You spin me right round, baby, right round.

This will be my last "money & banking" post for a while.  Why?  Because I've learned something important in my quest towards financial success.  After you take a big step, you maintain.

You don't try to transfer anything.

You don't apply for anything.

You tear up all those offers the credit industry barrages you with the minute you could possibly withstand an additional $5 of debt without getting thrown out onto the streets.

You pay everything on-time, according to your plan, for six months.  And then you pop your head back up and decide where you can make progress next.  I've got two open credit card accounts sitting at 19.5% and 20% that are scheduled for the 2007 chopping block.  Personally, I'm hoping Prosper expands to include loans over longer terms than 3 years.

Here's where I'm at now.  My Prosper loan funded at 13.5% borrower rate (14.21% APR).  This is 5% less than the loan I'm going to pay off when it hits my checking account.  Sweet!

Double bonus, the loan account will stay open and available, and since it's a loan (not a card), I won't use it.  So that will help the ratio of my debt to my available credit.

On the negative side, I still can't handle credit cards with available credit.  Emotionally, I think I'm almost there, but when you're buried in debt, you're bound to need - really need - car repairs or food or a million other things, and if you have a credit card, you use it. 

I had a slippage because of the eight days unpaid that I took to shadow on the TV show last fall, and it snowballed a bit for a while.  I learned that my finances plunge into chaos after only eight days without pay.  It took months to recover, and the whole experience has been a serious wake-up call.

I do feel confident that I won't touch that open loan.  I'm hoping to get a sweet balance transfer offer in the mail after a time and maybe move some debt there and close my second card.  Let's face it, the whole debt to available credit ratio just isn't my primary concern right now.  And it's a shitty ratio for anyone to be looking at anyway.  Fuck 'em.

My priority is getting my interest rates down.

The other big thing happening this year is that I should be getting a substantial unclaimed funds check.  This is going directly to a closed account that has an ex's name on it.  It won't pay it off completely, but it will bring it down enough that I should have it completely paid off by the end of the year.  This one is so important to me on so many levels that I've decided not to get my car air conditioning fixed and just send it all.

I've just had it with my debt.  It's insane, I'm buried, and I'm done slipping.  I can't beat it today, but it is my number one priority.  It's killing my dreams, and that's one thing I won't let anything do.  There is no reason I shouldn't be debt-free by 40 if I get serious now.  And I am beyond sick of spending hundreds of dollars a month on nothing every month.  I hate that I can't live at my income level.  I can't buy a car; I can't even buy a bicycle.  I hate this debt-ridden life.  I have to get free.  I can't live this way anymore.  I have to beat my way to the light at the end of the debt tunnel to survive and to succeed.

Of course, the trick is that it is a battle waged slowly by making good choices everyday.

I'm ready now.

Comments

[Frederick]

I feel for you, I really do. I was in a similar 19.5% death struggle a few years back, and it's taken me a while to work things down...but it has happened. A few ideas (some are really simple, but it's surprising what sometimes people don't do...) Call your credit card company(ies) and ask them to lower your rate. If you're making payments on time, you can get a few percent knocked off, which can make a big difference. Just don't let them talk you into increasing your limit instead, which they'd much rather do. Just ask, can't hurt. Second, are you in a union? Have parents that are/were? Work or volunteer for the city? Parents ex-military? Look for a credit union that caters to these groups. You can very likely get a small loan for less than 14% APR. Pay that off and things will get even better.

Referencing a past post you linked to: Take your employers matching 401k. I know you want to be socially conscious, but as the flight attendents say - you have to put the oxygen mask on yourself before you assist the person sitting next to you. Get your 401k up to a healthy level and feel good. Get your savings higher than your debt (in time), and you'll be shocked what positive net worth can do for you.

I don't mean to lecture, but there's no good reason someone with an advanced degree, a plan and some discipline should be paying 20% for anything other than good service.

[Personal Finance Advice]

Take the baby steps and turn them into habits. It takes time and effort, but it can be done. The first step is deciding to do something about it and you have. Wishing you the best in tackling that demon...

[Dave2]

I have only one card left... but it's a biggie. I pay and I pay, but it never seems to get me anywhere. :-(

[Lessa]

I agree with Frederick about calling your credit companies and getting the rates lowered. Those high rates are from the late 80s, early 90s. There's no way that you should be paying more than 15%.

Also, if you've had these credits cards for a long time, don't cancel them. Credit reporting bureaus like to see how you've maintained one or two credit lines over an extended period of time. If it looks like you credit card "hop", your score will be suffer adverse effects. And good credit scores are becoming more and more essential in this world.

Anyway, as always, it's about taking those baby steps in the right direction, and you're walking with flying colors, kid.

[Liz]

Thanks everyone, for your comments.

I feel compelled to share that it has been my experience that if you are so in debt that a credit card company can take one look at your credit card report and see that there's no way in hell you could possibly take your business anywhere else, they will be "unable" to lower your rate.

This is one of the reasons that the Prosper opportunity was so important to me, because it allowed me to transfer an account to an account with a lower rate by allowing me to even open another account, considering my debt-to-income ratio. It's an important toe hold.

[panasianbiz]

I stumbled across your blog while I was doing some online research. I was really quite impressed with the strategies you described. You seem to be doing a fine job managing your finances and meeting your goals.