I just paid $13,600 towards my credit card debt. That puts me a little past the half way mark on my journey towards a zero balance. For the past three months I’ve been talking myself into and out of paying this stupid card off completely. I keep going back and forth between investing it and paying off debt. But the final thought that tipped the scale in favor of paying off debt was the fact that, for the moment, the two are essentially the same. Here’s what I mean. When I was writing my previous post, I had only paid 30% of my debt off. My credit card balance was still close to $20k and my interest rate on said credit card was 20.47%. Investing the $13600 I put towards my debt would have gotten some returns, but for it to actually have been the right decision, it would have to make more than the amount of money I was losing on interest by keeping this debt around. Now I’m no financial guru, but I feel like I’m not being pessimistic in saying that getting a 21% return on my investment is near impossible.
Things did not quite happen the way I planned them namely because of my lack of discipline. I regressed a bit and had to dig myself out again but I feel like I’m back on track. It’s difficult to stick to a plan when you’re easily tempted and have no one to be accountable to. Having this blog and seeing all the goals I had set for myself in writing shamed me into getting my act together.
So my initial plan was as follows:
- Call credit card companies and negotiate a zero interest period
- Pay off small balances and build up momentum to tackle the largest balance (the big bad debt)
- Save money for a down payment on my second property or create a 6 month emergency fund.
Here’s what really happened:
- Got the credit card companies to provide me zero interest for 6-18 months.
- Paid off small balances like credit cards under $1000.
- Siphoned off the money I was going to use to pay off my credit card debt into a real estate opportunity.
- I was forced to pay down my car note significantly to qualify for a loan for the property.
- Got my real estate license and will be getting a license for neighboring states soon
- Opened an MMA account to save for emergency funds
- Went back into debt over the summer and was forced to use my emergency funds to pay some of it off.
The good news is, as a result of my decisions, namely taking advantage of the real estate opportunity, I was able to purchase an income property that will provide me with a little over $600 after expenses. The property purchase also forced me to pay my car note off in order to qualify for a mortgage. And I caught myself before slipping all the way down the slippery slope and managed to put over 13K towards this debt.
The bad news is, had it not been for this decision, I would have completely paid off my debt by now. I now hover around the halfway mark and continue to work towards eliminating this debt within the next 6 months.
Its not a total loss. But not a total win either. The struggle continues. Sigh. I need to figure out how I can stay disciplined.