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Personal Finances / Credit Cards and Consumer Debt


Subject:  Awakenings (long) Date:  4/29/2001  1:46 PM
Author:  speedsurfer Number:  68574 of 312957

I feel like the guy who woke up out of a coma after 30 years. After reading this board and deciding that it is time I really face my debt head on, I went back last night till 2am through every credit card statement for the last 3 years to see how this all happened. It blew my mind. Three years ago I didnt think much of credit card debt. I had 3 cards, with a total balance of 2800, and low interest rates of under 6%, and a combined credit limit of about 9,000. Small potatoes I figured- easy to pay off anytime, right? Then I browsed through my monthly charges- 600-2000 per month! Payments? 100-300 per month, with a rare payment over 300. You do the math. Then the slippery slope- those guys are good, and you dont even see it coming. Slowly over the months, I would get a "congratulations!", for being a great customer and paying on time( this should have been a red flag, but still didnt hit me), your credit limit has been raised get the picture. As of January 2001, my combined balance was 14,200 with a combined limit of 41,000 on 4 different cards (I thought I was so smart surfing cards for better rates, until the great rates started to dry up). The worst part? All those stupid things I wasted money on that I really didnt need or want. Fortunately, Ive been able to sell some of those things, but at a loss of course. So here I stand ready to take action and with a plan.

1. Live off 60% of take-home pay for the rest of my LBYM life (LBYM life = natural life + 5 years).
2. With the 40%, Snowball CCs, then education loans, then save and invest
3. NEVER carry a balance on a CC again (all but 1 CCs are cut up, but accounts are open to possibly surf rates while snowballing.
4. Track EVERY expense and income EVERY DAY on Quicken (this is great software- intimidating at first, but pretty easy after a while)
5. Open a PCbanker account- DONE
6. Run my personal financial life as a business: Increase Profit, Decrease Expenses
7. Max Employee Pretax retirement Plan
8. Open Roth IRA-DONE
9. Pay cash for everything except a home (I would if I could!)- especially Cars (Those fancy brand new leased vehicles from a couple years ago wasted a lot of money and what do I have to show for them now?)
10. Get One CC that has Cash back or Miles, and pay off every month.
11. Smile to myself when my friends with their leased BMWs, fancy clothes, and over-extended mortgages tell me I should get a new car/house/boat.
12. Avoid dating/marrying a member of the opposite sex who falls into category 11.

Let the journey begin...
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