Yesterday I spent all day working on my finances (I took a heap of files & papers to work). I went over the credit card statements for the last 4 years. A lot of high cost charges were for 'emergency fund' type items. Car repairs, broken down appliances, computer repairs, unexpected accommodation costs and replacement of major appliances.
The next most common charges were regular, expected bills that we didn't have the money for. Now some of this arose because of family crisis (job loss, illness) but there still was a fundamental problem with the way we were managing our money.
We have not used a credit card for almost 3 months now. Last night we agreed that no matter what we will not use it again to sort out the car situation, even if I have to ring up and get extensions of paying the regular bills. Even if we have to live on tinned tomatos!
I remember when we had no credit card. It was such a good feeling. We used to pay our large bills (insurance etc) annually instead of monthly. There were no monthly payments deducted from the bills account. We paid things on time. I want to get back to that feeling.
The new budget will include a regular amount set aside for car maintenance, repairs and appliance replacement/repair. Obvious, I know.....
I am opening a new account just for bill paying at a different credit union. I will build up this amount and use it to get back to paying everthing straight away and having the large bills paid annually. I worked out that the small monthly account keeping fee ($5) is less than what I would spend on fees charged for having bills deducted monthly.
By having it at a different branch it won't show up everytime we look at the bank account online and there is less temptation to dip into it.
Steve Bracks
2 hours ago
6 comments:
I'm glad I came across your site. I gave up my credit cards ... mastercard about three months ago & visa about five months ago. When I had them, I used them regularly, but oddly enough don't miss them now that the accounts are cancelled. You've just become one of my role models. I too have a mortgage & a substantial line of credit. Although I can't compete with your five year timeline, I find it encouraging that like me, you've set a timeline. For me, both will be paid off in ten years.
Hi Jennifer, thanks for stopping by and saying hello, it helps finding others trying to do the same thing.
Setting the goal really helped me get focused.
It's a good feeling to choose not to use credit cards, good luck with your debt paydown:)
I wish I could give up my credit cards, but they're such a crutch! I've started using my debit card more...but it's still difficult!
Must admit that I'm still in survival mode and using a credit card.
It's a strange mental frame of mind. I know I have to simply stop it, but there's no emergency fund and I'm stuck in vicious cycle.
For example I have to have the car tested (money) and car tax (money). I simply don't have the cash to do so. But if I don;t have the car, it affects my ability to work.
I absolutely detest having to use it. But because I can just about keep up the payments (above minimum) I can just about live with it.
Because I'm turning around a business disaster and it's beginning to look hopeful, it feels right even though my head says it's wrong.
You have to follow gut at times.
I think it's hard to give them up at first, particularly when money is tight.
It may not always be the best starting point for everyone. We could not have stopped using them without having made a heap of other changes over the last few months.
I agree with you Ian, that there are times when there isn't another alternative. It comes down to priorites which can vary depending on our circumstances.
Thats why debt reduction is so individual, and why I get annoyed with people who seem to think there is only one way to do this (i.e debt snowball). Simple solutions don't work in 'real' life and one size doesn't fit all!
We found ourselves in a similar position last year when Dad was critically ill & I had to live away from home for 5 weeks. We still had all the usual expenses to pay & once we used the savings there was no option other than to use credit. It was the right choice for us at the time.
Just start where you are and head in the general direction:)
sounds like a good plan...i plan on doing the same too starting next year...which was why i enrolled at our health savings account so i can pay for visits and medicine on a pre-tax basis.
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