Kick Debt's Butt

I have the day off – Happy New Year’s Eve by the way – and so I was just going through one of my four remaining credit card statements.

This one happens to be my Costco American Express card; a card I have about 12 more months to pay on. I started scanning the basics: balance, date my last payment was received, etc. and then I looked at the finance charge. Oh the finance charge, that little bit of data that laughs at me every month and says, “this is money that should be going to your retirement accounts and investments.”

Anyway, I noticed that my finance charge is a actually slightly higher this month, even though the balance on my card is lower. Where’s that stinking APR?!

Of course, there it is, American Express has decided to arbitrarily raise my interest rate another 2 points! I immediately call to politely inquire as to why in the hell they raised my interest rate, I’m not late, I pay over the minimums, etc., and the nice young lady on the phone says, “American Express sent you a letter in August letting you know that we were going to do this.” I of course ask, “any particular reason why?” To which she responds, “American Express decided it was in the company’s best interest to increase rates across the board because of the difficult economic times.”

I almost sprayed my coffee across the room! THEY are having difficult economic times and to solve it, they pass through higher rates to their customers who are just having a peachy old time in this economy??

Brilliant customer service move by American Express and they need to know that in my case, it probably is a smart move that they squeeze me for every penny they can get for the next 12 months.

Because the second that balance goes to zero, the card will be canceled and destroyed, they will never get another penny from me, and I’ll gladly tell them that I’ve ended a seven year, so called relationship, because of “difficult...economic...times.”

No sooner than I started patting myself on the back for striking a good balance for Christmas, did I get the bill in the mail for our #$%&!@ homeowner's dues!

I know, I know...I choose to live in a covenant protected community and I'm sure that one day, ten or so years down the road, our property values will have rebounded to the point where it makes sense to keep close checks on homeowners with, shall we say, eclectic tastes in decorating.

That being said, this bill has some pretty rotten timing. Right on the heels of Christmas spending and before any chance for a federal tax refund. Which means that I may have to - yet again - push back my debt attack another month.

I would just drag my feet on this one but because apparently a LOT of my fellow homeowners place this bill very low on the priority list, the board has decided to tack on a 10% late fee. Did I mention I hate late fees?

Theoretically next year this won't happen because...you guessed it; the dues are a part of my monthly cash box budget so I'll be setting aside for it each pay period.

Of course that doesn't help me so much for this year...groan.

I don’t know if irony is the right word. Perhaps it’s some kind of strange financial sadism. But for whatever reason, we backslid on spending after I was laid off.

At the beginning of last year, when we finally recognized that credit card debt and other consumer spending was eating away at any chance we ever had to build wealth, the first thing I did was put us on a “cash box budget.”

I segmented the family expenditures and applied a finite monthly amount to them, ensuring that the total equaled an amount that when combined with my debt attack, would not leave us negative at the end of the month.

It worked fantastically for the three or so months that we used it. In fact, what we thought might feel stifling, turned out to be liberating. There is a large peace of mind factor that goes with knowing what you have to spend. Then the job bomb, and like I said for whatever reason, we threw the cash budget out the window.

So here we are, almost a year later, and in spite of some major set backs, we’ve done a great job of paying down our consumer debt.

With that said, I’m getting the cash box ready again. This time the balances are adjusted to be a bit more realistic and if I’ve done the math correctly, we still will be able to continue with our aggressive debt attack while hopefully building a decent buffer in our operational (i.e., checking and savings) accounts.

I’m already planning for post consumer debt life; where we start routing money in to investments and not debts!

As much as it pains me to know that my thieving credit card companies will be getting another month's interest out of me, I have of course decided to re-purpose my debt attack amount to Christmas.

I had to convince my wife that we are making outstanding progress and that there is a light at the end of the tunnel, but this past year has been pretty tight around here and we haven't done a whole lot. After it was all said and done, a little Christmas spirit was just the thing we needed!

I will say this. We are all getting the travel bug and I think a nice trip, paid for with a "trip budget" and not with a credit card, will be a fantastic reward. Unfortunately, we will not be in a financial position by this summer to go to the World Cup in South Africa, but my goal is to be in that position by the next Cup in 2014!

It's December and we all know what that means. Christmas shopping! Well, I'm torn. I want to enjoy the season of giving without being stressed out about backsliding on my debt butt kicking routine that is now finally back in full swing since my layoff.

So part of me wants to go VERY light on gifts, in which case I run the risk of being a scrooge this Christmas.

And the other part of me wants to use my monthly debt attack amount to buy Christmas gifts for everybody; which of course knocks me back a month on my debt pay down goals.

I guess the answer is, what will my kids remember when they are grown and raising their own family in 10 years and our debt is ancient history?