The Ugly Truth – Day 458

Debts

• Personal Loan: -$19,136
• Credit Card 1: -$5,681
• Credit Card 2: -$6,147
• Credit Card 3: (transferred to Card 4)
• Credit Card 4: -$15,719
• Credit Card 5: (paid in full)
• Credit Card 6: (paid in full)
• Credit Card 7: (paid in full)
• Credit Card 8: -$4,750

Savings

• Emergency Fund: +$2,000
• Car Fund (Maintenance & Registration): +0
• Short Term Goal Fund: +$1,250 (Current goal is new bedroom furniture)
• Home Deposit Fund ($60,000 Goal): +$1,000
• UK Tour Fund ($10,000 Goal): +$1250

Total: -$51,433
Debt reduced from last month: +$321
Debt reduced from Sep 2007: +$5,339

Another tiny change downward this month, as I had to get the car serviced and it cost heaps, plus pay the NRMA membership.

I need to make more of a dent in those balances down though, it’s driving me mad.

I’ll be tracking my spending more tightly over the next few months to see where it’s all going.

I did manage to add another $250 to my travel fund and also my short term goal fund though so that’s cool.

My goal for this month is to finally crack through the $50K barrier, it’s been far too long coming.

Roll on payday.

Subscribe in a reader or Subscribe via email

Another 2008 Financial Goal Achieved!

Even though this month’s ugly truth showed a backslide, this doesn't mean it's all doom and gloom in Debt Dieter world.

I got paid today & I’m pleased to report my personal loan has finally dropped below $20,000! This was one of my financial goals for 2008, so I’m happy to see that one happen at last.

Goals 1 and 5 on that list have no chance of happening now (although goal 1 will be pretty close), but I am aiming to get my total debt under the $50,000 mark by the end of this month, just for my own sense of achievement.

The other good news is Credit Card 2 is now under $6,000 too, but I won't know final balances until the November 1 update.

Subscribe in a reader or Subscribe via email

A Year Ago Today

A year ago today I started this blog. I was $56,772 in debt, and horrified, so decided to do something about it.

• I had a personal loan that consisted of a car loan and a previous consolidation loan of my credits cards, which I had run up again & added new ones to – I was so smart – not.
• I was making decent money but only paying the minimums & then reusing my cards over and over.
• I was paying for things I didn't need or use and did nothing about it (gym membership, online DVD rentals etc)
• I was buying my lunch every day, and buying up to 4 ‘bought’ coffees a day too
• I ate a lot of take away meals & ate out in cafes & restaurants most weekends too
• I was driving to work every day, and paying $17 a day for parking.
• I was paying for my broadband service, even though there was a free staff plan available

I got a great new job in October, which I still love coming in to do each day, and pays me a lot more money!

In November I found out I had to move house. I had no emergency fund at all, no savings, so onto the credit cards it all went. Right before Christmas, and in the Sydney rental market, it was a nightmare.

December and January were consumed with the joys of finding a new place to live and actually moving house. I had a couple of nice financial surprises in the forms of some found money in my travel wallet & all my share dividends, as I’d never updated my mailing address. So I managed to still get my numbers down.

In February, all the moving bills came in and my total debts had actually increased to $61,836! Talk about two steps forward & three steps back. The credit crunch has also hit the world hard by this stage & all my interest rates had gone up, many more than 2%.

March saw my Baby Emergency Fund reach $1000 for the first time – Hurrah!

In April I shopped around for a cheaper Greenslip for my car, and knocked the front bumper off in the local KFC carpark – good times…

I bought a snazzy new vacuum cleaner in May, turned another year older and saw a run of 4 months of consistent debt reduction kick in – finally, some progress, small, but consistent.

June was an awesome month, my annual bonus arrived so I was able to make a serious dent on my debt and still put some money aside for my other goals. It also saw petrol prices in Sydney hit record highs.

July saw me get back under my original debt amount of $56,772 for the first time since February, it was a great feeling. I also scored the employee of the month award at work, which is worth $150 and I still haven’t spent it yet.

August was a pretty boring month to close out my first year, I am getting a lot more offers in the mail to increase my limits though and calls regarding financial advisors, so someone’s noticed I’m trying to pay down my debt.

What will the second year bring? Not sure yet, but I’ll continue to reduce my total debt every month, set goals for myself, and blog about it here!

So as numbers go:

• September 2007: -$56,772
• February 2008: -$61,836
• September 2008: -$51,704

Total debt paid off so far: $10,132 – not too shabby, but I can do better!

I've got a new medium term goal, to double that amount in the next year, so my goal for September 2009 is a total debt of no more than $31440, which is $20,264 less than today. Plus still have my overseas trip in May/June in 2009!

Subscribe in a reader or Subscribe via email

I Decided To Take The Limit Increase

I sent off the paperwork this morning to increase Credit Card 4’s limit to $16,300. Good grief that’s a large number!

Well it’s only going to be large for a finite period of time, as I’m going to reduce the limit as I pay it off.

The deal I've made with myself is that I’ll transfer the remaining balance of Credit Card 3 onto it, which reduces the number of cards I have to pay each month, but I’ll be paying both the amounts I was currently paying all onto Credit Card 4 each month instead.

Credit Card 3 was my current focus card, and the one I’d worked out I could pay off by December 31 (to achieve another of my Financial Year Resolutions). To ensure that goal is still achieved, I need to get the total balance on Credit Card 4 to at least $10,000 by December 31. This allows for the amount I was already paying off Credit Card 4, plus the total balance of Credit Card 3.

Clear as mud? To break it down, as at 1 August, the balances of Cards 3 and 4 were:

• Credit Card 3: -$5,466
• Credit Card 4: -$11,197

Once the limit increase is approved & the balance transfer is complete the most the new picture will be:

• Credit Card 3: $0
• Credit Card 4: -$16,663 (it won’t be this much though, as this month's payments on both cards will be applied first)

Then it’s a matter of paying off like crazy between now and December 31. I can’t claim credit Card 3 as paid in full until that goal is reached.

Subscribe in a reader or Subscribe via email

I Must Be Doing Something Right

In the last week or so I've had three letters from my numerous credit card providers.

The first one offered to switch my card over to a Platinum card, oooh Platinum - shiny! The old me might have been tempted, but the new me checked the fine print and found that the interest rate was over 7.5% higher than I’m already paying, and the ‘benefits’ are of no interest to me or my lifestyle. So thanks, but no thanks.

The second one was offering to double the credit limit on that card, but the interest rate is 19.89% so why would I want to do that? Not to mention it’s one of the cards I've already paid off, so thanks, but no thanks to your ‘generous’ offer. Reminds me I must cancel that one this week, probably not what the bank was hoping I'd do.

The third one offered to increase my limit by $6,000. Like I need more credit at this point! That said, I did consider this one for a moment as the interest rate on this card isn't too bad, it's only 10.49%, so I could potentially balance transfer one of my other higher interest cards (my current focus card is 13.99% for example) and save on some interest charges while I pay them both off?

Even if I do nothing, it’s good to know I’m doing something that is working in my favour. I figure the more debt the banks want to get me into, the more I’m on the right track by getting rid of it!

Credit cards work differently here in Australia to how they do in other countries, like the US. Your total available credit limit impacts your borrowing power for things like mortgages and car loans, so it’s actually better to cancel cards as you pay them off or reduce your limits as you go, just as Ugly Debty has been doing. I guess I’m becoming a ‘preferred customer’ myself these days!

What do you think? Just say no, or should I take the offer and consolidate and save some interest?

Subscribe in a reader or Subscribe via email

Big Wins - Third Credit Card Bites The Dust!

I’m proud to be able to say I paid off my third credit card since starting my debt diet today!

Only more 4 to go from here, and only 1 more to meet one of my 2008 goals of paying off 4 of my 7 cards by December 31, 2008.

Credit Card 6 - $0. Paid in Full 15/07/2008

I decided to use my extra pay from my pay rise to get rid of it, so the UK Fund won’t get a boost until next month now, and I’m OK with that.

I now have a $600 payment to snowball onto my next focus debt, Credit Card 3 which is now my smallest debt, but still quite substantial at $5,597.

I've crunched my numbers, and with some small tweaks I’m confident I’ll be able to get it paid off before the end of the year. I wasn't that sure even two weeks ago, but I've found a way.

Onwards and downwards!

Subscribe in a reader or Subscribe via email

The Ugly Truth - Day 305

The Ugly Truth

Debts

• Personal Loan: -$21,600
• Credit Card 1: -$6,680
• Credit Card 2: -$8,657
• Credit Card 3: -$5,597
• Credit Card 4: -$11,000
• Credit Card 5: (paid in full)
• Credit Card 6: -$900 So close!
• Credit Card 7: (paid in full)

Savings

• Emergency Fund: +$2,010 – Sorted!
• Car Fund (Maintenance & Registration): +$252
• Short Term Goal Fund: +$1,004 (Current goal is new bedroom furniture)
• Home Deposit Fund ($60,000 Goal): +$1,004
• UK Tour Fund ($10,000 Goal): +$502
  

Total: -$54,434
Debt reduced from last month: +$3,646 – check it out!
Debt reduced from Sep 2007: +$2,338 – YAY!

Now you may not have noticed but there’s a dramatic change to my numbers this month, in more ways than one. Who doesn't love an annual bonus?

First, I'm back under $56,772 (the amount of debt I had when I started this blog). Woohoo!

Second, and more importantly (to me anyway), I’m no longer reporting my debt total by including my Emergency, Car and Short Term goal amounts in the final number, and it’s still less than when I started, plus there’s money in the bank! If I did run the numbers using the old way, the numbers would look even better still, but wouldn't be clearly outlining my situation.

I have $4,772 in available cash should I need it, but it’s all allocated for a purpose (other than the emergency fund of course), so I don’t think it will be going anywhere other than where it’s supposed to.

I’m really re-energised about improving my finances after making such a dent this month, my next target is that pesky $900 on Credit Card 6, I want it gone by August 1. I did waver about making a double payment on my personal loan this month, but it’s got the highest interest rate so felt it was worth waiting the extra month to pay off Credit Card 6.

Roll on payday – and my payrise!

Subscribe in a reader or Subscribe via email

The Ugly Truth – Day 276

The Ugly Truth

• Personal Loan: -$22,750
• Credit Card 1: -$7,000
• Credit Card 2: -$9134
• Credit Card 3: -$5,970
• Credit Card 4: -$11,351
• Credit Card 5: (paid in full)
• Credit Card 6: -$3,860
• Credit Card 7: (paid in full)
• Emergency Fund: +$1,508
• Goal Fund: +$351
• Car Fund (Maintenance & Registration): +$126
  

Total: -$58,080
Debt reduced from last month: +721
Debt reduced from Sep 2007: -$1,308

May was an expensive month.

I had car registration, pink slip and green slip to pay, which came to just under $1000 – that included the two new front tyres required to get my pink slip, which wiped out my Car Fund and then some. I’m determined to prepare better for these expenses for next year so I’m adding $125 to the car fund each month to cover those expenses next year, plus servicing and my NRMA membership as required. I just want to have the cash on hand as the expenses come in throughout the year.

I've also added a Goal Fund to have money to buy those bigger ticket items as they come in, I really need a new bed for example, so that has to be saved up for, not charged to a card.

Still knocked a smidge over $700 off the total of my debts though, the seemingly ever increasing interest rates on my cards are killing me! Looks like my prediction of being back under my original debt of $56,772 by June was accurate though.

Roll on payday.

Subscribe in a reader or Subscribe via email

I’m Back! So Are My Bills And Debts…

Well I’m all moved in to my new apartment, even though I’m still surrounded by boxes and the week long issues with phone and broadband connections have only just been resolved.

The move cost me an absolute fortune, and I’m glad it’s behind me so I can refocus on eliminating my seemingly ever increasing debt load.

The movers cost twice as much as I expected, pushing the total costs of the move up over the $2500 mark. One of the joys of being single with no family in the city to assist with the moving process. It’s amazing how your friends disappear into the woodwork when the moving word gets mentioned.

Unfortunately, due to lack of emergency funds almost all of this had to go on the credit cards so I've started the New Year more in debt than ever.

That said, I have a shiny new budget in hand, my envelopes at the ready and payday is today, so it’s time to focus on moving my finances to a better location, now I’m all moved myself.

Subscribe in a reader or Subscribe via email

Taking Advantage Of 0% Interest To Get A Jump On 2008

I decided to consolidate two of my credit cards (1 and 7 on my ugly truth list) into one today to take advantage of a reduced ongoing interest rate on card 1 (down 2% to 9.95%) and 0% for 6 months (then 9.95% ongoing) for card 7 (currently 18.75%) once they’re both together.

The new balance will be just under $7500 combined and will mean I only have 5 open credit cards instead of the original 7 I started with in September.

Card 7 is currently my focus card that also receives any snowball payments, which I’ll now combine with the fixed minimum payment I've been paying on card 1 ongoing. This should help speed the repayments along when combined with the lower ongoing interest rate and the interest free period on the balance transfer, which will get paid off first.

Card 1 would have been the next card on my snowball plan anyway, so it makes sense to me to take advantage of this offer.

The other interesting thing I found out was that as long as there’s a 0% offer running on the new card and I have enough available credit on it, I can transfer future balances onto it without having to set up a new account, and start another 6 months at 0% on that new balance. Something to ponder once I've got this first lot paid off!

My stretch goal is to have the entire $7500 paid off by the end of May 2008.

Subscribe in a reader or Subscribe via email

Times They Are A Changing…As Are My Credit Card Due Dates?

I came home from my Christmas travelling to all of my monthly credit card statements, how delightful.

Three of them have changed their due dates from the 15-16th to the 14th of the month.

This is a real pain as I get paid on the 15th of the month so they will always be late and always incur a late fee. Grrr.

I actually thought I must have assumed the dates were after the 15th, but I checked last months statements and they have actually changed.

I’ll be calling them over the next day or so to see if I can get them changed back, otherwise I’ll need to make double minimum payments on all of them in January to get a month ahead to avoid the late fees ongoing (keeping one set of minimum payments aside for the February due date)

I've also noticed the interest rates slowly creeping up on them with no warning at all from the banks themselves about the changes, very sneaky.

Subscribe in a reader or Subscribe via email

Not Accepted Everywhere

It seems Australians traveling in the UK are having trouble spending money on their credit cards. It’s not because they are all being frugal and paying cash!

The problem is credit cards containing microchips with a PIN rather than a signature for authorisations have become the norm. Credit cards with magnetic strips are used here in Australia for the most part, and you don’t need a PIN, just a signature.

The UK moved to the chip and PIN security system in early 2006 in a bid to clamp down on its growing credit card fraud problem.

Some shops even have signs proclaiming "No chip, no PIN, no sale''. I do love a good catch phrase like that don’t you? It’s like going to a pub with a "no shirt, no shoes, no service” sign, you just know it’s going to be a classy joint. :-)

The problem is also affecting travellers from the US, where chipped cards are yet to replace magnetic strips. Seems you don’t even need a signature in the US in many cases, but that’s a whole ‘nother post.

As for the ‘Big 4’ banks in Australia, this is where they’re at with chips in cards:

• ANZ has more than 1.7 million chips cards in the market, and were the first to introduce products in Australian around 2001
• Commonwealth Bank is introducing chips on all replacement and new cards.
• The NAB is yet to announce when they’ll introduce chips
• Westpac has announced the introduction of chipped cards on their products

The Australian market has been slow to switch to chips due to levels of fraud, relative to other markets. It’s reassuring to know we’re not quite as dodgy as some other places, especially since we're the ones who were supposed to be the 'convicts'!

It’s worth checking your cards before you travel to ensure you’re not caught out, and to make sure you have a PIN for your credit card when travelling. That said, any shop displaying the Visa or MasterCard signage is supposed to take your card regardless, but it’s one less drama to have to deal with if your card is chipped.

I wonder if this also applies to Visa debit cards?

Subscribe in a reader or Subscribe via email