Credit Card Freedom Day

We got our state tax refund today. And after work, Jennie and I mailed what will be the last credit card payment we’ll ever make.

We’d hoped to be done by the end of last year, but life happened. There were a lot of things we hadn’t planned for, and even with Jennie and me both working part-time, it took us longer than we thought. But we made it. We’ve been in debt together for longer than we’ve been married, and finally, after something like fourteen years, a big, big part of that debt is gone. (And I put in my two week’s notice at my part-time job the day after I filed the tax returns. Tomorrow I work my last weekend there.)

Whew.

No more credit card payments. Ever.

In some ways it feels like starting our life together all over again.

Goal: Pay off the credit cards by year-end

Jennie and I have been in debt since before we were married — progressively more debt as time went on.

Back in 2000, we had our first wake-up call, when my primary income dried up for several months and we didn’t know how to make our payments. We signed up with Consumer Credit of Des Moines, and they negotiated lower rates and payments with all of our creditors and put us on a single-monthly-payment debt-snowball plan.

Then we went out and borrowed more money. Clearly, we didn’t get it yet.

Or rather, we didn’t have an emergency fund yet. So when emergencies came up, borrowing more money seemed like our only option. “Just this one time,” we’d tell ourselves, “and then everything will be back on track.” With yet another plan that left no room to breathe.

And then, three years ago, another wake-up call: I added it all up and found that our minimum payments were more than my take-home pay. Back to the drawing board. Called Consumer Credit and bumped our payment back down to then-current minimums. Rolled new debt into the plan. Cut deals with other creditors. And started making a budget.

There have been other bruises along the way, and a few miracles. And we’re finally seeing the light at the end of the tunnel. Consumer Credit called us a few months ago and said we’d have all the credit cards paid off by the end of next February.

(That’s not all the debt — just the credit cards. We have a few other debts, like the car loan and student loans and mortgage, that we’re just not even worrying about right now. Paying off the credit cards is going to be a huge milestone for us.)

Well, I just got a raise, and it’s going to kick in on my August 15th paycheck. And a few days ago, I was thinking about that, and wondering. By all rights, I should take that money and start putting it into a 401(k) — that 100% return on investment, from the employer match, is tough to beat. But… what if I took that money and started paying extra on our debts? That, plus a little more we could find somewhere, might be enough to accelerate things… we might be able to pay off the credit cards by year-end.

So I spent all weekend crunching numbers, and I found out that Consumer Credit was wrong. They just estimate our current balances, and don’t contact our creditors for up-to-date balances until the month they think something’s ready to be paid off. They don’t get the actual statements; so when an interest rate goes up, or their payment cycle doesn’t match up with the credit card’s billing cycle and we get late fees tacked on, they don’t know about it. The reality is that, at the current rate, we won’t be paid off until April.

That really let the wind out of my sails.

But Jennie and I talked about it yesterday. And she got out the budget. What if we took this money here, and this, and this, and put them toward debt instead? What about this? What if we did that? Put this off a little longer. Stretch this.

We wrangled for about twenty minutes, and something magical happened. We found the money.

Our payment to Consumer Credit is our second-largest expenditure every month, after the mortgage. We’ve got a plan to make it the biggest expenditure every month, by a fair margin. And we will be paid off by the end of the year.

And somehow, we did it without cutting groceries, or gas. We’ll still have some wiggle room every month. We’ve still got the emergency fund if we need it, and some money in savings for things like car repairs. The money was there. We just had to look for it.

Lately, our progress has seemed so slow. I was getting discouraged. I had no idea how far we’d come; how much freedom we’ve gained; how much money was there in the budget, just waiting to be found. It’s good to be reminded of these things. The money is there. The budget will provide.

And once the credit cards are gone for good?

Don’t know yet. Jennie’s got a few ideas, and I’ve got a few ideas. But the one thing we know for sure is, we are going to throw a party.

T minus eight credit cards, and counting.

U of I, ISU selling student data to credit-card companies

I was in Ames this weekend at a church meeting. On the way back, I stopped at a gas station that offers free Sunday papers with a tank of gas.

Cover story: U of I, ISU use student data to sell credit cards. Subhead: “Bank of America cards are promoted despite public worries about debt loads”.

I can’t even believe it. Someone had the balls to think it was okay to sell private student data to these predators? Someone thought it was okay to railroad these students into debt? (Yes, the students can choose whether to go into debt — but it’s not an educated choice; nobody’s teaching them what debt is actually going to mean to their lives. Nobody but the credit-card companies… and, apparently, these two universities.)

How many students already declare bankruptcy as their first act after graduation? We want this to get worse?

Apparently most of the money isn’t even going to benefit the schools; it’s going to privately-run alumni associations. Alumni associations. They’re preying on the younger generation. And these people can sleep at night?

If I still lived in Iowa, I’d be working my butt off writing to the legislature right now. As it is, I should probably do what I can to make sure this doesn’t happen in Nebraska (or gets fixed, if it’s already happening), and write to the federal Congress as well. This is unacceptable.

Somebody should be getting fired over this stunt. Somebody should be getting arrested.

Opting out of “pre-approved” credit card offers

Some of you may already know about this, but I didn’t. The Big Three-And-A-Half* credit agencies (Equifax, Experian, TransUnion, and Innovis) have a Web site where you can opt out of being on lists they sell to companies offering “firm offers of credit”, i.e. pre-approved credit-card offers. The opt-out site is at optoutprescreen.com.

This is not for general junk mail; this is just for pre-approved offers of credit and insurance. And not even all of those — just the ones that come via mailing lists sold by the big credit agencies. Still, I’ll bite.

Their Web form asks for your Social Security Number, which raised my hackles, but I did some poking around and they seem to be genuine. For example, LifeHacker speaks favorably of their site, and here’s a Wall Street Journal article that talks about them. Pretty good recommendations in my book.

There’s also a phone number: 1-888-567-8688 (1-888-5-OPTOUT). I assume it’s the same deal, with asking for your SSN and all. I used the Web form.

* Sure, everyone’s heard of the Big Three credit agencies, but Innovis? Who the heck is Innovis?

Well, whoever they are, they’ll be selling a little less of my info now…

Emergency funds

You know what? Having an emergency fund doesn’t take away the stress.

Okay, let me amend that: Having an emergency fund does take away the stress, but only if you never have to touch it.

Back when we started budgeting, we made a choice. We decided that car breakdowns would fall under the heading of “Emergency”. So would sick cats. And so we’ve had to dip into the emergency fund probably half a dozen times in the past year. And every time, we stress about it.

Actually, I think those choices were probably the right ones, the first few months we were budgeting. But not anymore. And so we’re finally learning, and our October budget has two new line items in the “Saving” category: “Sick Cat Fund” and “Sick Car Fund”. Next time the inevitable happens, we won’t have to dig so deeply into the emergency fund. If we’re lucky, we won’t have to touch it at all.

In retrospect, we should have put those categories in our budget from the beginning. If there were months when we couldn’t put anything in them, fine, but they still would’ve been a reminder that we really ought to be doing something about this.

On being a lucky bastard

This afternoon, I went to a session called “The Lego XP Game”.

Yes, that’s what it sounds like: I got to play with LEGOs all afternoon.

Now, it’s a weekday. Normally I would be at work today. So that means I got paid to play with LEGOs all afternoon.

It doesn’t stop there. My company paid for my airfare, lodging, and food, so I could get paid to play with LEGOs.

And it turns out that, even though the convention provides lunch, my meal allowance is still $46 a day. So let’s break that down: I got

  • paid-for airfare and lodging,
  • so I could eat out at a teppanyaki grill,
  • so I could get paid,
  • to play with LEGOs.

I am, in fact, a lucky bastard.

(Hey, I’m getting out of debt. These days I eat out maybe once a month. I’m enjoying this while it lasts.)

It’s a three-way tie, though. I got to play with LEGOs, Sam got to make paper airplanes all afternoon, and Brian, despite registering for basically the same hotel room as both of us, wound up getting put in a room with a whirlpool.

Lucky bastard.

Dave Ramsey Live Event in Lincoln, NE, Aug 12

Russ Carroll, Dave’s lead financial coach, is going to be in Lincoln on August 12 doing a Dave Ramsey-branded Live Event, and Jennie and I are going to be there.

Not quite sure what it’s going to be like, especially since we’ve already taken Financial Peace University. But I do know that one of the best things about FPU was being around other people who were in the same boat as us (and willing to admit it). So even if the content turns out to be a repeat, I think it’ll be well spent.

And it’s cheap as things like this go ($27 per person). If you live within a couple hours’ drive, and if you’ve ever had, as Dave puts it, “too much month left at the end of the money”, I’ve got two words for you: Go.

Paid-off count: 10

Paid off GSB this morning. We’ve been planning it since we made the budget late last month. Our second-draft budget was tantalizingly close, and we decided to stretch and skim and make it work. Tightened the grocery budget, put off a couple things, and go.

I’m glad we did. That receipt with “Balance Due: 0” really makes me happy. Another one bites the dust.

The budget will provide

Our emergency fund was already depleted a bit from our car breaking down earlier this month. Then yesterday, we dropped a $25 check off at a local collection agency — and I later realized that they now had our checking account information, and could probably just go ahead and take out the full amount we owed them (we’ve had it happen before). So another $300 of emergency fund is now tied up covering for that possibility.

And then we had to figure out how to pay the vet bill for a sick cat — nearly another $800. We didn’t have enough in the emergency fund to pay for it. So we went back to the budget.

We’ve already revised this month’s budget twice (once for the car, once for a withholding change). On to #3. Goal: find money we’re spending that we could live without spending for another month. Things like the money we were going to put back into the emergency fund. Clothing money. Do we really need to buy a new ladder this month? A little here, a little there. Didn’t look like it’d be enough.

Then we added it up.

We had found — found, just lying around — $659.

Six hundred and Jesus Christ fifty-nine dollars. Just sitting there in the budget. It’s like finding six hundred dollars under the sofa cushions.

And we’ve done this at least half a dozen times by now (though this is by far the biggest). Things always come up. Things never go according to plan. Sometimes they’re off by several hundred dollars. But every time we’ve gone back to the budget to find money for something, it’s been there. Every time.

It’s amazing. We can start with what we think is the leanest budget we could possibly manage. And then something comes up, and we go back and take more stuff out, and it still works.

This is why we budget. Yes, it helps us plan. Yes, it helps Jennie and me align our priorities and our goals. Yes, it removes stress. But the biggest reason we budget is because it saves our ass.