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Credit Card Debt - June, 2009 PDF Print E-mail
Thursday, 16 July 2009 00:00

This month, I was unable to achieve my full commitment of $1500 towards reducing debt.  I achieved just less than half of that.  The biggest factor was the purchase of a used car, which we needed now with 5 working drivers at home and only 3 cars.

The biggest news for June is my shift in strategy in which account to carry the debt.  I had written about the HELOC consolidation loan, and it turns out that was temporary due to an even better idea (better for now, anyway).  I've moved a significant portion of debt to a 401k loan.  This is a dangerous tactic according to many experts, but I have carefully weighed the tradeoffs, and concluded it is right for me at this time.  I took out a $20,000 loan from my 401k, which is a significant portion of what's available in a loan.  Most 401k's allow you to take up to 50% of the money out as a loan.  My interest rate is 4.25%, and payments are $370 per month.  I had to pay $125 as an origination fee.  My hope is that I will now be able to refinance my house, freeing up almost $600 per month.  This will help with the 2 kids' college expenses, as well as make things a bit easier to hit my $1500 debt reduction commitment.  I may even be able to accelerate that a bit.  My monthly debt status reflects this new move.  There is not much change to my debt-free date.  I'm still looking at October, 2011 to pay off the last of my credit card debt.

During June, I also "recycled" a balance on a Citi card which came off of a no interest intro rate.  It seemed unusual that Citi gave me an intro rate offer just as my previous balance came off an intro rate.  However, the mechanics are overly simple here.  They don't let you just roll your existing balance into the new low interest offer.  Instead, I had to pay off the Citi card (I used my HELOC to do this), then once I was showing a $0 balance on-line, I wrote a convenience check placing the balance right into the new intro rate.  Not too much pain on this one.  For once, I can say "thanks" to Citi.  It did cost me a full 3% balance transfer fee, and the rate runs through March of next year.  All told, this equates to about a 4% annual interest rate, much better than the 18% normal rate that I had.  Of course, I cannot be late on a single payment to get that effective rate, otherwise it all blows up and I wasted that 3% fee.  Fortunately, I have automatic payments set up on that account, so that the minimum is automatically paid each month.

 

Plan summary and account list for kvan's plan 'Credit Cards'

 

Summary of Credit Cards for user kvan
Total Balance $37,838.10 Payment Efficiency 82.44%
Minimum Payments $594.00 Total Savings $20,933.59 (17 Years, 10 Months)
Monthly Commitment $1,500.00 Total Payments/Fees $40,322.25 / $2,484.15
Kicker Payments $906.00 Payoff Date Oct-2011 (2 Years, 3 Months)

Account list for Credit Cards
Account Balance Min Plan Rate Day Note Web Site
401k Loan$20,000.00$370.00$370.004.25%1stPaid off USAA, BofA, Discover 
Capital One$9,453.10$97.00$97.005.99%2nd http://www.capitalone.com/
Citi (BLV)$8,385.00$127.00$1,033.0019.90%4thautopay minimumhttps://www.citicards.com/cards/wv/home.do
Discover$0.00$0.00$0.000.00%12thpaid off 6/3, check residual interesthttps://www.discovercard.com/cardmembersvcs/loginlogout/app/ac_main
US Bank$0.00$0.00$0.000.00%13th https://www4.usbank.com/internetBanking/RequestRouter?requestCmdId=DisplayLoginPage
USAA$0.00$0.00$0.000.00%17th https://www.usaa.com/inet/ent_logon/Logon
BofA NEA$0.00$0.00$0.000.00%17thpaid off 6/3, check residual interesthttp://www.mbna.com/
GM Flex Earnings$0.00$0.00$0.000.00%19th https://www.gmflexcard.com/GMFlexCard/index.jsp
Chase/United$0.00$0.00$0.000.00%20thpay balance monthly!http://www.chase.com/
Citi (KAV)$0.00$0.00$0.000.00%26thOffer: 3%fee, 0% until 3/1/10 or 2.99% until 9/1/10. Equifax 02/07/2009https://www.citicards.com/cards/wv/home.do
Total$37,838.10$594.00$1,500.008.15%   

Note: payment values in red indicate the 'focus'' account, the one to pay down the most.


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Last Updated ( Thursday, 16 July 2009 04:12 )