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My retirement is actually a pension. I'll check what the penalties are for withdrawing it to kill the debt.
I checked a couple of loans to test the waters but I'm always getting still high rates (high teens) and similar monthly payments, it may be that for now the high utilization is killing me with creditors.
Also appreciate all the comments so far, hopefully a lurkers or some younger folks can learn! What's keeping me level-headed is I'm unbelievable grateful for a steady job, it could've been absolutely disastrous.
DO NOT touch your retirement to get rid of debt. HUGE mistake. Don't make MORE mistakes.
I appreciate the update, as I'm sure others do as well. Of course, the frugalista in me would like to see you more aggressively pay off the debt, but your mindset is definitely in the right place. What you said about having a thick skin against social pressure is key. I think that's a lot of what keeps people on the perpetural debt/consumption treadmill. A lot of times they aren't fully conscious that they're living to a set of social expectations. Sometimes nobody's pressuring them to live a certain way, but they have an unconscious script in their heads about how they're supposed to live.
You're ahead of the debt payoff schedule you created for yourself and are looking for ways to accelerate the payoff date even faster without driving yourself crazy, which is great. Probably the best way would be to earn more money and put it all toward the debt. Not always easy to do, but it can work wonders.
In any case, you're doing a good job. Keep it up!
Oh, and just out of curiosity, your debt balances were about 68K. What are they now?
Last edited by mysticaltyger; 10-24-2021 at 05:49 PM..
With your higher salary last year and literally things being locked down so you couldn't spend as much going out, how much of a dent did you make on your debt?
How much of a tax refund do you typically get? If you're getting thousands back, then you really need to adjust your w4 withholdings so you're not sending more money to the government than you need to. This will increase your take home pay and allow ​you too pay down debt faster and decrease the interest you're paying.
Have you tracked your spending too see what your outflows are to see if there is anything else you can cut? Try an app like mint.
Just remember balance transfers typically have a fee associated with them so factor that into your calculations.
Would you be better served by getting a personal loan at a bank to consolidate debt and pay that loan versus a higher interest credit card?
I'm the OP and just wanted to give an update on this as it's been about a year.
My Current Debt Breakdown --> New min payment, interest rate, and balance
Min Payment* - APR - Balance - Type
1. 294 - 8.9% - 13,700/14,800 - Credit union ccard ---> 280 - 8.9% - 13,900/14,800
2. 248 - 21.49% - 11,800/12,500 - Discover IT --> got the balance off of here with BT offers. Also CLI to 15K.
3. 289 - 20.99% - 10,000/11,600 - Amex Blue** --> managed to land some extra cash, that allowed me to pay 5K of that, and then put the rest on a new BoA 0% transfer card. It'll be paid off in March 2022.
4. 200 - 15.24% - 8,000/8,800 - Chase Sapphire --> 169 - 15.24% - 7,300/8,880. This should be paid off in October 2022 after I roll out my surplus payments to
5. 190 - 12.90% - 9,000/9,800 - citi double cash --> 223 - 12.9% - 12400/13800 - took a hit here, but 12% interest is better than the 21% interest that was previously on the discover.
6. 0 - 17.8% - 0/7,500 - CapOne ccard**
I decided to use the snowball credit card repayment method. At my current pace, all credit cards will be paid off in March 2024, compared to October 2024 when I made the plan after my first post. It's interesting how strategic usage of balance transfers can help, as can adding an occasional $100 payment here and there.
Much has been made of paying interest vs low balances first. I think when you are drowning like i was, you need to get those wins. I think you have to see light at the tunnel. You need to start seeing that you are owing on less accounts. My strategy has shifted to paying off lowest balances, but meanwhile doing all I can to redistribute higher interest high balances to lower balance cards.
As you pay down cards and improve your credit, you'll get offers to open up 0% BT credit cards or you'll be able to increase your credit limits on existing cards. I leveraged this to transfer some of the high interest credit card debt to 0%.
I was in a bad place when I made the original post.
100% austerity doesn't work for me, but I realize my relatively "comfortable" (although not rich) income allows me to get away with that. It's probably still not the best case scenario financially, but it's a sustainable medium. But there are still some sacrifices--I don't think having a car will be viable for another year or two yet, which is weird for someone my age I know but at least I live in a city.
The other tip I have is to be thick-skinned in resisting social pressure. At my age friends have houses, and are just generally comfortable, or are investing in all sorts of cool stuff. I have to reframe my extra debt payments as an investment. It may be naive, but the way I look at it, my minimum payments when I made the orignal post were over $1200 and now my minimum payments are $717, so I've "gained" $500 cashflow if it ever needs to come to that (which ideally it won't because I do have $5K as an Emergency Fund--not that high an amount but hopefully enough to allow me to never deviate from my snowball payments). But it just feels to know that by denting the minimum payments alone I have that cushion.
Also interest per month went from $700 a month to $300 now, so again in a backwards way, I'm looking at that as some sort of return on investment.
Next goal will be to see if I can inch up the date from March 2024 to December 2023, it'd be great going into New Years Eve knowing it'll only be two years of credit card debt. Oddly enough these movements are small, but between seeing 0 balances on more credit card accounts, and seeing how much less interest I'm accruing feels good.
Thanks for all the support earlier, and happy to answer questions. Also feel free to share more on this topic of debt in your 40s, and various ways/styles of coping or approaching debt reduction--both from a financial but also psychology/human nature perspective.
Just wanted to say that I never thought you were in in a bad place, as you put it. Money is for spending and life is for living. So, you just carried on as you should-nothing wrong with that. Besides, $68K debt is nothing in the bigger scheme of things.
My last comment is in regards to your rush to pay down debt. I would take a different approach in the current environment. The dollar is rubbish. Instead of paying down debt, you should be buying assets and synthetics. They would out pace your debt.
I appreciate the update, as I'm sure others do as well. Of course, the frugalista in me would like to see you more aggressively pay off the debt, but your mindset is definitely in the right place. What you said about having a thick skin against social pressure is key. I think that's a lot of what keeps people on the perpetural debt/consumption treadmill. A lot of times they aren't fully conscious that they're living to a set of social expectations. Sometimes nobody's pressuring them to live a certain way, but they have an unconscious script in their heads about how they're supposed to live.
You're ahead of the debt payoff schedule you created for yourself and are looking for ways to accelerate the payoff date even faster without driving yourself crazy, which is great. Probably the best way would be to earn more money and put it all toward the debt. Not always easy to do, but it can work wonders.
In any case, you're doing a good job. Keep it up!
Oh, and just out of curiosity, your debt balances were about 68K. What are they now?
My available credit was 68K, my balances were 52K.
My available credit is now 80K (requesting CLI's to transfer and a new 0% BT card), my balance is 37K.
The biggest thing was getting rid of those two 20+% credit card balances, by a combination of paying them down and shifting them to 0%. When I put it down in a debt calculator sheet and started to see every month how paying minimum payment with high interest is basically doing nothing, it forced me to get creative. For credit cards it's crazy how even 5% interest makes a difference, especially at higher balances.
The other thing is continuing to pay the minimum payments I started at when I first asked about this a year ago, it can be tempting to reduce your payment as the minimum payments go down.
All of this is automated, so I don't even have to manually "budget". Money I see in my checking account is post-debt payment.
Preaching to the choir and basic stuff here, but it took some despair and a bit of work that first month but once you set it, it's weirdly liberating, even while still in debt. Hard to explain...
Just wanted to say that I never thought you were in in a bad place, as you put it. Money is for spending and life is for living. So, you just carried on as you should-nothing wrong with that. Besides, $68K debt is nothing in the bigger scheme of things.
My last comment is in regards to your rush to pay down debt. I would take a different approach in the current environment. The dollar is rubbish. Instead of paying down debt, you should be buying assets and synthetics. They would out pace your debt.
Oh....tell us more?
Current credit card interest is 15% on a 7K balance, 8% on a 13K balance and 12% on a 12K balance.
My available credit was 68K, my balances were 52K.
My available credit is now 80K (requesting CLI's to transfer and a new 0% BT card), my balance is 37K.
The biggest thing was getting rid of those two 20+% credit card balances, by a combination of paying them down and shifting them to 0%. When I put it down in a debt calculator sheet and started to see every month how paying minimum payment with high interest is basically doing nothing, it forced me to get creative. For credit cards it's crazy how even 5% interest makes a difference, especially at higher balances.
The other thing is continuing to pay the minimum payments I started at when I first asked about this a year ago, it can be tempting to reduce your payment as the minimum payments go down.
All of this is automated, so I don't even have to manually "budget". Money I see in my checking account is post-debt payment.
Preaching to the choir and basic stuff here, but it took some despair and a bit of work that first month but once you set it, it's weirdly liberating, even while still in debt. Hard to explain...
I just wanted to acknowledge your hard work in getting this thing under control. You stepped up Big Time and you should be commended for it.
You found a method that worked for you. I hope you see that Credit Cards can be a good toll for living, use the Cash Back features on those cards to your advantage.
You were making a Mortgage Payment in the excess Interest every month. Once you're fully paid off....you can see your way to buying a house.
Good Luck to you.
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