Friday, May 2, 2008

I'm paying off some bills

About a year ago I took a look at my family's bills and decided it was time to get rid of some debt. I'm now to the point where in about another year or so we will be debt free, except for the house.
I use a pretty simple system I came up with that works well for us. There are many different options out there if you're looking to better your debt to credit ratio, consumer credit counseling, consolidation loans there is even a scheme I've heard of where you open several low rate cards with grace periods and preferably introductory offers and while making your regular payments, you also transfer balances back and forth between the cards to avoid paying interest. I've seen that one work but it can get complicated and you really need to stay on top of it to make sure it doesn't come around and bite you.
My system is not nearly so involved. To start with my husband and I both work, he gets paid every two weeks while my payday is once a week. Before we started this we were making minimum payments with a little extra if we could manage it. Upon implementation, we kept up with all the minimum payments but instead of adding a little extra here and there I decided to put the focus on one debt at a time. I started out with the store credit card that had the highest interest rate with the lowest balance, and just begun by putting and extra $20 on it every payday until it was paid off. When that one was taken care of I took the next one like it and paid $25 on it every payday until the balance was gone and then just continued paying off credit cards and then adding another $5 a paycheck to the next one. We got up to about $80 per paycheck and felt the pinch about the same as when it was $25 because every time we upped our paycheck payment we had also gotten rid of another minimum payment.
I like this method because it is very easy to use and doesn't require any special provisions, and I am very proud of the progress we are making. I can't wait until the only debt we have left is our mortgage.

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