Whew, sorry guys, I realized I have to refrain from talking about my idea until it’s really developed. I have a tendency to jump the gun but I WILL do this one, so I need to focus on on action not daydreaming. I’ll give you guys an update in the coming two weeks!
Paying the Smallest Debt First
Last year, I decided to focus on paying my smallest debt first, which at that point was a 0% interest $2,100 Carecredit loan for my Lasik surgery. It seemed dumb, but I knew that I was having a hard time making any impact on my debt with five separate debts to pay each month, in addition to all the other normal expenses. So I redirected my efforts and got that debt paid in full on December 31, 2011.
My next goal was to pay my next smallest debt, which was my Discover card with a 15.99% APR. Technically, this is not my next smallest debt. My next smallest debt is my car, and it was in December as well, but at 4.9% APR and 4 years of paying it, I have paid the majority of the interest on the loan and am paying nearly all principal on that balance, which is now around $2,800. Even though it would be sweet not to have a $270 car payment, it will be over by next June anyways, which is my target goal of paying off all my debt (or at least credit card debt). The real killer has been my two credit cards, where I am paying over $200-250 per month in interest. My other credit card (with the high balance of over $18K) has an APR of 9.24%. So even though I am paying more interest on that card and I have not lowered the balance since starting this blog (in fact, the balance went up), I need to pay off the Discover first since it has the higher rate.
Here’s where I am on that credit card:
Starting Balance, 12/31/2011: $5,787
Debt Paid Off: $2,617
Current Balance: $3,170
Getting closer! I need to knock on wood. I feel very lucky that I’ve been able to pay off debt, but I also know that I have been working really hard to make this happen. But it’s always a combination of the two. So I just wanted to say I am grateful. I am grateful to have steady work and a boyfriend that’s my biggest supporter (even of my crazy ideas) and a family that I can go visit a couple hours south. I am also grateful to have friends around, and friends online (that’s you crazy people!) and the chance to meet new people. I am going to keep paying this debt, goddammit. Because for the first time in my life, I no longer feel frantic when I think about money. Money might be tight, but it’s no longer an insurmountable obstacle.
Reader Poll: Should I be paying my Discover card first at 15.99% and $3,170 balance, or my car loan at 4.9% and $2,800 balance? My argument for the car first would be that it would free up $270/month!