Friday, March 17, 2017

Amount owed... $0.00

Yesterday, I paid off my last credit card.  This is the first time since the mid 1990s that I haven't owed anything on a credit card.  I had to pay them off before I went in the Peace Corps, but then halfway through my time there, it became possible to get cash advances from ATMs.  That's what I did those last months to stay afloat... and to be honest, I was pretty tired of not having enough money.  My mom kept the minimum payments up for me.  Then I went to Europe after the Peace Corps and ran it up to a couple thousand bucks, which seemed insane at the time.

The years after the Peace Corps were financially challenging.  I didn't make a lot of money and went off to graduate school, where I became more indebted.  Then I married Bill, who was broke.  It wasn't until about 2007 that things started getting better for us financially.  He went to Iraq and earned extra pay.  I put it toward paying off his debts and reducing my debts.  Then we went to Germany the first time, where we got extra money for utilities that we never used.  I used that extra money to pay off one card and pay down another.

Last time we were here, I also talked Bill into refinancing our car loan.  It wasn't easy to do that, because he was still very ashamed of his financial nightmare history with his ex wife.  They had gone through bankruptcy and foreclosure and he was afraid if we tried to refinance, we'd be turned down.  As it turned out, PenFed was only too happy to refinance our car loan at a much more reasonable interest rate.  Suddenly, our $500 payments to Toyota Motor Corporation were cut in half and going to PenFed.  When we bought me a new car in 2009, they financed that loan, too.  And we paid both cars off early.  We are still driving both of them.

By the time we left Germany in 2009, I had almost paid off my second credit card.  But then we got to Georgia and I decided to buy a bedroom set because I didn't want to sleep on an air mattress for a month.  I also bought us a refrigerator because the house we rented didn't have one.  Up went the bill again and it's taken me since then to get it completely paid off.  I was getting close when we were in Texas, but then I had to use it to pay for moving expenses.

When we got back to Germany in 2014, my bill was well over $10,000.  It's taken me a couple of years to get rid of the debt.  Until recently, we were spending over $1500 a month on my two credit cards alone, aggressively attacking that debt.  Now that money can be used to pay off Bill's credit card.  Then we'll put the extra money into savings so we can finally buy our own house someday.

I will probably incur new debt in May because that's when we're paying off our next cruise.  But I already have some money saved to pay down that bill.  Aside from that, Bill told me last night to up my student loan payments.  I am already paid ahead by almost $13,000, but with this new aggressive payment schedule, I will probably have that debt paid off in about two years... if we are able to keep it up for that long.  Once that debt is gone, it'll be GONE.  We won't have to worry about it anymore.

I've learned that it really does make sense to "pay yourself first", if you can.  Put money in savings and pay more than the minimum on debts when possible.  For instance, when I started paying down debts, I started small.  I added another $20 to my student loan payment.  It wasn't much, but pretty soon, that massive loan payment started to look more whittled.  Gradually, as we could afford it, I added more to my extra payments.  Instead of $20, I paid an extra $50.  And so on and so on until the extra money became very substantial and really started making a dent in the loan.

I am now paying quadruple what that initial minimum payment was in 2007 (granted, the minimum payment did balloon in 2011).  My original minimum payment before the balloon was $180.  In 2011, the minimum payment went up to $389, but I was already paying close to that voluntarily and was paid ahead on the loan.  It wasn't too painful to adjust to the new minimum payment and before long, I was paying significantly more on the minimum for that, too.  As of last night, I'm voluntarily paying $1000 a month so I can get rid of the debt sooner.

The faster you pay off the loan, the cheaper the loan ends up being and the more you can afford to pay it off sooner.  If all goes according to plan and I succeed in paying off that loan in two years, I will have finished about eight years ahead of schedule.  That's a lot of interest we won't have to pay.

Of course, there is no way in hell I would have been able to accomplish this goal without Bill's cooperation.  When I told him what it would take to finish paying for grad school, he told me to go for it.  I told him I wouldn't divorce him when the last payment goes through.  Of course I'm kidding.  I wouldn't divorce him anyway.  He's an amazing guy.

We've been blessed with good luck and good health.  Parental alienation also spared us from having to put Bill's ex kids through college.  The military lifestyle spared us from having a mortgage.  And it's only a matter of time before I owe again.  But for now, I will enjoy being more debt free.  It's a good feeling.

It may take time and effort to develop the mindset of paying yourself first and paying off debt faster, but it really works in getting finances under control.  After awhile, saving and paying ahead becomes less painful and more rewarding.  That's my pearl of wisdom for the day.

ETA: I wrote about this topic in 2013, too.  At that point, I was only $4000 ahead on my student loan.

Moving on...

Yesterday's topic was revisited on Facebook when a woman, who is not American but is apparently married to one, wrote that she agreed with the German journalist that Americans are building too much on Panzer Kaserne.  She basically wrote a post shaming Americans for being wasteful and ungrateful for Germany's gracious hospitality.  A huge, all day thread began.  It's still sort of continuing.  The funny thing is, almost no one arguing about the new commissary that is slated to be built will ever shop there.  By the time it's operational, most of them will have probably moved on to their next station.  As for Bill and me, I don't know.  I have a feeling we could be in Germany for a long time if we don't get kicked out over Trump's antics.

Again... amazing what passes for controversial in these parts.

2 comments:

  1. Congratulations on having your credit card paid off.

    I haven't had to borrow yet. My mom said 18 months ago that I would be better off when the interest rates are low to borrow and leave my grants and previous earnings in longer term investments, but I really didn't want to get loans if I didn't have to have them.

    I bought a package of Little Debbie Swiss Rolls. They were quite a bit fresher than the Hostess Ho Hos that i had earlier in the week. The main thing I didn't like about the Little Debbie's version is that they come packed by two, which means you really need to eat two at a time, which I don't always want, and they come packaged atop a thin form of cardstock. The bottom of the chocolate covering on the Swiss Roll often sticks to the cardstock.

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    1. You're lucky you haven't had to borrow. I didn't start owing money until I was about your age and took out student loans for the first time. I also got my first credit card when I was about 21. I remember just a few years after I got the card, kind of rueing the day I gave in... But I have learned that if you're careful, a reasonable amount of debt can be a good thing. If anything, it shows people that you can borrow money and pay it back.

      I'm surprised you weren't turned off by all the chemicals in the creme filling.

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