I’m not sure I’ve shared this little secret with you, but Eric and I had the majority of our credit card debt on one card–which has a 0% special interest rate. We moved over two balances from two different cards back in April and May and qualified for this special interest rate, until December 2010 for one balance, and April 2011 for the other balance. We did have to pay an additional 3% of the balance, but that was much better than paying 10% interest every month.
This special 0% interest rate is what has allowed us to sock away money into our savings while still paying off big chunks of money on this credit card. The other credit card we use is paid off in full every month and is used to earn points for gift certificates.
Anyway–the first balance on the 0% card was due Dec. 1, 2010 and then we would start paying interest. The balance we transferred in May wasn’t due until April 2011. So what did we do? We paid off the Dec. 1 balance which left us with $1499 on the card, which we assumed would be due by April 2011 (before we would start paying interest).
But what do the mean nasty credit card companies do? They pay off the April 2011 balance first, (even though that balance was transferred SECOND) which means the first balance transfer we made is now due Dec. 14 or we’ll start paying interest on it.
I called and argued my case, but that’s just the way these things go. So we had a choice–we could pay interest on the card and stick with our plan of paying off credit cards by April 1 OR we could take the money out of our savings and be credit card debt free and just start putting a ton of money toward savings rather than interest.
What do YOU think we did?
Yup, as of today, our savings account is now at about $750–way below the $2,000 minimum I like to keep in there. But what this does mean, is that by Jan. 1, 2011, we will be credit card debt FREE (still waiting on that $1500 freelance check!) and we can work on pumping up our savings account until August when Eric will go into the fire academy full-time and we’ll be living off of my paycheck. Doesn’t seem so shabby now after all, right?
It almost makes me think we should have done this sooner! Although granted we didn’t have all this money in savings six months ago. A savings account is great for all those unexpected “surprises” that pop up, such as car repairs, vet bills, etc. I think we’re still safe with $750, but I always like to keep it padded just in case.
Let’s hope this plan sticks and no new surprises come our way…
What do you think of our plan? Did we make the right decision? Any recommendations?