Monday, December 8, 2014

Finally debt-free

In April 2012, I decided I had to get serious about paying off my credit card debt. I'd been in New York City for eight months and paid off my moving costs, and I was finally making a real salary after eight years in grad school. Total credit card debt? $22,510.57.

This week, I finally paid the end of it off.

I didn't do anything fancy. I simply put a large chunk of my income towards the bills every month. First, I paid off the smaller of my two cards, then tackled the larger card. (The psychology of having a card paid off was more important than tackling the higher interest rate card.) Finally, about a year ago, I transferred what was left to a new 0% APR card.

I haven't totally sworn off credit cards. One card I've had for nearly two decades has a high credit limit that is good for my credit rating. That is linked to my iTunes account - it keeps it active, and it means my checking account isn't cluttered up with $1.29 charges. It gets paid off every month. The other card I use for purchases that are more secure on credit cards, such as airplane tickets. It gets paid off as well. The third card will be closed soon.

A huge weight has been lifted from my shoulders, but of course there were trade-offs. My savings account is practically empty. In fact, I have a negative net worth overall. My student loans aren't huge (although morbid as this sounds, at least if I die, my family won't have to pay them), but my 401(k) and rollover IRA will let me retire around age 70, if I plan to make it to 70 and a half. I've increased my 401(k) contribution - it should be higher, but first I need a savings buffer. That comes before paying off any student loans or maxing the 401(k).

This is the first time in my adult life I haven't had credit card debt. You know, that's pretty exciting.

1 comment:

Tracy Frazier said...

Frugality must've been the concept that helped you most in paying of your debt, Eve. A change of lifestyle costs can be pretty hard and almost unattainable, so I'm proud of you for the responsible way you tackled that problem. I'm way excited for you as well. Good job! Kudos to you! :)

Tracy Frazier @ Sunnen Law