Credit Card

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Piggy BankAs I peruse all of my banking websites this morning, I’m finally starting to notice rates dropping in accordance with the fed rate drops over the past few weeks. Citi, Chase, Bank of America…

Okay, well, not Bank of America, but I think they’ll come through eventually.

It’s nice to see credit card rates dropping from 17.99% down to 15.24%. Sadly, these relatively large drops are all coming on cards that I’m not carrying a balance on anyway.

The one card I do still carry a balance on in with Chase. In the past month, the APR has dropped from 18.99% to 17.24%. That’s a good thing, though it’s not affecting me because my entire balance is sitting on a 4.99% promo rate. Drat. Foiled again…

The other place I’m seeing a rate change is on my ING account.

Dropping.  Like.  A.  Rock.

It was only a year ago that I started using a savings account — the rate was up above 5%. Now, it’s 3.348%. That’s too bad.

Just as I find myself finally overcoming debt, the interest rates start to work against me again.

Yep, it’s me against the man.  It’s personal.  (okay, that’s a little over the top…)

In the grand scheme though, I’m really glad that I’m finally digging out of the hole when I am. With all this news about a recession (I don’t see it coming personally), slumping home values, rising gas prices and, I dunno, total world destruction, it’s nice to know that 95% of it doesn’t affect me at all… other than that crappy 3.348% rate.  

And that costs a guy like me, what, maybe $20/year?

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Okay, so January isn’t quite over yet, but you get the idea.

I didn’t really have any New Year’s resolutions, but I did lay down a few goals for 2008 and I guess now is as good a time as any to see if things are still on track…

Eliminate all credit card debt by the end of June 2008. Current credit card debt is $10318. I’m aiming to achieve this goal slightly ahead of schedule, by about a month, according to the snowball plan I started in November.

Progress is far ahead of schedule on this goal. This morning, my total credit card debt is under $5000 and with Thursday being another pay day, it’s likely to fall even more by the end of the month. I’m hoping to have all of this wrapped up by the end of March now.

Eliminate PMI from the Mortgage by the end of December 2008. Right now, it’s costing me over $1000 per year. For what? Nothing. To meet this goal, I’ll have to contribute an additional $160 per month towards my mortgage.

I’m on pace for this, though it doesn’t really feel like it. At the start of the year, I began throwing $125 towards the principle each Monday. So, with the extra payments this month, I’ve climbed $500 closer to my target of $6100. In total, I have $5124 left to go.

Pay off my auto loan by the end of December 2008. Current balance is $7418. This is also included in my snowball plan and it’s scheduled to be paid off in October if all goes as planned. I’m not looking to speed this up; just finish it off.

Nothing worth mentioning on this one. I’m just making the payments…nothing extra. This goal comes in a distant second to the credit card goal. Current balance is $7177.

Increase my 401k contributions to 15%. This way I’ll receive the maximum match allowed from my employer. Right now, I’m contributing just under 10%. I’ll plan to make this move once the credit card debt is eliminated. Achieved 12-27-2007

I achieved this goal before the year even started, but with the way the markets have been going, my increased contributions habe only resulted in larger losses. That’s okay though — in the long run, it will be a very good thing that I got this back up to the full match percentage when I did.

Increase my passive income. Now that I’ve dumped my largest client, the hockey team, I’ll soon find myself bringing in a lot less income. But, I also find myself with a lot more free time. Free time that I should use to optimize my other ventures to make up the difference; except now I’ll focus on more passive income streams because, in all honesty, I’m tired of working so much. Right now my 100% passive income hovers around $50/month. With the least effort possible, I’m looking to triple that in 2008 and pick-up a few low maintenance clients as well.

I’ve made a few moves in the past couple of weeks to get this goal on track, but nothing really impressive. I missed out on a generous advertising opportunity last week because I took too long to respond to the email offer — but that won’t happen again. I’ve got everything forwarding to one address now so nothing sits and waits for a week. Eitherway, things are headed in the positive direction. Passive income for January is looking to top out around $80.

$10k in savings. This is my lofty goal. I’m not sure it’s even possible. Right now my ING account is holding a mere $1k. No matter how far rates fall, with a 5-figure balance working in my favor I’ll have to be making atleast $1/day in interest and for whatever reason, I like that. I’d also like to pay for some still needed interior renovations in 2008 with cash and this is where I’ll draw from.

I’m tanking on this goal. On January 1st, I had around $1000 in savings. Today, I’m well below that, and the interest rate is falling so I’m not real *excited* about trying to right the ship on this one. I haven’t thrown in the towel just yet, there are 337 days remaining in the year, but I’d be shocked if I come close to realizing this goal.

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NHL Credit CardThe last time I did this was back in June of 2007 and I thought that with just having eliminated two credit card balances recently, it might be a good time to go back and see how the landscape has changed.

This is a list of my open credit card accounts as of January 2008:

Bank of America Business MasterCard
Originally an MBNA account before they were bought out by Bank of America, I opened this account in March of 2005 when I started to divide my personal and business expenses and keep track of them separately. Turned out to be a great move as it was shortly there after I realized how much money I was bleeding on business expenses. This is currently the only card I carry, but I rarely pull it out.
Balance: $0
Credit Limit: $24200 (up $2000 since last update)
Rate: 9.9%

CitiBank AT&T Universal MasterCard
I opened this account in April of 2007 utilizing a 0% for 12 months offer. I wrote a $6000 check to myself, which I originally dropped into my ING Direct savings account to jump on the “arbitrage” bandwagon. Shortly afterwards, I pulled the money out to finance the siding project. As the original plan was to make money on this card, I do not carry it in my wallet — though in the near future I plan to use this card for personal expenses as it’s the only card I have with a “rewards” program.
Balance: $0
Credit Limit: $8500 (up $1700 since last update)
Rate: 0% until April 2008, then 13.81% 13.48%

Chase Bank Visa Card
This was one of my first credit cards. I opened the account in 1998 and it was one of the cards that I ran up a considerable balance on before I got my act together. The highest it ever went was $12905 and that was in October of 2005. By August of 2006, I’d eliminated the balance, but continued to use the card for gas and the occasional purchase. Balance was always paid in full each month. In June of 2007, I took advantage of a 4.9% for the life of the balance offer to fund the siding project. As a result, I no longer carry the card for expenses.
Balance: $5227
Credit Limit: $19200
Rate: 4.9% 17.27%

Bank of America NHL MasterCard
Another of my original credit cards originally opened through MBNA in 1997 for a free t-shirt. This is also another card that I ran up a 5-figure balance on. In May of 2004, it topped out at $10915. By November of 2005, I had wiped the balance out. Now I have my internet service provider automatically bill to this card each month, and like clockwork, I pay back the $42.95 automatically on the same day using an autopay set up from the MBNA days. I do not carry this card and have not carried a balance since November of 2005.
Balance: $0
Credit Limit: $27400 (up $4600 since last update)
Rate: 20.99%

Bank of America Platinum Plus Visa Card
Originally opened in March of 2005 as a failed plan to use balance transfers to consolidate balances at a lower rate. At first I transferred $5000 to this card. Evidently, not having learned my lesson the first time, I transferred another $5000 to this card in March of 2006. Luckily the rate was only 6.25% for both transfers. I wiped out the balance, which topped out at $6925 in March of 2006, in January of 2007. I do not carry this card and don’t ever plan to use it again.
Balance: $0
Credit Limit: $15400 (up $1400 since last update)
Rate: 18.24%

Bank of America GoldOption Loan
This was a loan for $10000 I took out in December of 2002 to, again, consolidate a few balances and put some much needed cash in my hands. At the time, it was LendingTree.com that found me the loan at 9.9%, and when the big check made out to me came in the mail, it was from MBNA. After a couple years of paying it down in regular $226 intervals, MBNA sent me a credit card attached to the account and started treating it like a credit card. With each month, the rate would rise another half percent or so. Not cool. I made my final payment in March of 2005 when the rate had climbed to 13.24%. I do not carry this card and don’t plan to ever use this line of credit.
Balance: $0
Credit Limit: $13700
Rate: 24.99%

I think it’s funny how each month I get correspondence from the banks notifying me of credit limit increases as an attempt to lure me back into using their card. Hasn’t worked yet — though some of the included promotional teaser rates are attractive enough to get me to read the fine print.

My total credit limit has increased $6000 to a total of $108400 over the last 6 months. In theory, it’s comforting to know that if push came to shove, I could charge 6 figures. That’d be crazy though.

At some point, I’d like to sit down and figure out how much it actually cost us to finance the siding project using credit cards though. At the time, it wasn’t exactly what I had in mind, but now that it’s nearly paid for, it may have actually worked out to be a pretty good move for us (compared to alternatives like a home equity loan) in the long run.

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CitiBank LogoI’m pretty proud of myself.

On December 17th, the balance on my CitiBank AT&T Universal MasterCard was $5000. This morning, this being a pay day, it’s at $0.

Even better, it was less than a month ago that I eliminated my balance on my Bank of America Business Card.

Two credit cards gone in the span of a month!

Two down, one to go — and the remaining card’s balance is just over $5000. Can I keep pace and wipe that one out by February 17?

Probably not.

But still, this puts me a good five months ahead of schedule on my snowball plan.

Sure, that may indicate I should have set out with a more aggressive strategy from the get-go, but I’m still perfectly happy with how things are coming together.

Well, except my checking account balance. Have I mentioned that I’m broke yet?

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The VaultIn another month or so, if all goes as planned, I’ll be out of credit card debt 100% for the first time in over a decade.

The deepest I found myself was $29k in November of 2006.

At the time, I was carrying around $l7k in credit card debt (down from $26k two years earlier) and I had just taken out a $12k loan from Bank of America (that turned out to be a credit card too) to have the roof of my house done.

Coming that close to $30k scared the crap out of me. I had worked so hard to get it down to $17k… only to be deeper than I’d ever been after one signature. That’s when I got serious about dropping the debt fast.

I started transferring balances — seriously this time — to take advantage of lower teaser rates and stopped using all but one of the cards. It wasn’t until November of 2007 that I started a snowball plan.

This time my plan worked. I don’t know how we paid off so much. I don’t where the money came from. I mean, I keep track of every penny using MS Money, but the thought of paying over $20k and receiving nothing in return is hard to fathom.

You just don’t have $20k of “extra” money, you just don’t.

But somehow, we came up with it, and sent it all to the fine folks at MasterCard and Visa.

Right now, this morning, my credit card balance stands at $5226.53. At my current pace, that number will be zero at the end of February. Maybe the first week of March… Depends on what we do with our tax refund.

I know I still have the outstanding car loan. I hate it when people call something “good debt”. My car loan is at a 5.35% interest rate. I’m around 5 months ahead on it and the payments are within reason. Basically, it’s a tolerable monthly bill or, ahem, “good debt”.

That said, I’ll likely go another 3-4 months like I have been and wipe that debt out too.

Then what?

In anticipation of this looming achievement, I’ve already increased my 401k contributions to get the maximum employer match, I’ve accelerated my mortgage payments, which I know some people don’t think is a good idea, but it’s mainly to eliminate the (overpriced) PMI I’m paying each month, and I’ve already got a plan in the back of my head to start putting more in savings.

So with all of that already on the go, when I get out of debt and if (a big IF) all of that proposed “extra” money materializes, over the next few years I want to:

  • Quit my extra job. (oops, jumped the gun on that one!)
  • Start a family.
  • Take a real vacation.
  • Have the entire first floor of my house remodeled. We’re talking the works. New floors, walls, ceilings, electrical work, plumbing…
  • Buy an all new living room set with a sectional couch so we can both sleep comfortably when football is on.
  • Have some trees removed and then have other areas landscaped professionally.
  • Tear down and build a new garage.

Best of all, I want to be able to pay for all of these things without carrying a balance. It just *might* be possible.

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So I went to throw a little bit more at my ATT Universal credit card this morning and came up with this:

Online Payment Error

If you can’t read it, it states, “You are permitted 4 online payments per billing cycle. You have already made 4 payments totaling 915.00 this billing cycle.

I like how they call it an “Online Payment Error.” Ha!

I understand why they do this — fewer transactions on their end to deal with and, well, more finance charges to be handed out at the end of the cycle too.

A little crooked, eh?

Anyway, I think it sucks.

Brainy SmurfWith all remaining bills for 2007 paid already, it’s time to start looking ahead to 2008. This will be my official “Goals for 2008” posting. Earlier this month, I had a preliminary version, but as I’ve thought about it some more over the past few weeks, there were a few things I felt I should add.

In no particular order:

  • Eliminate all credit card debt by the end of June 2008. Current credit card debt is $10318. I’m aiming to achieve this goal slightly ahead of schedule, by about a month, according to the snowball plan I started in November. Achieved 03-27-2008
  • Eliminate PMI from the Mortgage by the end of December 2008. Right now, it’s costing me over $1000 per year. For what? Nothing. To meet this goal, I’ll have to contribute an additional $160 per month towards my mortgage. Achieved 07-08-2008
  • Pay off my auto loan by the end of December 2008. Current balance is $7418. This is also included in my snowball plan and it’s scheduled to be paid off in October if all goes as planned. I’m not looking to speed this up — just finish it off. Achieved 09-25-2008
  • Increase my 401k contributions to 15%. This way I’ll receive the maximum match allowed from my employer. Right now, I’m contributing just under 10%. I’ll plan to make this move once the credit card debt is eliminated. Achieved 12-27-2007
  • Increase my passive income. Now that I’ve dumped my largest client, the hockey team, I’ll soon find myself bringing in a lot less income. But, I also find myself with a lot more free time. Free time that I should use to optimize my other ventures to make up the difference — except now I’ll focus on more passive income streams because, in all honesty, I’m tired of working so much. Right now my 100% passive income hovers around $50/month. With the least effort possible, I’m looking to triple that in 2008 and pick-up a few low maintenance clients as well.
  • $10k in savings. This is my lofty goal. I’m not sure it’s even possible. Right now my ING account is holding a mere $1k. No matter how far rates fall, with a 5-figure balance working in my favor I’ll have to be making atleast $1/day in interest and for whatever reason, I like that. I’d also like to pay for some still needed interior renovations in 2008 with cash and this is where I’ll draw from.

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Bullwinkle J. MooseYeah, it’s a little early for this, but I’m gonna do it anyway.

First and foremost, my goal for 2008 is to eliminate all credit card debt. This should be completed sometime during the summer of 2008. Done. Finis. Finished.

I’ll still use the cards, I just won’t carry a balance.

Next goal will be to eliminate PMI insurance from my mortgage. This has been costing me an additional $85/month for the past five years. When rolled into the mortgage, it doesn’t seem like that much, but when you do the math, that’s $1020 per year, or another $5100, that could have gone towards the principle.

To meet this goal, I’ll need to knock around $6000 from my mortgage balance.

Broken down, each regular payment in 2008 will pay down around $191, or around $2300 over the year. Right now, I toss in around $150 extra per month, or an additional $1800 over the year.

Combined, that’s a $4100 drop in the principle over the entire year just on its own.

I’ll need to step up an additional $1900, or around $160 per month to meet the goal. Considering it was just last week that I contemplated throwing an additional $250 per week towards the mortgage — this goal should be a sure thing.

The last goal isn’t really a financial one…

I’m going on vacation this year. My wife and I haven’t gone on a vacation since 2004 and that one was a rather miserable camping-in-the-rain experience — though we did see a bull moose up close. That’s much too long to go without a vacation. We should probably start planning it now!

That’s it.

I’m sure I’ll add to it before month’s end, but for now, this works.

Can You Dig It?

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