The Glass is Half Empty (And That's a Good Thing)

In September 2011, I was sinking in credit card debt of just over $38,000.  Over the years, I had placed in my figurative glass IOU after IOU for the credit card companies.  A trip to England?  No problem: I'll owe you.  A new computer?  Easy: I'll owe you.  Emergency car repair?  That's no fun, but sure: I'll owe you.

When my 13 year old vehicle was giving me major issues and I realized that I wouldn't be able to afford the cost of repairs or a new-to-me car, that's when I realized how much trouble I had.  I was making minimum monthly payments on my credit cards; I never missed a payment, but I also kept on tacking on more debt.  So my debt-to-credit limit ratio was always worsening.

I was in a panic and feeling nearly hopeless.  The best advice I received was from a colleague who said I should consider a debt management plan.  I set up a phone appointment with a financial counselor at Money Management International (MMI).  We went over all of my income, debts, and other obligations.  She helped me create a manageable budget and agreed that a debt management plan would work well for me.  The plan reduced my credit card interest rates by a great deal, but all of the cards' accounts would be closed except for one.  And I wouldn't be permitted to use that card while I'm paying off debt; it was just to keep some credit history.  I would pay a $30 monthly fee to MMI, which was pocket change compared to the significant savings from the lowered interest rates.  The remaining $860 would be divvied out by MMI to the credit card companies.  And I'd be on this plan until January 2016.

I've stayed true to this plan, and I'm happy to say that this coming week, I'll make my 29th monthly payment of $890, and as a result, my glass of IOUs will officially be half empty.  50 percent of the credit card debt has been paid off, and I presently have about $19,000 in credit card debt.  It's still a large figure, but it feels important to celebrate this milestone.

Since September 2011, I made a number of changes to how I earn and spend my money:

• Increased my income a bit by taking on additional hours working occasional events
• Reduced my cell phone bill by switching to a no-contract company called Ting; my monthly bills went from about $75 to $30
• Automatically transferred $100 every month to a savings account for emergency purposes
• Stuck to a budget on dining out, entertainment, etc. (sometimes I do overspend in one of these areas, but I compensate by reducing my spending in another area that particular month)

I frequently look for good deals where I could save money.  Little things, like paying 10 cents less a gallon by signing up for a free plan with a gasoline company.  Buying generic name foods at the least expensive grocery store in town.  Buying in bulk at lower cost at places like Costco or on-line when it makes sense. 

I still participate in my daily pleasure of buying a mocha latte, and certainly I could have saved considerably more money by making my own coffee, but I decided I wanted to retain something I could enjoy on a regular basis.  It's worth it to me.

I have two years remaining until my figurative glass is empty.  Into that glass, I'll be able to put in what I want to.  More savings.  More investing.  More discretionary fun, but within my means.  Better positioning to make major life decisions.  What a relief that will be to have such financial control and flexibility.  And that will be the difference: I will control my finances; they won't control me.