Big Brood

According to this article on Yahoo Finance, MasterCard is finding quite a bit of profit from other countries even as it gets more business in the U.S. from consumers desperate to cover their bills in a down economy.

As much as Goose and I have found credit cards to be useful, I’ll be glad when we are out from under them. We have spent years shifting some floating debt around on 0% interest cards, rather than paying it off like we should. While this has helped us to live a little “faster” than we could have, we now regret this.

The truth is, we came to a point where our monthly bills nearly exceeded our monthly income. Our credit card debt was increasing due to sloppy buy habits and this was making it hard for us to meet our other obligations.

We were working for Mastercard and Visa rather than for ourselves.

Now, we are on a road to recovery and we are looking forward to keeping our money out of the hands of credit card companies.  So far during our recovery we have had a fairly rigid “no credit” policy.  So far, we have slipped a couple of times but paid off the new balance at the end of the month.    I’ll post later on how we are doing and what our plans and techniques are.

Have you had problems with your credit cards?  What have you done to avoid using your cards?

Well, my Goosey mentioned our 10 year old car for which we still have a loan. She didn’t want to go into an explanation, but I will. This car was our first foray into mini vans. It served well enough for its time but is starting to really give out on us at an accelerating rate. Here’s how we did. Don’t try this at home.

1. Buy new Jeep Cherokee that you love and you think will grow with you well. When you do buy it, pay too much and don’t negotiate with the dealer.
2. Have a second child and discover that it is getting really packed inside the backseat. Discover that you can’t haul nearly as much stuff as you’d like.
3. Trade in your nice Jeep Cherokee for a 2 year old fancy minivan. Again, don’t really negotiate except to ask for slightly lower monthly payments. Make sure to get the 5 year loan. Oh yea, since you’re a little upside down on the Jeep, just add that amount on top of the loan. Boy, that dealer sure is helpful!
4. Run the minivan for a couple of years, then decide you’d like even lower monthly payments. Refinance it at a much lower monthly payment, fully intending to make extra payments. Oh yea, get another 5 year loan. Then your required payments are REALLY low.
5. Don’t make the extra payments.
6. Fast-forward 4 more years. You’re still paying for that car. You hate that car. That car is falling apart, but you’re so upside down on that car that you can’t get rid of it without losing your shirt. Hate car. Hate it! We hates it! It burns! It burns……!

Then….

1. Get tired of paying for the car and finally accelerate payments.
2. Save a whopping $0.03 in interest by paying it off early.

Many of these decisions we made thinking that we were doing the right thing. We really DID need to lower our payments because of lower income. But, I’m still in that car!

Here are some things that someone who doesn’t love servitude to rust buckets might do:

1. Buy used! Most of the depreciation for a car happens in the first year or two (think 20-40% of the original value).
2. Negotiate! I plan to post on this more later, but negotiation is great to save you money.
3. Pay cash! Yes, it can be done. We’ll discuss that in later posts.
4. Make your extra payments automatic. Some companies will make this difficult but you should be able to do it in some way. Call them up and ask. Also be sure to ask if there are any prepayment penalties.

Back in early November gander and I took a look at our finances and decided we were at best going no where fast and more likely on a sinking ship. Together we headed down the debt reduction road once again. I say once again because we have done this several times before. We have taken tax returns, bonuses, etc and paid down credit card debt to zero (or nearly zero) only to be lured back into our consumer world thinking we should spend money on things we didn’t need and certainly couldn’t afford.

We are trying something a little different this time. We are communicating. It seems obvious but we have lacked this in the past. It is much easier to slip back into bad habits when you don’t talk about spending, purchases, etc with your spouse. It has taken us almost 12 years of marriage but I think we are starting to figure a few things out! I did say starting!

We also decided we would keep ourselves motivated by taking a special trip or buy something special to reward/motivate ourselves whenever we get a large bill paid off. Since our current endeavour began in November we have paid off 2 big bills and are chopping away at a third, Gander’s 10 year old rusting minivan (don’t ask why we still have an outstanding loan on this, sigh). Gander and I took a much needed overnight date night last night. We had the youngest gosling with us, but other than that it was just us. We had several “quiet” meals together and got a lot of chatting done. It was very refreshing and really helps us to keep our perspective.

So the other goslings don’t feel too burdened by our debt reduction plan (and the sacrifices they have been making like very few trips to the “big M”) we will treat them also, we will be going to an indoor water park next month. That will get us up to date until the next debt has been eliminated!