Because I’m going on vacation mid-month, I’ve been a little concerned about paying my end of the month bills before I leave. I ended up getting an extra $1,000 this month. It’s for something specific but I don’t need it quite yet. I used it to pay my mortgage and a couple of other small bills. As a result, everything is paid so I don’t have to worry about chasing my money before I head out. I still have $3,000 coming in this month, which should all be here by the time I get back. Once I take the extra $1,000 back out plus $500 for savings, I'll be left with $1,500 and all my monthly bills paid.
I’m not quite sure how that happened! I really tightened up my grocery shopping and, because I’m going to be gone pretty much the rest of the month, I didn’t need as much. Maybe I have more money than I think I do! As soon as I realized I was going to have this “extra” money I immediately earmarked it for a credit card payment. $1500 will make a nice dent in my remaining $5,000 debt. I wish I had it immediately because the more time I have to think about it, the more time I have to reallocate bits of it. Mostly I’m torn between credit card repayment and savings. I know it needs to go to credit card repayment and that the longer term benefit of getting rid of my remaining credit card debt is huge. Intellectually it makes perfect sense. I’m really struggling, though, with the sense of security a big savings balance brings.
I was listening to Dave Ramsey on podcast the other morning. One of his callers had $35,000 in credit card debt and $17,000 in the bank. Dave advised her to withdraw all of her savings except for $1,000 and use it to pay down her credit card debt. Once her debt was completely retired she could begin to rebuild her savings. I know that is the strategy of Dave’s “baby steps” plan. However, it presupposes that someone will have the stability in their income to rebuild that savings account. What if this caller does as he suggests and then has a big emergency or loses her job? She’ll still have $20,000 in credit card debt and, after following Dave’s advice, only $1,000 in the bank. Yikes!
I do plan to hold tight and apply my extra money against my credit card debt. Now that I realize I can get by with even less than the already tightened budget I’ve been living on, I should be able to knock out the rest pretty quickly. I realize that without credit card payments to make, I’ll have even more money to put in my savings and will be able to build my emergency fund more quickly. Instead of my expenses growing with my income, I’m always afraid my income will shrink along with my debt! Hopefully I can hold on to all my clients beyond retiring my credit card debt and will have some extra money to sock away.
If you are still carrying credit card debt how do you allocate your payments? Do you ascribe to the snowball and/or snowflake method and pour every available extra dollar into your repayment? Or, are you trying to repay your debt and aggressively build your emergency fund simultaneously?
I’m not quite sure how that happened! I really tightened up my grocery shopping and, because I’m going to be gone pretty much the rest of the month, I didn’t need as much. Maybe I have more money than I think I do! As soon as I realized I was going to have this “extra” money I immediately earmarked it for a credit card payment. $1500 will make a nice dent in my remaining $5,000 debt. I wish I had it immediately because the more time I have to think about it, the more time I have to reallocate bits of it. Mostly I’m torn between credit card repayment and savings. I know it needs to go to credit card repayment and that the longer term benefit of getting rid of my remaining credit card debt is huge. Intellectually it makes perfect sense. I’m really struggling, though, with the sense of security a big savings balance brings.
I was listening to Dave Ramsey on podcast the other morning. One of his callers had $35,000 in credit card debt and $17,000 in the bank. Dave advised her to withdraw all of her savings except for $1,000 and use it to pay down her credit card debt. Once her debt was completely retired she could begin to rebuild her savings. I know that is the strategy of Dave’s “baby steps” plan. However, it presupposes that someone will have the stability in their income to rebuild that savings account. What if this caller does as he suggests and then has a big emergency or loses her job? She’ll still have $20,000 in credit card debt and, after following Dave’s advice, only $1,000 in the bank. Yikes!
I do plan to hold tight and apply my extra money against my credit card debt. Now that I realize I can get by with even less than the already tightened budget I’ve been living on, I should be able to knock out the rest pretty quickly. I realize that without credit card payments to make, I’ll have even more money to put in my savings and will be able to build my emergency fund more quickly. Instead of my expenses growing with my income, I’m always afraid my income will shrink along with my debt! Hopefully I can hold on to all my clients beyond retiring my credit card debt and will have some extra money to sock away.
If you are still carrying credit card debt how do you allocate your payments? Do you ascribe to the snowball and/or snowflake method and pour every available extra dollar into your repayment? Or, are you trying to repay your debt and aggressively build your emergency fund simultaneously?
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