Back in fall of 2010, the Public Relations officer from Randolph-Brooks Federal Credit Union (@rbfcu) tweeted about a woman who made a New Years Resolution to go on a spending fast, in which she wouldn't spend any money at all on wants...just needs. The goal was to reduce consumer debt. Her plan, despite all her apparent withdrawal and consumerist sacrifice (no paid social outings like going out to eat, or the movies), she either made a big dent in paying off her debt, or she eliminated big chunks of it. Since at the time I read the story about this woman, I had no idea what my NYR should be, I realized I should do the same thing.
Normally, I might make a NYR, but how many of us actually hold ourselves to it each year? I mean, really. Let's be honest. Do you make a NYR, only to give up on it a couple months later? Knowing this, I decided to do it, and made a conscious daily choice to not spend on anything I wanted...only what I needed. Easily simplified, it meant, after paying all my monthly bills that my teacher paycheck pays, (mortgage, car, student loan, cell phone, credit cards), I only had a few hundred per month for "gas and groceries" and professional expenses...or so I thought.
At first making this NYR, I felt relatively comfortable doing it. But I didn't think about all the "uh-ohs" that come with life, like car maintenance, and new tires if you get a nail in your tire, and doctor visits, and medical prescriptions. I was so short-sighted to think that after paying all bills, "gas and groceries" was all that would be left. As each "uh-oh" event came (and they did), if I didn't have enough cash from my paycheck, I'd be forced to use my credit cards. Since my credit card debt has been on a steady incline in the past few years, this NYR was particularly designed to keep me from adding to it.
-NO impulse spending
-NO stupid justifications for any unnecessary purchases
-NO movie or restaurant outings unless someone else paid
-Want the DVD? Wait for it to be available on Netflix
-Want a new single, soundtrack, or album? Ask for iTunes gift cards for your birthday or Christmas. (I teach music for a living, so this was ESPECIALLY difficult!)
The only eating out I allowed myself was usually fast food when I needed to eat, and didn't have enough time to go home and eat. That was justifiable.
So where do I stand now? I've almost made it through November with one month left to go. In retrospect, I can say this: My fast hasn't been perfect. It could've been better. There are plenty of things I've wanted to buy and didn't. I've fought many moments of seeing something online or in-store that I wanted, and thinking, Fuck it. I'll just charge it, and resisted the urge.
Like I said earlier, it was my goal/hope that I'd pay off a good chunk of my credit card debt through this NYR. Well, because of life, that didn't happen. Instead, my credit card debt increased. Why? A few factors could be to blame:
-I should've driven around less. That would've saved gas, giving me more cash to use per month to refrain from using credit cards.
-I gave to charities - granted, not much - thinking that despite my intention to reduce debt, I'd receive some sort of Good Samaritan blessing from God for giving even when I didn't have anything to give. Though the effect this could've had on my debt is undoubtedly minimal, I know it played a role, but I don't regret doing it either.
-I could've gotten a summer job teaching music at one of those after-school academies, and though I had the opportunity, I was lazy and let it pass me by. The extra income would've reduced the amount I charged for necessities during the summer, and would've made the summer a LOT more financially bearable.
Over the past 7 months, or so, I had some credit card adventures, too. And by that, I mean taking advantage of certain offers or promotions a card offered to help save money. I consider it an adventure because I had never done balance transfers before. First time for everything, right?
I have 4 credit cards (from lowest limit to highest):
-Chase MC (lowest limit, with a 12% APR, with points rewards)
-AMEX (9.9% APR, with cash back rewards for Costco)
-Discover (14% APR, with points rewards)
-Citi MC (16.99% APR, with cash back rewards)
The AMEX is a joint account with my partner. I don't pay on that one, he does.
As for the others, let me break it down as to what happened in these "adventures".
-At the start of the fast, my Disc and Chase had BIG balances, and my Citi, with a LARGE limit, was clean. I hated paying 2 credit card bills each month, so I checked Citi to see if there was a balance transfer promotion. There was.
-I transferred my Disc and Chase balances to Citi with a promotion that gave me 0% APR until March of 2012. And I'd still have plenty of room to charge if necessary (i.e., when my cash ran out, and I needed things). Well, over the next few months, plenty of "life happens" events took place requiring me to charge, and my Citi balance sky rocketed to where I was closer to my limit than I wanted to be. (I also was okay with using the Citi because I knew that even though I was increasing my debt, I'd earn a cash back check eventually...and I did; a whopping $50.) Damn, I wish there was a font for sarcasm!
-Knowing I needed "space" on my Citi, I looked at my Disc again (as it had the 2nd highest limit of all my cards), and lo and behold, they had a balance transfer option too, until March (or April) 2012.
-So, I took a big chunk of the balance from Citi, and put it back on the Disc, which left me more room on my Citi to continue charging when necessary. For a few months, I was able to not charge on my Disc at all. But my Citi balance continued to increase to where I needed to stop charging there, and start charging on Disc instead. Why? When I've paid my statements this year, I've really only paid the minimum payment because that way, I could satisfy my card agreement, and still have cash to use. The more I paid off, the less cash I had to make it through the month, which would force me to charge on the card even sooner, thereby essentially canceling out whatever extra I paid on the card.
-Since I had two monster balances on my Citi and Disc, I looked to my favorite financial institution, RBFCU, and learned about their credit card and balance transfer options. So, I thought, I'll apply and transfer everything to that card since they're such a bad-ass-awesome institution, and I'm tired of dealing with big banks. Well, I applied, and though my credit is okay, I have too many financial obligations to take on a 3rd balance transfer of the amount I needed. So, I'm stuck paying 2 cards for a little while.
So here's my plan for the rest of the year:
1. Keep the fast going and charge on Disc as that has more room than the Citi does through the end of the year.
2. Once I get my tax statements (either Dec. or Jan.) and get my IRS refund in January (yes, I file QUICKLY), I'll use a large chunk of it to pay down my car, unless I can pay it off (it's final payment is supposed to be June 2012).
3. Once the car is paid off, use that money to pay the cards, or by then reapply for the RBFCU cards I was initially declined. By then, I'll have one less bill to pay per month.
We'll see how this plan works.
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