Sunday, January 1, 2006Dear Motley Fools,Back in November I found your wonderful board by chance (I was just about living online – this time for the purpose of researching all things related to credit card debt). Your collective posts have been filled with such good advice and encouragement that I decided to delurk and purchase a one year membership (I know firsthand the importance of encouragement, because I run an online support group for folks with a rare disease). Here's my story! I've been a chronic overspender my entire life. I got my first credit card (Macy*s) in the mid-70s and abused it from day one! By 1987 my credit card debt was so overwhelming that with great reluctance and shame I filed for Chapter 7 bankruptcy. I made a promise to myself that I'd never rack up my credit card bills again. By 1993 when I got laid off from my job my debt was higher than it had been in 1987! I cashed in my 401(k) and paid off my cards. Again I made myself the same promise but didn't change my behaviour! Fool! In September 2005 I forced myself to sit down and add up my credit card debt again. This time the total was higher than the sum of the previous two times! September 2005 total: $44,123.10! *thud* I realized that if I didn't change my ways I will not be able to afford to retire when I reach my late sixties (I will turn 50 next year and I am a single wage earner). I immediately started changing my ruinous ways that very day. I would say without a doubt that my motivation for change was fear for my future! From the advice I've gleaned from your posts I am living on a budget (the dreaded “B” word!) and have my expenses and everything related to my credit card accounts detailed on Excel spreadsheets. I've been very lucky in that five out of the nine banks that I owe money to have lowered my APR rates (I've called every month). I will no longer be putting my vacations on my credit cards (in fact instead of travelling next August I will be having an operation the following month and will be hanging around home for a week or two in order to recover). I've stopped spending thousands of dollars on eBay (I am addicted to collecting Lord of the Rings films memorabilia and J.R.R. Tolkien's mythology related books. My 2002-05 trips to Hollywood, San Diego, Pasadena, Michigan, New Zealand, Germany, and England all tied into this. Now I shall be an armchair traveller until my credit cards are paid off. And I do have lots of books to read!I live in one of the cheapest apartment complexes in Sonoma County (in the very expensive San Francisco Bay Area) and I have a roommate in order to split the cost of rent and utilities. I switched from doing 99% of my shopping at Whole Foods Market (AKA “Whole Paycheck”) to Trader Joe's and Safeway. Word of advice: Know thyself! Whole Foods is a very dangerous place for me. I don't even need to use a credit card (cash works just as well) in order to do major damage to my budget. *wry grin* I'm bringing lunches to the office instead of eating out. I now look for sales at grocery stores (and everywhere else I shop). Instead of buying books I now use the library.My current monthly expenses: 731.46 misc. (food, prescriptions, doctor visits, hygiene & household products, birthday & Christmas gifts, matinee movies, etc.) 672.00 cc payments (min. payments; total is actually higher; I snowball1 1 acct at a time) 412.50 rent 126.40 bus (20% discount for buying tickets) 47.00 cell phone (average) 30.00 land line (estimate. was $47.00) 30.00 gas & electric (no heat/wear sweaters; rates go up this month) 30.00 hairdresser (was $95.00 a month) 23.90 Internet 0.00 NetFlix (was $19.43; on a three month hold) 14.00 gym 9.30 cable TV (was $24.82) 6.34 PO Box 2.38 Tolkien Society_________ $2,135.28 monthly net incomeOn Christmas Eve I had the latest discussion with my father (a retired banker who has always been wise in the ways of handling the family finances) about my ongoing progress (slow, but steady) of paying down my cards (because I am finally living below my means – which is not an easy task when you are a former resident of a county whose motto is “I want it all now!”). He was so impressed with my determination that on the day after Christmas he gave me an additional (and much larger) birthday windfall with instructions that I also apply it to my credit card accounts. This will knock at least two years off my plan of getting out of debt. The bank that is getting most of this blessed windfall is Juniper. I hate that bank! *snarl* Their CS reps have been so rude! I can't wait for January 4 to get here so I can make my final online payment to them! Slay that bastard Orc!I will be getting a 4.1% cost of living raise later this month but at the same time my employer will be severely limiting overtime this year (if I could do it over again, last year's overtime money would have gone toward paying down my credit card debt).Regarding retirement savings, I have a pretaxed amount of $50.00 taken out of my paychecks for my 401(k) account. Unfortunately my employer doesn't match employee contributions. I have $28k in my 401(k) and will be getting an unknown amount from my employer's profit sharing program later this month. When my credit cards are paid off I will raise my contribution amounts. Any further advice you can throw my way would be greatly appreciated! I am all ears! Cheers,hobbit
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