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By RedQuark13
April 14, 2005

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I've been lurking on these boards for quite some time and finally decided it was time to share my story.

In March 2004, I was shown the door at my last employer. Looking at my situation and trying to figure out how I was going to pay my bills I came to the terrible realization that maybe carrying debt on my CCs might be a bad idea. There is nothing quite like losing your sole source of income to motivate change. I was lucky that I could rely on family to provide shelter until I was able to find another position and get back out on my own. So I swallowed my ego and made plans to move back home to mom's house. Someone must have been watching over me because the phone rang as I packed the last of my worldly possessions in cardboard. The nice woman on the other end of the line informed me that my services were indeed required and at a 36% increase in salary. While this normally would have me doing cartwheels, the reality of the situation was that I was moving from a very low cost of living area (Central PA) to one of the more expensive areas of the country to live (Northern VA). Now don't get me wrong, I'm not complaining. The situation was far from dire, but I still worried that I didn't know exactly what I was getting into and hoped for the best.

Having my income back was definitely a good thing. At that point I could have easily carried on as I had before and continued to deny the credit issue that was creeping up on me. Only three years out of college and I had packed on $15000 in consumer debt. Fortunately, I couldn't shake that sickly feeling I got the day after I got my walking papers. That cloud of confusion and panic. I'm sure some of you know the feeling. I decided right then and there that there had to be a better way.

I spent the next few weeks scouring the Internet reading anything I could about debt repayment. Then I happened to click on a link for a dept repayment worksheet. It just happened to be from Fool.com. After reading all the articles I could find here on Fool.com, I felt I was prepared to tackle this monster and came up with a plan. That first plan seemed a bit harsh. I was throwing just over 40% of my monthly take home at the beast minus a small eFund that I needed to amass for peace of mind. My only other obligations were my car payment (which at $403 a month wasn't cheap), my cell phone and the $100 a week I promised to pay my family for the luxury of having a bed to sleep in and food to eat.

At that time (May 2004) my financial obligations were:

MBNA $12000/$18000 @ 21.99%
Discover $3272/$5000 @ 15.99%
VW Credit $10096 @ 8.9%
Total $25368

While I admit not high compared to some of the other numbers I've seen here on the boards it seemed like a lot to me at the time. The first four months of my plan I didn't make the wisest of choices. Looking back now, I should have called to have my rates lowered and tried to find some 0% BT offers. But, there is no need to dwell on the past. I was starting to see my balances drop and that was what was important to me at the time. After adding up the finances charges I was paying per month (I think it was just over $250), I figured there had to be a better way. I'm a non-confrontational kind of person and really dreaded calling my creditors. I am so glad I overcame that hurdle. While the calls didn't net me anything (None of my creditors would budge on my rates), it did serve to annoy me to the point that I was mad that I was paying these people my hard earned money every month and they weren't willing to work with me. This prompted me to apply for a new card from CitiBank with a 0% BT offer until September 2005. CitiBank was nice enough to issue me a card but the limit was only $6400. This helped a lot in the long run but still didn't let me stop paying interest. I rolled the rest of my balance up into a 2.9% on the Discover card.

The next few months were uneventful as I was snowballing the Discover card. Paying off that balance was a sweet victory for the good guys. I was no longer paying for my past spending. It was very uplifting and served to vault my forward into slaying the remainder of my debt. Well by the time March 2005 came around I was down to just over $5800 left on my CitiBank card. I had been paying the minimum on the CitiBank card and had increased my eFund to $6500. It just so happened that my birthday was coming up (3/22) and I decided that despite the fact that I could hold off on paying the balance on the card until September 2005, I needed to be rid of the debt and it would make one of the best birthday presents I ever gave myself. So, I instructed my bank to issue a check to CitiBank the day before my birthday for the remainder of the balance. Logging onto the three CC websites on my birthday to find them all with zero balances felt so good. The small victories, right?

It's amazing how quickly CC companies will increase your limits when you don't owe anything. I also called the companies back and asked them to lower rates again and this time they were much more receptive to my requests. While I can't quite say I'm debt free, I'm getting close enough to see the light. My current situation is this:

MBNA $0/$30400 @ 15.24%
Discover $0/$8000 @ 11.24%
Citi $0/$8000 @ 10.49%
VW Credit $5250 @ 8.9%
Total $5250

eFund $2200
Down payment $300
Total $2500

With all of my consumer debt dispatched, I can finally focus on amassing a housing down payment. I can't see living at home forever and now that I'm not on such financially shaky ground, I need to work towards not relying on my family. They have been very supportive and have never said anything to make me think that I was wearing out my welcome. Its something I need to do for myself. My only fear is that it took so much of my income to get me back to the starting line and that was without having a housing payment. Will I be able to make this all work once I have a hefty (darn housing prices in DC) payment to deal with every month?

Well thanks for listening. While the journey isn't over, I do feel I've started on the right path even if it took some wrong turns to get there.

RQ


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