Life, Debt, and Everything In Between
A picture story
To summarize: We paid off a total of $4,694.41 ($5,340.00 in payments, then add interest, and a dental visit, which will eventually get reimbursed), and we lowered our credit limit from $20,000 to $15,000.
All in a month.
I've been blogging on this topic since 2011, and this is the first time I've felt like the work is paying off.
How we did it
We opened a TFSA back in the spring, and started contributing $200 each per month ($400 total) into it. It was supposed to be our trip fund, and we were supposed to stop using the visa, but keep making reasonable monthly payments to it.
After 6 months of this, our savings had grown, but we had continued to use the visa (I know, I know, bad PF'er), and so our balance had hovered around that $19K mark for almost a year.
My husband spoke up and suggested we'd feel better about all the sacrifices we were making if we could see some real progress.
So we transferred the first $2,600.00, and left our TFSA's with only $100 each. We'll start contributing to them again in 8 or 10 months when we get the visa a bit lower, so we didn't bother to close them.
We also have pretty good side-gigs. Our 9-5 desk jobs pay us well, so our 'side hustle' can be used for fun or for extra debt-kissing power. The $1,500.00 chunk we paid down came from a music directing gig that Ian did in September. (it was actually waiting on that cheque that held up this post!). Prior to starting this post, I paid down about $400 from teaching and gigging, and I'm on track to make another $500 this month (which might go to Christmas presents, so we don't have to use credit OR our overdraft).
Great start, now what?
My credit card is on ice, literally - it's in a block of ice in my freezer, and I can't even see the numbers on it, so no cheating for me.
Ian is much better at not using his card than I am (I frequently used mine for work, which I really didn't need to do), so his card is available for things like flights, online shopping, and concert tickets. If only one of us has a card, it also means that we have to have a discussion if I want to spend on it, and let's face it: it's usually me spending. It also makes it easy to pay off purchases right away if there are fewer charges.
We'll continue to pay $1,240/month to the visa, and extra from our side hustle as it comes. If all goes well, we'll be under $12,000 by this time in December, and under $10,000 by this time in January.
Our ultimate goal is to get the balance on the visa as low as possible, and ultimately lower the credit limit to $5,000. I anticipate that happening in summer of 2015, in July or August.
After that, we begin to build an emergency fund of $6,000. Now, we live in Calgary so that won't go too far, but it's better than having NO emergency fund, and once that little safety net is set up, we have other debt to kiss off.