Friday, April 08, 2005

Paying off Credit Card Debt

I've decided that I'm going to transfer $3000 from my VirtualBank eMM account and go ahead and pay off my credit card debt.

I know some of you are likely saying: "About time!"

Yeah, I guess sometimes I'm a little slow to come to realizations on certain things. It definitely makes more sense for me to do this on several levels.

1) My job is fairly secure, I don't fear losing it and needing to depend on emergency funds anytime soon.

2) If I did happen to have some sort of emergency, I could then use the paid off credit card.

3) Paying off the card means I'm not paying interest on that debt any longer, and also means I have one less monthly bill to pay. (Simplifying my life...)

4) I can then take that monthly payment I would be using to pay the credit card, $100 or more, and split it between the VirtualBank, ING Direct and my car payment.

5) With the savings of that interest, my savings accounts will be worth more, because the interest I'm gaining on those accounts won't be offset by the interest I'm losing on debt.

6) This will leave me essentially just one source of debt to my name...my car payment. My life will be simpler, as noted above. My monthly payments will now be:

Rent
Car Payment
Cable/Internet Service
Vonage Phone Service
Car Insurance
Electric Bill
2 Savings Accounts
Food
Gas (hoping to pay that using PayPal debit card each month)
Recreation

2 comments:

Amy said...

I know what a scary step that was, and you should be proud of yourself for making the decision that makes the most "cents"...I love the feeling that thousands in the bank gives me, but I hate the debt! So, congratulations.

Cap said...

did the same thing a few months back. took 5 grand out of ING Direct and paid off my CC. even though I had super low interest rate... I decided I'm okay for now, and even with low interest rate I'm still paying $20 or so per month on interest. Its nice to have the "secure" feeling of the liquid.. but its nice too to see the $0 balance in the CC line.

plus, my credit score went up cuz utilization pretty much went down 70% :)