Thursday, January 16, 2014

Thirty Thursday - Debt Free Update!

I'm debt free in 2014! Part 2:
Missed my previous post? Check out Idea #1 for debt free here.
2. Credit Cards - 

Oh I was the typical college student. Took out credit cards thinking it would start building credit. My father lost his job my last year in college so I put EVERYTHING on credit cards. Groceries, utilities, interview clothing, going out, and of course gasoline!

So when I found myself with my first job, it was time to put on my big girl pants and deal with my issues. I started with my handy dandy excel spreadsheets. My headers were - Credit Card, Balance, Minimum Payment, Interest Rate, Due Date. 

First thing I did was change all of my due dates to coincide with when I get paid. I only get paid ONCE a month which has forced me to be very organized with my money to make it through each month. 

Second thing, I ordered my card by the highest to lowest interest rate. 

Third thing, I started paying them off like this:

- Pay as much as I can on the highest interest rate card
- Minimum on all of the other cards
- I started babysitting on the weekends and used that money to make additional payments on my highest interest rate card
- When I paid the highest off, I moved to the next one and continued my plan.

Why did I do this?
I had already made stupid financial decisions, I should not pay tons of interest rates to perpetuate the problem. Was I perfect at this? No! When I changed jobs when the economy went south, I did have to spend a couple of emergency purchases on my already paid off credit card. Annoying but it was essential at the time. 

How do I handle my credit cards now? Lessons Learned!
- DO NOT CANCEL a credit card once you pay it off! It hurt your credit report. Lots of sources out there say cancel them but if you are afraid of using the card, cut it up instead.

- I found a card that gives me rewards, I only use this card. I get 1-12% CASH back on every purchase so therefore, I make every purchase on this card!
- I pay off my card EVERY SINGLE MONTH!
- In an emergency situation, which has happened once, I couldn't pay off my entire card, I made sure I paid as much as I could, and did some extra work to pay it as soon as I could.

Where do I get my extra work?

- Babysitting & Pet Sitting -
- Tutoring -
- These are things that I am able to do around my schedule and that I enjoy doing. It isn't for everyone. I tend to babysit on Friday and Saturday nights which takes time away from social. I have tried very hard to not do this every weekend. The pet sitting has been super fun. I have met some fabulous furry friends along the way.

What have you learned along the way? I love learning new things!

Until next time...