New Debt

Let’s talk for a minute about where our new debts came from, shall we? Basically, it was a whole lot of this, a little of that, and some more of this all rolled together to make our big mess even bigger!

We went to Universal Studios in December. Our friend booked the hotel room and hasn’t told me yet how much it cost. I think it was around $500. She booked and paid for both rooms to make sure we would be able to be at the same hotel. I’m anxious to get that debt paid off so I can start working on the rest. In addition to the $500 we owe her, we charged our whole trip: tickets, food, souvenirs, etc. The trip probably cost us about $2000, including our hotel room, and it all went on the credit card.

We also have an outstanding bill for our kitchen. December was a killer; between Christmas and paying the final bills for our kitchen, we struggled. The outstanding bill is for plumbing supplies and fixtures.  We got a hot water dispenser, garbage disposal, sink, faucet, and various plumbing supplies. Obviously, those need to be paid for. And the sooner, the better. Like I said, the fewer bills I have to pay, the more I can throw towards each bill.

The credit card bill has no excuse other than we charged more than we could afford; part Christmas, part kitchen, part stupidity. No excuses. We charged our trip to Universal Studios. We charged our granite counter tops. We charged all our new appliances. We charged the remainder of our Christmas presents. Push came to shove and we couldn’t afford to pay it off. We were able to pay about $6000 towards our debt, total. That would have been half of our credit card bill, but I decided to pay off our other credit card in full.

The loans from our kids went towards paying off a different credit card. The amount of our debt would have been the same if we paid $4600 towards our monster December credit card or if we paid off the smaller credit card that we had been working on for a few years. I chose to pay off the credit card I did, even though it had a better interest rate, because I couldn’t pay that bill online. I had to physically go to the bank by the 26^th of each month and pay the bill. It was a pain. I also never sent extra small payments to this bill because I had to go there and write a check. By choosing to pay this bill off in full, we also have one fewer creditor that we need to make payments to. Again, it didn’t change the total of our debt, just the way it was allocated. The bonus of this approach is that I can pay small extra amounts without having to go to the bank; I’m able to schedule payments online which is easier. It also enables me to make more frequent, smaller payments that can eat away at the daily interest rate.

We are choosing to pay our kids back nearly last because we can. It would be great to pay them back in order, but then I would have $3000 sitting in the bank earning nearly 0% interest and I would still have outstanding credit card debt. It just doesn’t make sense to me to do it that way. They will be paid back. Hopefully, we will be able to pay them back by the end of the year, too, but I know that is a stretch.

However, if I meet my financial goal of having $10000 in the bank by the end of the year, we will have paid them back. We’ll have to wait and see!

Anyway, this is where all our added debt came from. It was mostly stupid and avoidable but we chose to spend. Now we have to pay it all back. Sadly, it takes much longer to pay back than it does to accrue. But pay it back we will. Slow and steady wins the race. All the extra bits we can throw at our debt are great, but it’s what we do on a daily basis that makes the most difference. Things like saying no, saving for purchases instead of swiping plastic, planning ahead. Those are the strategies that will get us out of this mess!