My Finances: Deconstruction and Rebuild

So now that I’ve examined some of the how and whys behind my spending I think its time to deconstruct my finances a bit more and rebuild them the way they really should be rather than the haphazard way they exist now. I have learnt that I need to plan and budget and that these budgets need to be enforced for them to work. I might not make as much money as I did in the past but I make enough. Its time to look at my expenses and figure out a good approach and plan to keep everything in check while starting to save money and get out of debt.

First off I’ve got a significant amount of debt, still, and this really needs to be cleared up and I’ve got to start using credit cards not as a form of cash but realistically as it should be: a short term loan to cover an expense that is more than I have. So how much debt do I have kicking about?

  • Credit card #1 $6,675
  • Credit card #2 $5,085
  • Line of Credit $14,500
  • Car Loan $13,885
  • Yearly Marina fees $1,500
  • Owing Marina Fees: $300

Minimum Payments:

  • Credit Card #1: $75
  • Credit Card #2: $205
  • Line of Credit: $460
  • Car Loan: $162.37 every two weeks set up automatically.

Unfortunately for me the yearly marina fees are simply something that I’m going to need to pay off, and I’ve cleared some money out of my savings (mutual funds) to deal with this. So it’ll dent my bottom line when it comes to my net worth but it won’t be a mental burden.

Now I like the snowball method of paying my debt down; I’ll start with the lowest limit card for one primary reason – it has the highest interest rate. The line of credit and credit card #2 are with the same bank. I have no problem keeping my line of credit at its limit while paying down the credit card. So the plan for the next few months will be to pay my line of credit on time and whatever I can pay up to my limit will go directly onto credit card #2. This should translate to about 300 odd dollars going to pay it down. This payment will be above the minimum limit and should allow me to bring the debt down a bit faster. I would destroy this card but I have no emergency savings and as a result I’m just going to take the card, all credit cards out of my wallet. The next thing will be to make sure all the minimums are met with the other cards/loans.

Paying off Credit Card #2 will take a while but it should be quite doable, the key it so keep spending down to a minimum and to ensure no additional debt is accrued. No more impulse spending and I have to keep the escapist spending down to an absolute minimum.

I think the debt needs to be brought under control and reduced considerably before any significant saving can be made. I have a wedding to pay for and any saved money will need to go to this before it goes into an emergency fund.

[tags]money, paying debt, debt, money, finances[/tags]

2 thoughts on “My Finances: Deconstruction and Rebuild”

  1. Since you already have the LoC set up through your bank, why don’t you approach them and move the balance from Credit card #1 to the LoC, and cancel it. Then moveth Credit Card #2 to the LoC and keep the credit card empty, then just pay on the LoC as one bill?

    It will probably save money in the long run, and I’m sure the bank it’s through will love the extra business.

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