Paying down debt. I need to change my mindset.

[anya85]

So over about 5 years, I accrued about $10,000 in credit card debt. A lot of things happened, I got engaged, bought a condo, changed jobs about 4 times(each job being an increase in pay), broke up with my fiancee and began living in the condo myself. I had not one, but about 6-7 cards carrying various amounts. Some of the cards I had as attempts to fix other cards--I opened two of them to do balence transfer offers with no interest to help me out, but after splitting what I owed on so many cards, I began to lose track of them and realized I couldn't afford 6-7 different minimum payments on what I make! Not to mention a late payment or two really pisses those card companies off--then that $25 minimum payment jumps to a $250 minimum payment.

I got out of it though. I refinanced my mortgage--which had a bad rate any way, and took out money to pay down most of the cards(a cash-out refinance), leaving me with a total debt of about $2,500 with $1500 of it being interest free for 3 years(financing on a tv). I had a better rate this time also, it it only increased my mortgage payment by about $30 a month.

My finances are in order now and as a result of a very recent job change, I'm making more money than I ever have. I, for once, have a fairly decent amount of disposable income. My problem is that since the end is in sight with the debt, it's all I can think about. I'm near-obsessed with paying it down. I so cannot wait until I am debt free and able to save and use my money however I want, pay my mortgage down. I allocate nearly ALL of my money towards going on the credit cards(which is left over after bills). I do this to the point that I barely leave enough money for food/gas, so that EVERY week is a struggle. My bank account will get down to $10-30 by the time I get another paycheck--thankfully it hasn't yet overdrafted. I have $0 savings, which is bad, I know. But I cannot help that I am completely sidetracked with paying the cards off! It feels like any money not put on the cards is a waste and puts me farther from getting rid of them. I have my money allocated months in advance now, how much I'll pay, when I'll have which card paid off. It's seriously obsessive! I know I need a savings. And I wish I felt more comfortable having more of a cushion in my bank account, but NO. All must go to the cards or it bothers me.

This is extremely neurotic, it's like my brain is in debt-paying hyperdrive. As of now, if I continue with my plan, ALL cards will be paid off by my birthday, which is Thanksgiving. I am SO excited! However, it's stressful knowing that I have NO money in my bank account because 2 days after I got paid, I put practically all of my money on the card and now I have to make it 2 weeks on $30. The answer seems simple, though. Just don't do it. But I can't! The will to be debt free--as soon as possible, is ridiculously strong. I just keep thinking that after the cards are gone--ALL of my money will be mine to do with whatever I want. Saving mainly.

Advice here?

[renaissancewoman101]

Since you are SOOOO close to paying off all your debt, I would slow down a bit so you HAVE some money in your account. Otherwise, you will just be putting necessities BACK onto those cards you are paying off.

[LivingToday]

Not sure really what to say...I'm proud of you! I think you should keep paying everything off! Keep doing what you are doing (just don't starve from only having 30 bucks for 2 weeks).

The "Euphoric Bliss" feeling will be great once you finish paying it all off.

[pianoguy]

Congrats for paying off your debt! Rework your budget so that you have enough money for food and gas. That needs to come first, then the debt. It might add a month or two but since you're so close it shouldn't make much of a difference.

[anya85]

It feels sort of like I "cheated" because I refinanced. I would have been more fulfilling had I been able to take care of it on my own...but realizing it would take years to pay off $10,000 was daunting. I do have a higher mortgage balance now, but thankfully the mortgage payment stayed roughly the same. I figure after the cards are gone, I can start hitting the principal on the mortgage with about $300 extra every month and save the rest and try to make up for it. But yes, I've had SOME debt ever since I started working, so I can't imagine what it'll be like having *everything* paid off. I'm 24 years old, but I know now that I will NEVER allow this to happen again. I will have *one* card. And I will not charge anything I can't pay off within a month or two--unless it's a big purchase and has financing.

[TennesseeGirl]

Most of the personal finance experts these days recommend a 3-8-month emergency fund. Meaning, enough money in savings to live on for 3-8 months.

Credit card debt is unsecured debt, which means that they can't come after your house or anything.

So while its very important to pay down your CC debt (and congrats for all your hard work on that), you also need to be thinking about building up a savings account so that in the case that you lose your job, you will have a way to survive.

Not sure if you're familiar with [Only registered and activated users can see links. ], but he has a lot of solid practical advice for getting out of debt and becoming financially stable.

keep up the good work!

[christiantighe]

It looks like you're on the right track. The key to getting out of debt is training your mind to live without it, forget the interest rates and put all your extra money on the cards with the lowest balances. Pay the minimums on the rest, that way you knock off some quick wins to keep your motivation and intensity going. When you pay off the lowest roll that money into the next lowest balance. Sounds like your so close, I'm in about the same position you are so cheers to a debt free life style. Hold on to some of your money for food and gas. One thing also, you need an emergency fund to catch all the unexpected events that would come your way, other wise you'll find yourself using your credit cards again to pay for car tires or whatever. Start with an emergency fund of $500 and do if FAST. When your open to unexpected events Murphy's Law tends to capitalize (The law: what can go wrong will). So get that emergency fund first then go back to rolling your debt away. It will ensure you don't place unexpected happenings back on the cards which will just frustrate you more. Keep it up, cheers to debt freedom!
~Chris