Gazelle Like Intensity

I took a six mile walk today. Along the beaches of Newport, Rhode Island (I’m here for a conference, which is a whole ‘nother post in and of itself which I have saved to be published during a few days later this week when I’ll be hanging out with Okturn Delmoniq and won’t want to be on the internet as much).

I spent most of my time during this hour and three-quarters walk thinking about my money situation. Thinking about what I was going to do with my BofA credit card. Thinking of how I was going to get myself out of this situation that I’ve put myself in. I’m not going to blame the bank, that is easy to do, but really – if I hadn’t done such a poor job with my credit card 10 months ago I wouldn’t be in this situation now. So really, this is a late penalty for the poor mistakes of my past and I’m going to have to live with it.

I do know I have options and I do know that 27% interest is ridiculously high.

As I was walking I tried to think about what would be the best thing for me to do FOR ME. And I realized that what I want it do is something that I’ve been avoiding since day one. I’m going to have to make DRASTIC life changes.

I’ve been avoiding this at all cost. I’m not going to lie. I made as many small changes that didn’t effect my life as possible as I could to put myself into a place of comfort, that I could COAST into financial freedom without a problem in 3-4 years. I cut out most of my eating out and a little of my “play money” and I started saving some money and that was enough to make me feel comfortable.

But the truth of the matter is, that I’m not HURTING. Not that I want to hurt. But you know what? I’ve put myself into a situation that is HORRIBLE. And now it has gotten even worse. And I’m realizing the ONLY way to get out of it in tact is to start making drastic choices.

I realized that I was going to have to take a hard look at my life and change just about everything. From how I approach entertainment, to food, to transportation, to my pets. I have changed some of my basic bad habits since last year, but I didn’t have the intensity to change them all to get myself out of debt within a reasonable time frame.

Doing a little work on my CNN.com debt calculator, I found out the following:

1) If I pay my new minimum with 27% interest, It will take me 22 years and 8 months to pay off my debt. WOW. I’d end up paying over $23,000 just in INTEREST by the time it is paid off.

2) If I want to pay it off in two years, at the 27% interest, I’ll need to pay $850/month and will end up paying $4,422 in interest.

3) If I do their payment plan with 5% interest for 5 years, I’ll pay a total of $2,041 in interest. It is less interest that I’ll pay for sure. But it will take me 3 more years to pay off AND will ruin my credit score for the next seven. I’m not sure if that is a price I’m willing to pay.

4) If I can lower my interest rate to 15%, I will be able to pay off my card in two years at $700, and will only pay $2,300 in interest.

And so that is what I’m going to try to do, convince the bank to lower my interest rate to 15%. I’m not going to ask for my old rate back, because they’re not going to give it to me. But they may lower it a bit if I promise to pay off the debt in X-period of time (two years).

They may not, and I know this. And it may be that I’ll have to suffer through 6 months of 27% interest before I can negotiate 15%, but you know what? I think it is worth it.

HOWEVER – the caveat to all of this – is that I’ll need to be paying over $850/month onto my credit card every month. And this means a COMPLETE overhaul of how I handle my money.

As of September, I was going to raise my payment on this card to $500. Which I can do without a stretch in my lifestyle.

So I will need to find $350 more a month. And it is going to have to come from SOMEWHERE.

Thus, here it is, life is about to get tough.

1) I’m selling my car. It will cost me a little bit of money to get it into selling condition (i.e. chip on the windshield, detail and washing, ect – I estimate around $200-300 for everything I need to do). Since I’m not in a HURRY to sell it I’ll keep it available until I get a fair price for it. I’d like to get $3,500 – which is $50 above Kelly blue book for it. Savings per month: $75

2) Cable television is gone – with internet possibly to follow. If I can keep my home internet for less than $40 per month WITH taxes and fees, I’ll keep it – if I can’t – then it is gone. One of my neighbors has wireless and he’s already told me that I can leech from him. Savings per month: $66

3) Tutoring will be absolutely required. Last month I only brought home $15 from tutoring. However, once school gets back in session I’ll need to tutor AT LEAST 20 hours per month. Private tutoring or online tutoring, it doesn’t matter – I should be bringing home at least $200 per month tutoring. Gain per month: $200

4) Doggy Daycare. Done. I went down to 2-3 days per week instead of 5. But let’s be honest – without a car I can’t take him there anyway. Savings per month: $100

5) Discretionary spending. I’m not going to lie, right now my budget for food and entertainment and clothes and pet food and all of this is around $550/month. I think I can get this down to $400/month. Especially if I work in a cash based system. Savings per month: $150

Even if I exclude the car and the tutoring, I’ve already “found” $300 in my budget just by REALLY scrimping. And with the $500 that I was going to be putting onto my card, I’m up to $800/month that I’ll be able to load onto my credit card. Even with $800/month I’ll get this sucker paid off in 2 years and 3 months – and I’ll be able to put ON TOP of that any extra money I make tutoring and teaching at the local community college.

I am actually starting to believe that even with this high interest rate I could possibly pay this debt off in 18 months if I really work hard – and such a short goal as that seems completely fantastic. I’m NOT going to let my debt get the best of me – I am going to KICK IT’S ASS!

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14 Responses to Gazelle Like Intensity

  1. TMcImmy says:

    If your bank won’t negotiate with you, you should be able to find a private lender who will give you a personal loan. Opening another line of credit isn’t phenomenal for your credit score, but it’s not the worst thing in the world either.

    Canceling Cable television was something you should have done long ago. Aside from the monetary costs, I’ve found the time cost of cable to be staggering – I wasted a lot of hours watching TV when I had it, which I didn’t get as much enjoyment out of it I had been doing other things. If you can leech internet, that’s awesome too!

    I think the food savings is a great idea too.

    Selling your car… obviously it is up to you if $75 a month savings is worth the hassle of not having a car. It sounds like you can survive without one in your current living, work and social situations. From my experience of back when my old car wasn’t working, the worst part was trips to the grocery store. If that’s not a problem for you, then perhaps it’s a good idea.

    Regardless, I’m glad to hear you plan to really tighten your spending to attack your debt hard. Even at your old interest rate, you would have paid a lot of interest by the time all is said and done. The faster you pay it off now, the more money you’ll have for fun in the future!

    • SS4BC says:

      It isn’t just the $75/month, but also the $3,500 straight off that would go right onto the card to lower the balance. So in the course of two years it would be more like a savings of $5,300. That is quite a bit towards the balance on this credit card.

      Obviously selling the car isn’t the HIGHEST priority until my campus gets their Flex cars. Until then I’m planning on keeping it and just minimizing gas usage. But like I said in the post, drastic times, drastic measures – and that includes the car. 😉

  2. Jessie says:

    wow!

    It sounds like you are facing this head on!!!

    *Lots of Supportive Thoughts*

    You have some great ideas and strategies listed to find/make more money!! Way to go, you can do this!!

  3. WOW!

    Sounds like you’ve got an awesome plan laid out. I have every faith that you’ll be able to pull this off.

    If you need anything from me, please don’t hesitate to ask!

  4. Leigh says:

    You can totally do this! YOU CAN.

    I missed your earlier post and had to go back and catch up (too much traveling this month). Do you have the possibility of transferring some or all of the balance to another card? I know you are really worried about closing the account and taking the credit hit, but I don’t think that’s such a bad idea. You don’t have to take the full 5 years to pay it off. Either way, you can do it. Remember small steps for big change does work (just like your title says) but sometimes huge steps work too.

    • SS4BC says:

      Leigh, while I have store credit cards (Firestone, Express, Sony, Limited) that I paid off completely this month – I don’t have any only just “credit card” – so there is no where for the money to go.

  5. Leigh says:

    OH and one more thought – I’ve had luck as a lender through lending club and I know there are a couple of PF bloggers who are borrowers there. It might be worth taking a look at to get Skank of America out of your life.

  6. MPP says:

    Wow, lots of things to think through. I can relate to your walk on the beach. I had my own “walk on the beach” about three years ago when I had just found out about my parent’s $100K+ debt. At first I felt so helpless and defeated, and then realized that I have the power to defeat it with just a little bit of hard work and time.

    I think your strategies sound awesome. The only thing I’m not sure about is the car–it may have the potential to be more of a hassle and not worth the savings if you are going to take mass transit or walk. For example if you have a tutoring job but have to spend one hour in traveling time, will that really be productive? Just a thought.

    As for your interest options–certainly Option 4 would be the most ideal. I suggest continuing to fight this out with them. It may be a hassle and it may take some time, but the difference in interest can mean thousands and thousands of dollars.

    Good luck as you decide all this stuff! I know right now it seems pretty dismal and you’re at the bottom… but I guarantee you that you’ll get through this and while it may take a lot a lot of hard work, it will be worth it in the end. And you’ll have a bunch of cheerleaders (like me!) helping you stay focused along the way.

    You can do it!!! 🙂

    • SS4BC says:

      Thanks MPP! I appreciate your positive thoughts.

      I think that option #4 is the best as well. But I have a feeling that I’m going to have to go through six months or so of option #2 before I can REALLY make a case for option #4 – because let’s face it – from what they see on the computer screen when they look at JUST this account, I don’t know how to handle my accounts. They don’t see that I’ve paid off in the last 6 months 4 other credit accounts and saved almost $3,000 worth of money.

      And the “nice” thing I guess is that it is really pushing my ass in gear to make changes.

      As for the car issue, I would be tutoring students on campus – where I work – which is a mile from my apartment. So I shouldn’t have any long travelling for that.

      As well, this school year they will be implementing a Flex-car system at my university, so I can “rent” a car for $8/hour for things like grocery shopping or whatnot. I’ve actually been considering selling the car for quite a long time – even more than I really talk about on my blog. I’m pretty sure as soon as they get the Flex cars I’ll sell mine. It is better for the environment and it is better for me wallet book, and it isn’t that inconvenient for me since I live, work and play within a mile from my work, there are two bus lines that pick up in front of my apartment and my neighbor is also my coworker and would take me anywhere I needed in an emergency.

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