I wish i could tell you that we are debt free and pursuing our next goals. But…… we’re not. If we had been able to stick with the debt management program, our last payment would be in a few weeks. Unfortunately, we had to drop out of the program last winter because we just couldn’t come up with the moo-lah anymore. We have been making the payments still, but much smaller.
The good news is this: we are current on all of our regular bills. The exception is a handful of medical bills. They have all been sent to collections companies eons ago, so the damage is done. The plan is to build up a comfortable emergency net in savings and then tackle them one at a time.
I’ve recently decided to alter my strategy. I had been aggressively paying down our credit card debt using the snowball method. In 2 weeks, another card will be paid off and we will only have 3 cards left. (We started with 14!) The minimum payments total $320 for all 3 cards. Instead of snowballing the next card in line, I’ve decided to take the “extra” cash and put it in my ING Direct savings account. I know, I know. I’m not giving up. I’ve decided that it would be better to build up our emergency coffers for the remainder of the year.
Being a type A personality, i fret over the unknown. Even though we have some savings, a larger cushion would help me sleep better at night. We only have 1 month’s worth of expenses in savings. If we need to dip into savings between lawn and snow seasons, it’s all gone. Not cool. And since it will be quite a while until the next card will get paid off, i’ve decided to take a break for a while. We’ve paid of 5 cards this summer. That freed up over $250 in monthly payments to snowball with. The remaining balances on the 3 cards are large enough that adding $250 to the payment won’t reduce the minimum payment significantly. I’d rather have $750 in savings than a $25 lower minimum payment. I’m sure the personal finance gurus are foaming at the mouth, but right now it feels like the right decision.
Getting out of debt sucks.
It definitely does not happen overnight. So easy to lose momentum…