January 15th, 2019


credit card debt

If I only had one new years resolution, it would be to climb out of credit card debt. I'm embarrassed to admit this but when I add the two cards together, we owe over $8,000.

Time for honest talk. If you read this, please do not judge me, I'm trying to improve and maybe writing it all down honestly will help.

When it comes to personal finance I feel like I do a lot of good things. Our mortgage payment is less than $1000, I pay an extra $300 a month on the principle, we're on track to have the house paid off well before we have kids in college. I'm still using Elizabeth Warren's All Your Worth budget recommendation guidelines for my goals: 50% needs, 30% wants, 20% savings and debt repayment.

Food is a need, $240/week into a debit account based on the USDA meal budget guidelines, I have about three months emergency savings in CDs, charities on auto-donate (credit card), I bought a new (to me) car outright last year, I've put into my 401K and have never taken anything out of it.

But when it came to the credit cards I just saw the balance every month and thought well, I can't pay that. maybe next month I'll have better luck. We'll just try not to use it.

I looked at the statements. The credit cards are supposed to be for gas, emergencies, auto-billing. We use them when we travel - maybe we did too much of that last year. We had some car repairs, bought new bikes, and probably just went out too much, we'll have some little celebration or great thing come up and think oh what the heck, put it on the credit card.

I think my problem was that I wasn't sure what "try not to use it" meant. I said gas only, but then a birthday came up, the kids needed clothes, a friend was in town and let's all go out, it's spring break let's take a trip and stay in a hotel because spring break is only once a year, etc etc etc.

Something I realized in thinking about all this was that I needed a TARGET for what my balance should be if I check it on any given day. What's a balance? The amount you spend minus the payments you make. And my payments are based on my income, that's the same every month.

I did a ton of looking at statements, re-did our budget from the top down, read up on strategies. Here's what I'm going to try. First, I did the math and I think I can afford to pay $3000 a month on credit cards. All my bills and charities go on one card, for about $1000. If we can keep the other one to $1000 or less a month, make a payment of $1000 on the debt, we can pay it off. Sadly on average we spent about $4000 a month last year. When I averaged that out, and looked at my income, it made perfect sense why our debt has gotten to where it is.

I always make the credit card payments on the first payday of the month. My plan is to carefully note the new balance, maybe put it on the fridge or someplace big. That way I know what it should be in 28 days when I'm ready to make a payment again. If it was $3200, we have to make sure it doesn't hit $4200. To do that we can spend $250 a week... if we're two days in, and the balance is $3700, we're in trouble. I also set up push notifications to my phone to tell me any time the card is used - marc has the card and uses it way more, frequently as an add-on to the food budget when he's past what the debit card allows. he's not the best with money. okay, he's terrible. but I love him and I want to have a solid plan in place instead of just laying guilt on him all the time.

We spend $100 a month on credit card interest. That's a night out! It drives me crazy. And I feel bad, because I'm an employed American with healthcare who doesn't miss a meal, I am very lucky, if I can't live on what I have I'm a shitty person. I should give more to charities. I should be able to figure this out.