I’m coming after you!
Are sleepless nights making me even more aggressive towards our debt? I think so!
As I mentioned in yesterday’s post, I have been experiencing a lot of sleepless nights over the amount of interest our debt is costing us. I spent several daylight hours focused on how fast we could eliminate $3,806 worth of debt to take full advantage of a balance transfer I received in the mail. Doing so would save us a small fortune in interest. Being a bit of a numbers nerd, I even ran some loose figures as to how much these balance transfers will save us. Between the transfer of a few days ago (giving us 21 months of zero percent interest) and the transfers pending paying off the $3,806, we will be on track to save over $300 worth of interest each month. Holy cow! It’s no wonder I can’t sleep at night thinking about this. The faster we can make this happen, the better off we will be.
With all this in mind, I did yet another small balance transfer. This one was for $1,500. Not a huge amount, but it will help us achieve our goal a month faster. Yes, it cost 3% ($45), but we also have 12 months to pay it off. I also figure that the savings of being able to transfer our other higher interest debt a month earlier will more than offset that $45. It also means we can start slamming a higher interest debt a month earlier as well. Once the dust settles, we will be looking at paying off five debts, which is what we currently have. The difference will be in that so much more of our payments will be going to the principle of these debts. What consumer debts will remain?
- One debt at 0% interest for 12 month
- One debt at 0% interest for 21 months
- One debt at 5.99% for life
- One debt at 13.99% interest (OUCH) until paid off or we transfer it to a lower interest rate
- One debt (car loan) at 1.99% fixed interest
The debt at 13.99% will also see a decrease of around $4,000 when we do the balance transfer. It will also take the #1 position in our sequence of what debt we will slam first. Before making all these changes, it was last. Who knows, another sleepless night might modify this figure, too. These days I’m feeling even more aggressive when it comes to doing whatever we can to pay our debt off. But when it comes to conquering a massive amount of debt, I think aggression is a good thing.
On average, the minimum payments (except for our car loan) is around 2% of the balance, so none of these changes affect how much we pay out each month. What does change is how much is now going towards principle rather than interest. I’ll play the balance transfer game if it gets us out of debt faster, which it will! As for any temptation to use the available credit that comes with moving debt around, I have zero desire to do so. Nope. It won’t ever happen again!
A comment left on yesterday’s post by Sluggy who blogs over at Don’t read this; it’s boring, nicely summarized exactly how I am feeling when she said, “While paying off smallest to largest and snowballing works for some, I’d be all over paying off the largest interest rate to smallest interest rate myself as that makes the most financial sense and will get you out of debt sooner.
I’d do the balance transfer if it’s a lower rate than what the transferred debt is at now.
Who knows?….you might get a better offer(0% interest or a lower rate) in a few months and you can always move the debt again.”
Good for you! The not using the paid off cards is the KEY to getting out of debt. Years back, I would do the balance transfers to get the interest and payment lowered, but then we’d use the card that it got transferred from! Granted, we weren’t in get out of debt mode back then – just trying to keep our heads above water with the monthly payments! So stupid! I was a viscous cycle. If you can do like you are doing, it will be a win situation to get out of debt faster.
OneFamily recently posted…The job this week
I agree about not using the cards as being key. Thankfully we’ve had no problem there as we are bound and determined to get them out of our lives for good. Meanwhile though, if doing a little juggling to reduce the interest we pay lowers the rate, I’m all for it.
That will be amazing to not be paying all that interest! Congratulations!!!
I’m excited to see how much it will benefit our debt pay off. It felt like we were making very little progress given the amount we were paying each month. This will make such an impact.
I have a friend who is very savvy. He keeps his financial life clean. However, he will go use a credit card and immediately pay it off when he gets home. The benefits of doing that pay off. He never charges anything that he cannot pay off when he arrives home! He keeps the offers for better interest rolling in.
Practical Parsimony recently posted…Total Eclipse–Part 2
I think we have reached a point that we could be that disciplined, although I’ll do my best to avoid taking a chance! I will keep our cards open while we pay them off, just for the sake of looking for better offers. I’m on a mission to avoid paying any more interest than necessary!
You know I have two bills with high interest rates and I need to see if I can get these knocked out. I could ask the bank I suppose but I am scared. Then I think why? I mean really? I will surely get the Studio card rewritten asap. I have been working on it with the company but they don’t have any offers right now. I could borrow against one of the cars, and then I think, no you got yourself into this now get out without jeopardizing your ability to replace the car or the truck if need be. It is just hard to make these decisions.
I did the first transfer totally on a whim. I had been hesitant for fear of rejection, but then figured I had nothing to lose. This other offer came in the mail from one of my current accounts. Seems strange to say that I am hustling to get it paid off so I can charge it right back up. At least it is for good reason, to get a much lower interest rate. The Beautiful thing is you can do this right on line! Give it a try, you just never know and might be pleasantly surprised at their answer!