessary judging by the advertisements they flood us with. However, thanks to the current financial crisis, some of us are finally starting to wake up and realize that our current path will only lead to failure.

I’m writing to you as a normal guy who was once part of the credit-card-crazed, consumerist culture. If I can break free, you can too.

Don’t let the media fool you into thinking you need credit cards and don’t think it’s normal to spend money you don’t have. At least give the credit-card-free life a try—you can always go back to living in debt if you find you miss the feeling.

*In the interest of full disclosure, I currently have 2 active credit card accounts (the two remaining cards I am paying off) and I have 1 physical card in my possession. I don’t carry it with me and I haven’t used it for more than a year now, but it is at home and available if I every truly ‘need’ it. I plan to get rid of it as soon as I have a fully-funded emergency fund (6 – 12 months of expenses).

Looking Back on a Year Without Credit Cards

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Update on the Credit Card Debt Battle

Eden — Fri, 07 Nov 2008 14:00:03 +0000

I wish losing weight was as easy as paying off credit card debt. Of course, for the person buried in credit card debt without enough money to eat or enough time to sit around and get fat, I’m sure the opposite would be true.

I guess we all have our strengths and weaknesses. My weakness is clearly food. I wouldn’t quite say budgeting and reducing debt is my strength, but I have found that except for a few things that I really enjoy doing I have found it pretty easy to cut expenses. In fact, as time has gone by, I’m continuing to cut my expenses and October 2008 marked my lowest spending month since starting this get-out-of-debt project over a year ago.

As an example, I just made the ‘sacrifice’ of cutting cable TV. I did this while my wife and I are earning more money than we ever have in our lives. I’m absolutely not trying to brag about that, we aren’t rich by any means, though we would probably fall into the above-average category for income. My point is that we could easily continue to spend the money on cable TV, but our priorities are changing. The more I work for other people, the more I realize that is not what I want to be doing and the fastest way I can see that situation changing is to continue to cut expenses, pay off debt, and save up cash. I’m getting off topic though. The point of this post is a long overdue update of my credit card debt progress.

When I last wrote about my credit card debt (as of the end of August 2008), I owed $14,338.45. As of the end of October, I owe $10,271.09. Not only did I pay off about $4,000 in two months, but I also bought a brand new MacBook Pro during that time!

So how the heck is this possible? We didn’t win the lottery or find a few thousand dollars of change in our couch. It’s simply been a matter of hard work and cutting spending more and more every month. I’m fortunate that my career easily translates to freelance work. I basically sit on my couch at home and build websites on my laptop. And I make pretty decent money for my efforts. It can be a drag sometimes, but it’s hard to say no to the extra money. I don’t make a lot at my day job, but the money I earn on the side is a nice supplement to my regular salary.

If you are working at getting out of debt I strongly encourage you to find something you’re good at doing and then find a way to get people to pay you to do that for them. It may be related to what you do for your day job or maybe not, but if you can find a way to make some money on the side for something you don’t mind doing it can really accelerate your plan to get out of debt.

At the start of the year, I had hopes of paying off all my credit card debt in 2008. It’s not likely at this point, but I’m not going to rule it out either. At the very least, I’ll be close and it’s starting to feel really good. I was able to pay off two different accounts and that makes life a little more simple too. Just two more cards and $10,000 to go!

Update on the Credit Card Debt Battle

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Who Voted AGAINST the Credit Card Holders Bill of Rights

Eden — Thu, 25 Sep 2008 15:31:21 +0000

Fortunately, the Credit Card Holders Bill of Rights passed the House of Representatives on September 23rd, though it still must pass the Senate and the President.

I’m glad it passed, but I’m also concerned about the 112 morons representatives who voted AGAINST this bill. What is wrong with these people? I don’t know if they are all in the pockets of the credit card companies, but really I can only assume these people are much more interested in the rights of credit card companies to rip us off than our rights to not be ripped off.

Check this link to see if your representatives voted yes or no and take action to kick out the fools who voted no on this bill. Three representatives who voted no are from Arizona (where I live), but none of them are from my district (thankfully). I did write to the one Representative who accepts email from someone outside of his district (I can see why the others don’t want to hear from anyone else). Please take some time to let these people know what you think of their actions.

Who Voted AGAINST the Credit Card Holders Bill of Rights

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Monthly Update: Credit Card Debt Payoff

Eden — Mon, 08 Sep 2008 22:00:25 +0000

Update: Looks like the Flash chart didn’t load properly at first- should be corrected now.

Now that I’m 1 year into the blog, I’d like to get back to tracking my credit card debt payoff progress monthly. Included below is a chart of the progress I have made.

The good news is that I have paid off $11,221 of credit card debt over the past year. The bad news is that my progress slowed down greatly over the past 6 months and my average paid off per month is only $863. Toward the end of 2007 and early 2008 I was typically paying off between one and two thousand per month.

Basically, my spending has crept back up over the past 6 months and I just haven’t been as tight with the budget as I was at the beginning. I’m working to get my spending back in line now and hoping to get closer to the $2,000 per month of extra payments range going forward.

Credit Card Debt

Oops! Something went wrong and the chart could not be displayed. You may need to upgrade your Flash Player or enable JavaScript.

Credit card debt progress since August 2007

Monthly Update: Credit Card Debt Payoff

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Still think you need a credit card?

Eden — Thu, 03 Jul 2008 18:50:00 +0000

Warren Buffett suggests avoiding credit cards.

If I borrowed money at 18 or 20 percent, I’d be broke…. So if I had one piece of advice for young people generally it would be to just avoid credit cards.”

Read the whole article from CNBC.com.

I think it is more wise to follow the advice of the world’s richest man than it is to follow the advice of our in-debt friends and family or Visa and Mastercard commercials.

Still think you need a credit card?

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Archive of Reasons to Not Have a Credit Card

Eden — Sun, 06 Jan 2008 22:20:31 +0000

I started a series of posts on Remembering Why I Don’t Want Another Credit Card to help keep track of the things I read that cause me to think to myself, “I never want to deal with a credit card company again!“. That was a start, but not quite the right solution to my problem since I would have to go digging through single posts when I want to review the list. So…I started a page, Credit Card Stories, with a list of articles, news stories, resources, or anything else that causes me to remember the phrase “I never want to deal with a credit card company again!“.

For the record, I do not think that credit cards are evil, though I do think that most credit card companies are evil (or at least dirty) and personally I want nothing more to do with them.

A few people successfully game the system and earn money with their credit cards (playing what is commonly known as credit card arbitrage). Go right ahead if that floats your boat, but I don’t want to invest my time keeping tabs of every little transaction, changes in policy, or dealing with customer service at a credit card company when they inevitably make a mistake and try to steal my money.

You can’t argue that people make money with this game, but I’ve never read biographies of the rich getting rich by playing credit card arbitrage. I’ll try to make my wealth the old fashioned way and I think achieving wealth will be much easier if credit card companies don’t have a part in my financial life.

For the vast majority of people, credit cards do not help you to achieve financial freedom! If you carry a balance, your finances are moving in the wrong direction. You need the power of compound interest working for you, not against you, to become wealthy. Credit cards may seem like part of the American Way, but they don’t have to be.

Visit the Credit Card Stories page for some inspiration to say goodbye to credit cards and feel free to send me links to include in the list. I know I have missed a lot of good articles and I will be updating the list indefinitely.

Archive of Reasons to Not Have a Credit Card

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