Debt, Debt and how I plan to pay it off – UPDATE!

Ok this has worked out really well!!!!

When I posted the blog in January (link)  I was really a tad sceptical. I wrote it knowing that I had to take control of my finances. Being on a fixed income I had to come to grips that things had to change, plus I was really scaling down my craft stuff a whole lot.. so.. The first thing I said I was going to do was stop spending on Amazon unless I had the money in my account to immediately pay on the credit card.. So YES! that worked. It is so easy to find something on Amazon and hit the buy it now since my credit card is on file there for all my purchases. The only thing wrong with that is that it is too easy to just click and buy without really thinking.. omg.. “I just put that on my credit card, I so hate myself right now”  I started  using my daughter’s 48 hr rule.. if you see it and want it,,,, WAIT 48 hours and after that if you still want it, need it or (and this is the big one) can afford it?.. then go ahead and buy it. The winter is a particularly bad time for surfing on the internet and finding stuff you don’t particularly need but.. Hey.. why not.. Why NOT?   well because you probably like what you see but honestly do you really need it?.. So with that in mind I made a few purchases and as soon as I received notification that it was shipped, I went into MasterCard and paid the exact amount that I had just spent. ( I did not buy anything unless I had the money in my account)

So that was the first life change for me and you know it worked!.. The second one was….. I have an Etsy store and once a week they send me the payments I received. So on Monday morning I would get a notification from Etsy saying funds are on the way. I would take that amount, round it up and put that immediately on MasterCard.   So that worked. No extra money coming out of my account,,,seriously… I was only putting the money that was being deposited by Etsy.  I purged my room, sold 2 of my sewing machines because like I said I was downsizing. That money went directly into MasterCard. Every time I had some extra money in my account I would put it on the card. I was never short in my account, I didn’t want for anything and this extra money was being put directly on the principal amount which was beneficial to me.  This was a great time to start all this because my expenses are the lowest in the winter/spring because I usually hunker down and not go out unless I absolutely have to.  I also run and organise craft shows and I just finished my biggest one the end of May. The profit from that show went… ready for this… yup.. right on my MasterCard.  I no longer feel the need to go right out and spend it on something I don’t need.   

Now on a slightly non related story.. I had some savings that were available to me.. Sitting down with pencil in hand (yes I do it old school) I figured out it if was more beneficial for me to leave it there, or take out the amount I had put on MasterCard to pay for my newer car that I got last June. Finances figured out, I went in today and took out the money that would be enough to pay off the cost of my car. DONE!  I now officially own my car!!!!!!!! The savings were there earning very little interest so it was more prudent for me to take that out and dump it on the credit card therefore lowering the interest costs. 

So with the MasterCard at an extremely lower balance that means that the payment owing will be significantly lower each month since the interest rate is based on the amount you owe on your card.   WIN WIN…. All this time the payments I was making were going to the interest on the balance and not the actual principal. This is how these cards keep in business. You pay.. you pay,,,you pay and unless you pay way more that what is required each month, you are just putting the money into their pockets.. NO MORE!!!..

for example.. you receive your credit card bill… the payment due is $342.00. Now look closer at your bill. (usually at the bottom part of your statement)  The interest accumulated on this payment is $196.00 leaving $145.00 for the payment on the principal.. so yes it looks good that you are paying $342.. but in actuality you are only paying $142. Just think how long that will take to pay down your card while they are pocketing almost $200  a month just for the privilege of using their card.   

So with the lower payments I will have to pay I still plan to keep paying what I had been required over the past year.  That way it will be paid down faster and hopefully soon to be a zero balance. I want to have it gone by January of next year.. Then I can call it my One Year Plan Success!!!.. it will be hard but I want to do it. I can do it.. maybe.. you think?  Heck.. over the past 4 months I have paid $3600. That is including offsetting purchases I made and paying extra when I could.  But that also shows that I can pay that much at least to bring it almost to a zero balance. It will come down faster because I will be paying more on the principal. Does this make sense to you?  Am I explaining it enough? 

And on that note I am off to have a well deserved coffee and give myself a pat on the back for a good job done. 

And this is my disclaimer:   I have never been really good at math,  either in school or in life. It wasn’t that I was not capable, I  guess I just didn’t care one way or the other. I had more of an artist brain and finances didn’t matter to me.  I never worked in the finance field. I was a stay at home mother with no money for many years, who went a little nuts with her new found freedom and no one telling her if she could spend or not.  🙂 One day it just dawned on me and this is how I got it all to work for me.  Hope it helps you in some way.

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