Saturday, 1 September 2007

Day 1 - The ugly truth, and a plan

It's really struck me lately just how much debt I've managed to acquire over the last few years.

The Ugly Truth

  • Personal Loan - $24,105
  • Credit Card 1 - $4947
  • Credit Card2 - $7317
  • Credit Card 3 - $5499
  • Credit Card 4 - $7177
  • Credit Card 5 - $677
  • Credit Card 6 - $4000
  • Credit Card 7 - $3000
  • Emergency Fund - $0
  • Savings - $0

Total = $56,722

Yes 7, count them 7 credit cards! What was I thinking? No wonder I'm 38, in a well paying job and don't have a home of my own. As today is the first day of Spring here in Australia, what better time to 'spring clean' my finances, and put that debt on a diet once and for all.

The Plan

  • I'm running with the snowball method of paying off my debts, from smallest balance to highest, as I know myself well enough to realise I need the gratification. I've managed to find an extra $700+ in the budget for the snowball per month, by actually creating a budget!
  • I'm keeping the current minimum balances fixed at this month's amount on the debts ongoing, maintaining those payments even as balances go down.
  • I've set up automatic payments to come out each pay day on each of the debts.
  • I've taken the cards out of my wallet
  • I've set up $100 a pay transfer to start building my emergency fund.

Based on the snowball calculator I used, I should have eliminated 6 of the 7 credit cards by my 40th birthday in May 2009, and completely debt free by May 2010.

Now, to work the plan in reality.

5 comments:

  1. I guess your situation of having this amount of debt and owning so many credit cards are really common these days. A great post :)

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  2. I'm glad I'm not alone with this issue, but it's horrible to think how many people like myself must be out there these days. Credit too easy to come by etc.

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  3. Yey you started your blog!

    I'll be watching your progress. Good luck:)

    Thanks for the link, I've linked you.

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  4. Ah, welcome to the club. It's amazing how mcuh debt you can accumulate without really, really being aware of it. When I first put all my debt on paper, I was astounded at the amount. There's loads of us on here in the same boat, we'll all hold hands together. I've linked you on my site. Careful, blogging is addictive ;)

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  5. I thought only people in the U.S were in debt... hmmm now I'm starting to see different trends, so how much is your debt in American dollars??

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