Getting Rid of My Debt: A New Beginning and Focus

This is a post I’ve been contemplating writing for the past two or so weeks, but for some reason, couldn’t bring myself to hit the “publish” button. I’m not sure why. I have just felt out of sorts when it comes to my financial situation because I still haven’t been able to look at a full month’s worth of expenses and salary, to see how it’s really setting itself up. Maybe that’s why. I’m pretty sure it is the reason, actually.Β 

So, it’s been a while since we talked about my debt. It’s been on my mind a lot lately, however. I’ve found a few podcasts that have focused on people who have paid off a lot of debt in a short period of time, and on finding focus in your life, mental clarity, etc. One is the Slow Your Home Podcast, and in particular, an interview she did with Cait Flanders, who paid off $30,000 in two years. She basically put herself on what she refers to as a shopping ban, where she monitors everything she buys and only buys what she needs. The only thing she doesn’t obsessively track is groceries/food. But what got me about her interview was her laser sharp focus. It’s something I have not had as much of lately because of all the changes in my life, but I’m now ready to re-focus.

I currently have two checking accounts going, just until the direct deposit starts to work with the new bank account. I have automatic payments coming out every month for my student loans so it’s important to monitor the two, to be sure there’s enough in there. Luckily, this month, the Big Daddy student loan payment has adjusted from what used to be $538 to $91. HUGE difference. The LAL loan remains constant at $167.11. There’s nothing to do about that one as it’s a private loan. I’m slowly moving my direct debit withdrawals to the new checking account.

I’ve been using my credit card since the move, and it’s something I’d like to stop. I’ve been able to pay it off every month and I plan on doing so, going forward. But I’d really like it to go back into the freezer. Or just get rid of it for good, and transfer money from my online savings to my brick-and-mortar savings bank account and use that as my emergency fund going forward. I know I handled my money the best when I didn’t have a credit card, but at the time, I didn’t own my housing (albeit by a loan), but rented. So when anything broke, all I needed to do was make a call to the building Super’s office.

That phone call would not have been an option this past week, when my AC broke. Because my rooftop AC unit is also my heater, even though the heating system still works, the whole thing needed to be replaced. About $1K later, I have a new AND working AC unit, thank God. At the time, the credit card really came in handy because my online savings account needs two days to make a transfer, and I needed 50% of the cost of the unit to be paid before an order for it would be placed. That would have delayed the purchase by two days, and then the ultimate installation would have also been delayed. So, I think that if I were to get rid of the credit card, I would need to have at least 1K sitting in a closely-accessible savings account in case situations like that arise again in the future.

For those of you that have emergency fund accounts sitting close by, what amount do you suggest placing into it? And how do you resist temptation to use it for something other than an emergency? Β Any comments and suggestions are very welcome, and thank you in advance if you take the time to leave one!

11 thoughts on “Getting Rid of My Debt: A New Beginning and Focus

  1. Unless it really is a problem for you, I would definitely keep the credit card at hand. As you just found out, it is a source of instant funds in an emergency, as well as allowing you to not need to keep a lot of cash on hand for every day expenses.

    This also helps to keep a record of your expenditures. Just be sure that it is paid off entirely every month.

    Also, it is pretty necessary to use a credit card for mail order items. Many times this is the most economical way to find and purchase needed products. They can appear right at your door instead of having to drive somewhere, using fuel, to search for a needed item.

    You’ll find the right method for your needs as time goes along.

    Virtual hugs,

    Judie

    • I do a lot of mail order things (through Amazon) and when I didn’t have a credit card, I just used my debit card, but you’re right, it can be a pain when you have to make a return of something and then still have to wait for the money to be credited back to your account. And I do get cash back (it’s a pittance but still it’s something) with my credit card for every purchase. Originally when I signed up, I got about $100 back because I charged a certain amount within three months (I knew i was going to be taking a trip so waited to use that new card for the airplane ticket and the rental car.)

      I am considering just putting it in the freezer so it’s not on my person all the time. I’ve heard of other people checking their card balance and paying it off once per week. I think I’ve gotten a lot better about my use of it, so that might be the way to go. I remember when I lived in Boston, it made renting a car for a trip quite difficult (unless it was zipcar, and I had an account with them so it was a non-issue.)

      Thank you, Judie!!

  2. Hi Terri,

    Good to have recent posts from you regarding how things are going. πŸ™‚

    When I had some debt to pay off, the thing that worked for me was turning it like in to a “fun” game to see how much I could save to pay it off. It did take several years but felt so rewarding to get out from under that weight. While I was paying off debt I also put money in to savings. Most people put all their extra money in to paying off their debt but for me it felt good to have some savings and made me feel good, like I was obtaining both goals of paying off debt and getting a good size savings account. Then if an emergency did happen I had $1000 available instead of getting in more debt and putting on a credit card. I also played the transfer to 0% credit cards game to pay things off quicker and save the interest. I didn’t have college loans so can’t give much advise with that. Good to hear that your loan payment was decreased.

    I’ve never really used a debt card, I don’t like the thought of someone maybe getting access to my bank account. I like with credit cards if there are any fraudulent charges it’s pretty easy to have those removed and does not lock up my cash. Also with cards you can get points or cash back, might have an extra warranty on purchases and like you found out good when needed in an emergency. Wanting my freedom was also a great motivator to not spending money, although I’m not perfect and did treat myself to dinner or other little things along the way.

    Good luck to you! πŸ™‚

    Tina

    • Tina, thank you so much for commenting! I was getting some messages from facebook friends saying “you haven’t posted in a while” and they were worried about me. So I thought it might be best to just hit the publish button on this post and get it out there.

      I understand what you are saying about the debit cards and fraud problems. And one time I did have my bank cancel my debit card and reissue me another one (was part of a security breach, I think) and luckily, my best friend was willing to lend me cash until I could get the new one and immediately pay her back. Borrowing from her was necessary as I didn’t have a credit card at the time.

      And I completely agree with you – it’s good to save at least a little while paying down the debt. Definitely, you need that cushion. I try to keep a bigger cushion than $1K (you must also have heard a lot of Dave Ramsey sayings like I have!) but totally agree with what you are saying.

      I also totally get the “Wanting your freedom” – I’m treating the car loan and RV loan as my main goals to be paid off. The Big Daddy Loan is here to stay for the next 25 years because after that, whatever is left is forgiven. So I’ll be paying until I’m 67, but you know what? I’m happy in the much lower paying job – more so than when I made a larger salary. But yeah, student loans, they are definitely a bit different beast than credit cards (although just as deadly if not taken care of.)

  3. Hi Terri:

    You are often in our thoughts and prayers. Thank you for your updates.
    I also enjoyed Cait Flanders interview. It was inspiring. I’m re-focusing as well but it’s challenging with 4 children.

    Regarding your question.
    I’m a Dave Ramsey fan, so I recommend $1,000-$2,000 in the emergency fund.
    I avoid using credit cards for monthly purchases. Though my intentions were good, using credit cards has gotten me into debt a few times. Also, I generally spend less when using cash or debit card.
    Last, I have a few friends who are well off. To my surprisingly, they don’t use credit cards..not for points, online order and so on.
    Having said all that, using credit card is not evil. Some people are disciplined and pay off their monthly balances.

    Just my thoughts.

    • Hi Kelvin!!

      I’ve begun reading Cait Flanders blog as well and she has an active online community forum that’s free to join and I have really liked being part of that. I know what you mean about the intentions being good but getting into trouble with credit cards. I have also done the same, and don’t ever want to go back there. And I am the same way – I tend to spend less with debit or credit cards, as well. And please give Camilla a hug – I miss you guys – if you are ever out this way, you know you all have a place to stay with me! It’d be like a big camping trip for the kids!

  4. Terri, it’s always good to hear your news on this new path. Your candid posts have been a continuing source of inspiration and insight.

    • Thank you so much, David. I really appreciate that, coming from you. I’ve always felt like you are one of the most insightful people I’ve ever known.

  5. I’d say make it urgent, and make it visual. I opened an additional checking account so I could visually see the money separated out and labeled it Do Not Touch (my accountant got a kick out of that!). The moment my paycheck hits my account I transfer a set amount,and think about what the total savings can get me. $500? That’s a set of tires. $1000? That’s a month’s rent if I’m laid off. The other thing is to make sure you do something nice for yourself each week so it doesn’t turn into a grinding feeling of deprivation. A $1.50 doughnut eaten in a community rose garden can go a long way I’ve found πŸ™‚

    • I do have some online savings accounts and they are labeled “emergency fund” (before I switched jobs, one was “job transition fund.”) But I do like the DO NOT TOUCH idea, thank you!

      And I do have a small amount set up to go automatically into three online savings accounts from my paycheck, but I really, really, really like that idea of do not touch. Wow, thank you! And thank you also, for reminding me, it’s ok to do something nice for yourself. I’m starting to think of goals I want to set and figure out a way to make them happen. That means lots of pencil and paper figurings. That always makes me feel more in control.

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