Monday, April 13, 2009

When it rains...

you know the rest.
It's been a really interesting week financially. Last week seemed like I was repaying some mortal sin I had committed. It was that bad. After the news about capital one almost tripling mu APR. I got hit with a $600 bill. Due this week. Are you shocked? Because I was. It was from my gas company who has never billed me since I moved in (October 2008). I had called in November, December and January to let them know I hadn't received any bill. The first time they told me that their guy was not able to get access to my building and the second time they said a bill would be going out the next week. I called them of course because I was not about to be charge a late fee for not paying $600 with a weeks notice. The long and short of it is that they still have not read my meter. The last time it was read was in August (before I moved in). Nobodies meter in my building has been read actually. I guess another department saw the gas was being used and issued an estimated bill and closed the account. They put a hold on the bill and I have to call my landlord to find out what's going on. I'm not sure how they are supposed to gain access to the meter so that's on hold.
Then i got two parking tickets. Both for $115 dollars. Total $230. Looking at the second ticket I notice my plates expire at the end of this month. Which reminds me that my insurance is up in June/July. All these financial curve balls made me panicked and helpless. I hated the fact that I have all this debt. I hated the fact that I make a supposedly good salary (62k) and I can only afford to give myself $10 a week to spend. That despite that sacrifice, I still don't have enough. I was definitely in depression mode. I quickly went to my budget and revised what I could. I increased my credit card payments from $700 a month to $800. I reduced the amount in unplanned spending. Cut eating out to $15 a month (from $20). I found all these little spots I could shave $5 here $3 here and resigned myself to living a life of poverty even though I make double what I made in my very first job.

Time is wonderful. It shows why we shouldn't rush into decisions. After thinking more this weekend, I realized I was panicking for nothing. Yes my APR went to a ridiculous percentage and I would be charged ridiculous monthly interest effectively slowing my debt reduction. But that would only happen if I accepted the changes. Which I didn't. I opted out and the account will be closed in May. I get to keep my 7% interest rate. So nothing changed in terms of payments. These unexpected bills I have coming up will not get paid because I increased the amount I pay on my credit card. Matter of fact, putting all that extra money towards my credit cards will mean i can not pay for those expenses.

Looking back, I think I just really want to be rid of this debt TODAY. It's not possible. There's not magic about it. It takes time. I didn't get all that debt in one month and it's not going to take 3 months to get rid of it. I have to start thinking in terms of years and just be happy that the number keeps going down. I mean, I owe about what I make in a year. I pay about half my salary in rent. Which means that even If i only used my salary on rent and debt, it would take a year to get rid of all of it. Obviously, that's not a feasible situation. I have to eat. I have to pay for transportation and all. Basically, I think I am going to go back and play with my budget. I need to contribute more to my savings. That way when things like parking tickets come up, I can pay it off without thinking too much about it. This means my debt reduction rate will slow down but hopefully I'll be able to avoid these anxiety-ridden moments. I'll also be able to enjoy life a little more.
Trust me, I'm not about to input $80 a month for clothes. I'll definitely still be frugal and look for ways to cost cuts. I'm still going to ask myself if something is necessary. There is just no need for me to be a martyr. I think that if being a martyr meant I would pay by debt off in 3 months, I would do it. I don't think I want to live like that for 2-3 yrs. The key is not to add to my debt.

I'd really like to know what you guys think about this strategy and If you've had to make this decision yourself as well.


  1. I'm glad you got rid of the BoA debt so far. With that being said, have you snowballed the payment you used to make to those into another payment? The best way to get a debt paid off faster is to make larger payments. It might hurt for a couple of months, but you said it yourself you make too much money to be broke.

    Regarding that utility bill that they're giving you a week to pay, contact them about it. Maybe you can get on a payment plan to pay so much on it for a period of time. I think the landlord might also have a problem by not providing access to the meter. You are still responsible to pay for the gas you used though.

  2. The point about snowballing that I was making was that putting that amount of money towards credit cards is making me broke and unable to pay for anything else. I've reduced how much I pay monthly on my credit cards because it's not going to hurt for "a couple of months" it would be "a couple of years" and in my opinion that's too long to be hurting. So, I think I've become okay with the fact that my debt will be paid off a month or two later than I expected if it means i'll be able to afford little things like a $15 ticket to go back to my original city to see friends. I know I'm responsible for the gas I used. I just want to be billed for the amount I used and not some "Estimated" figure.

  3. Just do the best you can and realize that as long as your not adding to your debt, every payment you make towards paying it down is a step in the right direction!
    Putting time limits on how quickly you can pay it off may be a motivator for some - but if it's taking away some all of your true happiness (like having $15.00 to visit friends), then you must make the little changes that you need to. If you don't, eventually it could make you give up which defeats the entire purpose.
    As for your gas bill, our gas company allows us to provide them with a meter reading if we log onto their website. Perhaps that could be an option for you?

  4. The one person I always turn to when I get down about paying off debt (and bummed that it does not happen fast enough is my dad..) He tells me the EXACT same thing you told yourself. If it took you a year to create your debt, its going to take more than a month or two to pay it off..and that is okay! I think your doing awesome so far, and have made huge progess since I have started reading your blog, and you will continue to do so! There will be lots of little bumps in the road, but eventually you will get there...we all will!

    My dad always reminds me that as important as it is to pay off debt, and try to live frugally, you have to remember that its important to LIVE too! That does not mean go out and go crazy, but it does mean that it is important (for your sanity) to budget in a little bit of money to do things with friends, or to indulge a little here and there. Otherwise it makes this whole process not worth it..

    so keep going girl! We are all here to cheer you on, and keep up with what you can afford! =)

  5. I love the comments that you have thus far!

    All are right! And you said it best- I have never looked at it this way.. It didnt take a few months for me to get in debt.. it is ALLOWED to take a while to get out of it. That makes perfect sense!
    I beat myself up everyday about just being tired of the repayment process. I want it over with!! I have learned the lesson- and am not adding to it.. so BE GONE. But yes, I do suppose it will take time :)

    Hang in there sweet girl! :)

  6. Try to aim for a fixed percentage of your salary to go towards debt. You also need to live life - so put a fixed percentage towards this also. It is about balancing the two. A balanced budget is better in the long run, as a budget weighted heavily to one area is not substainable. It is like the tortise and the hare - the slow and steady and constant approach will get you there. Keep going.

  7. My wife freaks out about the levels of our debt too. It is a result of our former lifestyle of spending money that we did not have to spend. The only way out of the hole is to reduce the amount of spending you can do right now and pay off the past. With that being said we still have to live and feel motivated to continue. We still spend money on the things we need, within reason.

    When you look at your debt as a big picture, it's a daunting task. Instead focus on the small debt, the ones that you could get rid of within a few months or a year. At the same time, that doesn't mean increasing debt. Unlike a windfall you got from the IRS (change your withholding on your W2!) to pay off a card all at once, you will see those small balances shrink over time. Hang in there.

  8. I'm right there with you. Some people have the dedication to live on next to nothing for a year or more while they pay off debt, but I'm not one of them and that's fine with me. I have a car loan and some student loans. The only other debt I plan to acquire is a mortgage. Other than that, as long as my debt keeps going down, I'm pretty happy.


Hit me with some tough love