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Consumer Credit / Credit Cards
Happy Dance - $0 CC Debt

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By beeleaf
September 28, 2004

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Hello Fools,

Just wanted to share my delight, and a Happy Dance, as DH and I celebrate -zero- credit card debt.

When we returned from our honeymoon in October of 2002, we realized that we had really gotten ourselves deep into CC debt. Between the two of us, we had about $30,000 in CC debt. We knew that we had too much debt on our individual cards before the honeymoon, but we had never tallied up both of our cards together...then, we didn't set a budget for the honeymoon, and basically lived it up, including going a little wild on gifts for each other and our family and friends...you get the picture. The reality began to sink in on our last full day of the honeymoon and the reality became stark when we totaled everything up. That's when we decided to get serious about the debt.

It's taken two years to get out of debt. It's not always easy, and the general consensus is that if it takes you a while to get in it, it will take you a while to get out - so don't lose hope if you're in the midst of your own CC struggles! Anyway, our basic plan of attack was to cut costs and put a lot of money toward the credit cards, plain and simple. The plan became more and more defined as time went on, but at first, it was making changes such as eating out less and eating more at home (DH is a good cook, so why are we spending so much money on food out?, etc.). Then we would basically save a lot of money and throw a bunch of money that was in our savings account at a credit card (I learned a lot on this board about striking a good personal balance between enough money in your efund and not having *too* much savings in your account so you could effectively attack the debt). We started with the credit cards that had the least amount of money on them and got rid of the debt on those first. We started tinkering with amounts that should go to the CCs each month, based on a budget we had worked with. We started to cut down on unnecessary monthly expenses by getting rid of Sprint and using prepaid phone cards from Sam's Club instead, bought some things in bulk from Sam's Club, reduced our cable bill by $50...all of these changes added up (in a *good* way).

We made the most progress in the past year. In the past year, we were able to transfer all of our CC debt to one card (Citibank), and we utilized a 3.9% deal on the life of the balance transfer. This definitely helped make a difference. We also got much more focused with how much we were putting each month toward the credit card. I cannot say enough about Bankrate.com's calculator, wonderfully titled "What will it take to pay off my credit card?", where you enter your balance, interest rate, and then you can choose between what amount of money you pay each month OR the desired amount of months until you will be debt free. Then you hit calculate, and you see how many months it will take to pay off your credit card, or how much you will need to pay toward your credit card each month to be debt free by whatever month. Calculators like this are important, because they force you to be realistic about how much work you have to do (hard numbers are easier to grapple with than a fuzzy feeling of "I just want to get out of debt"), and you can really look at your budget with these calculators and see how much junk you can cut out of your budget so you can achieve your goal of becoming debt free.

I forgot the most important part. We stopped using our credit cards altogether. It was the only way to kick the debt. At first we would continue to use them on occasion (e.g., going on vacation, using the credit cards, and then paying the charges off right away), but it was only when we stopped using them completely that we were able to get totally serious about getting the debt down. I am proud to say that we went on two vacations this summer without using CCs at all. We did this by a) taking out enough cash to sustain us through the vacations, and b) making sure we had enough in the bank if we went over our cash budget. Our debit card (has a MasterCard logo so we can use it anywhere MC is accepted) has become our best friend, because with it we have learned how to manage our money wisely. We either have the money to buy what we want, or we don't.

Living below your means and buying what you can afford are the only ways to get out of debt and stay out of debt, folks.

Thanks for reading. It cannot be said enough - "If I can do this, you can do this, too." Being in CC debt is very stressful, but there are success stories every day. You don't have to be another "average American statistic" who has $8,000+ on their credit card(s) at all times. It feels wonderful to know that, with our upcoming paychecks this week, we will be paying *ourselves* instead of Citibank.

Thank you to my fellow Fools for your essential advice, tips, inspiration and encouragement. With posts directed toward me and others, you have helped me develop a new mentality toward debt, money, savings and how to live a better life.

Take care, and my best to you as you pay down your own debts.

beeleaf

P.S. We ordered wine from our favorite winery to celebrate - put the balance on our debit card.

P.P.S. We're also having a party in November to celebrate - and the cost of the party will also be put on our debit card. :D


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