Credit Card Debt - Jan, 2009

Posted by: kvan in USAA, monthly, holiday, debt, commitment, Chase on Jan 31, 2009

This month was a month of belt tightening, as the post-holiday bills began trickling in.  My wife is beginning to understand the depth of my resolve, as I frequently interrogate her on new charges showing up on the checking account ledger or our monthly usage credit card account.  She's a good sport about it, and deep down, appreciates the importance of what we're trying to do.  I think she especially appreciates my new miserly attitude, as more often than not, it was me bringing home that new electronic toy that I had just charged to the credit card.

Despite the additional expenditures over the holiday vacation period, I managed to maintain my commitment of $1,500 towards paying down credit card debt.  I followed the payment recommendations from DueMinder, so my largest payment went towards my USAA account.  I am really happy about my payment efficiency at 94.6%.  The vast majority of my payments go towards paying down principle.  The high payment efficiency is due to the low interest offers I'm currently on, resulting in an overall average interest rate of 2.26%.  I doubt I'll be able to keep my interest that low for the long haul; the special rates start expiring in April.  I'll enjoy it while it lasts, and be on the lookout for offers in the future.  In the worst case, I have an offer of 3.99% with my Bank of America card that I can take advantage of.  That particular account has a balance transfer fee capped at $30, which is very favorable compared to the 3%, no cap fees of several other cards.

My next near term milestone is breaking the $40,000 mark, which I should dip under in March.  February is my critical month, as it is the month where several large bills come due.  My United Visa card from Chase, an account in which I build mileage towards free flights on United Airlines, is my "monthly payoff" card.  I use it on a daily basis for food, gas, clothing, and just about everything else, building mileage and floating expenses with free interest for almost a month.  The card's billing cycle ends the 25th of every month.  On February 20th, I'm due to pay all charges incurred from December 26th through January 25th.  Big expenses included taking the whole family up to the mountains for a day of skiing over the holidays, a large payment towards my son's field trip to Washington, DC over spring break (fortunately, he paid half), and an unexpected car repair.  It is critical that I pay this off in full, as the interest rate is high if I carry a balance, and they use double-cycle billing, which means it takes 2 full months to fully clear the balance to get back to paying no interest on purchases.  At this point, I'm confident we'll be able to pay it off, as long as we continue closely watching every expense.