Tuesday, February 10, 2009

Debt - A New Plan of Attack

As we're unsure how our job prospects will look later this year, we're making a push to pay off our remaining credit card debt. It's important to us to get rid of the balance to avoid further interest rate hikes. Besides, the money we're giving the credit card company could be going into our cruising kitty. Presently, our emergency fund isn't huge, but it's decent for our lifestyle. We're going to keep contributing to it but at a somewhat slower pace.

We do contract work and get paid by a few different employers. Our paychecks are irregular and scattered about. Sometimes we get three in a week; sometimes we go for a month without pay. Given this situation, and given that anything in our checking account should be used for expenses, here's our new debt-reduction plan:

-The night before we get a paycheck, we'll write down how much is left in the account.

-The next day, assuming that the paycheck is sufficient to get us through the next round of bills, we'll take the amount that we wrote down the night before and put it to the credit card.

To me, there's no point in leaving excess money in the checking account. A checking account contains funds meant to go to the mortgage, our bills, school loans, etc. Anything extra should be placed elsewhere.

This plan might seem a little odd, but I think it'll work. I'll feel great once we make that last credit card payment. I hope we can do it by the end of the summer (and then we can start focusing more on our school loans - hurrah!)

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