Monday, May 10, 1999

Newlywed Whammies

by FarmerBell

Back in 1996, my wife and I were hit by three "whammies" -- new (1st) house, we got married, and had a puppy with bad hips.

Although we had not become full-fledged Fools at this point, we were still pretty Foolish. In buying the house, we avoided private mortgage insurance (PMI) altogether (by having greater than 20% down payment). We held our wedding at our new spread, inviting only the closest friends and family. In treating our dog, we simply had her hind legs removed, replacing them with prosthetics. Just kidding! The dog received the best treatment money could buy to the tune of $1,700. (Some things transcend money, I guess -- a sentiment confirmed every morning with a wet lick from Ella, our yellow Lab).

Sounds pretty good so far, except even though we were pretty Foolish, there was still lots of spending taking place: wedding rings, food, flowers, lawn mowers, water softeners, on and on and on.

We ended up with a balance of about $12,000 on our credit cards.

Gripped by financial fear, I referred to Fools & Their Money on retiring credit card debt, and I'm happy to say that as of this month, the credit card debt is gone!

How did we do it?

1) We quit using our cards completely (no exceptions!).
2) We shopped for the lowest interest rate offers we could find, and transferred as much of our balances as possible to these accounts.
3) We paid as much as we possibly could to the cards with the highest rates.

And, most importantly:

4) We hung in there.

Erasing credit card debt is similar to going on a diet -- you don't get fat overnight, so don't expect to get thin overnight. Now that the debt is gone, we're accustomed to living without around $1,000 per month. Now our monthly payments will be going to ourselves, and it feels great.

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