Guess What?!?!!?!? I'm Debt Free!!!!!

This week, I paid of the remaining $1600 and change to my last credit card. It is done. Finished. Finito. The End. I am completely out of debt. I am so excited about this! After years of struggling and not being sure I could get it done -- and missing my original payoff goal of April 2012, it is finally done. I paid my standard $500 per month, then used most of my regular savings account balance to wipe the rest out.

It kind of feels weird... as in what do I do now? One of my friends told me that I should do something big and fun to celebrate! That sounds great, but blowing a ton of money just seems wrong. I thought about it long and hard, and I think my celebration will be to get my and the Princess's hair professionally cut and colored and our eyebrows done. This may seem silly, buts its been years and years since I had my hair totally professionally done. My haircuts have consisted of quick trips into Super Cuts and my grays have been covered by at home kits. Given that I have a 25 year class reunion coming up.... well, vanity thy name is Sass! It also rewards the Princess --- as she has been on board with the getting out of debt thing. I think it is probably a LOT easier to get out of debt when all household members are on board.

And don't worry, while a "pro" will be doing my hair, I won't be paying Salon prices for it. A friend of mine does hair, and she's REALLY good at what she does, and she's offered to come to the house at a discounted rate to do it. Hooray for frugal indulgences!!!!

So, the next step is where to go from here. While it would be GREAT to be able to adjust my standard of living a bit, its just not possible. My car is 13 years old --- and while it is doing great right now, I know its just a matter of time before it is not so great. Then there is the Princess's college -- that is going to take some serious bites out of my bank balances. And then maybe one day, a home I actually own. All of these things combined mean that $500/month I was paying towards credit card debt needs to get banked. So no lifestyle inflation for me. Darn it.

Putting that $500/month into savings will help me restore my savings levels in just about 2 months. So, here I go.... debt free, but not out of the woods yet! Wish me luck!

Almost There

Back when I started this blog in 2011 I was over $11K in debt. That was a scary number. Over a fourth of my gross annual income. Since then, I'm down to 2.5K. I probably could have paid it down a bit faster --- my actual goal was to pay it off before the Princess graduated high school. That didn't happen. However, I'm in actual reach now of paying this stuff off --- not way out in the distant future..... but in July. As in NEXT MONTH.

It will take some tweaking and some sacrifice, and essentially wiping out my liquid emergency fund.... but it will be worth it. (So that y'all don't think that I'm totally crazy, I have other money placed in an account that's just not as easy to get to should Murphy come a calling). I also have tuition put aside for the fall so I'm not just completely wiping out any and all safety nets.

So, I'll put my general $500 in this month and next. Then I have another $236 to apply (state tax refund), and likely another $100 coming in from another source. That puts me at $1336 paid. I then also have $1300 sitting in that pseudo emergency fund. That's $1636 (which gives me wiggle room for interest charges in that time period). And voila! I'll be done. Finished.

The tempting thing to do would be give myself a little lifestyle inflation once I get to the zero debt point. Tempting, but that won't happen. It CAN'T happen. That money that I've been putting to debt repayment now has to be put to good use. Namely, savings. My car is 13 years old. While I'd love to get another five years out of it, chances are that isn't going to happen. I'd like to have cash to pay for a new to me car. And if not cash.... well then enough of a downpayment to make those monthly payments really small. Also, there is still the matter of tuition. I'd like for the Princess to finish college with as little debt as possible. So I need to boost savings for that too.

With lofty goals like that... lifestyle inflation is out of the question. Completely and totally. Now if I can just make myself stick to that plan.

I Have a Rewards Card?

One of my credit cards, an American Express, is actually a rewards card. I kind of knew this, but never really paid much attention to it. That card is the one I paid off a year ago. Since then, I've put a few things on it, but nothing I couldn't pay off immediately. It was more of a "The Princess has my debit card, and I need gas/groceries/etc." type thing. So, since paying it off, I've used it very sparingly.

Then, during one of my visits with my Mom, she was telling me that she used her credit card points to pay for some of Christmas. It was then that I realized I too, had points accumulated on my card. So, I decided to look into what I could do with them.

While perusing the rewards site, in which I realized they had some really cool crap that I just didn't need, I noticed that there was a cash back option. Hmmmmm. Well, I looked into it, and realized that the "cash back" would be directly applied to the card. Well, pooey. I was wanting the cash back to pay onto the card that I'm still paying off!

So, I came up with this idea: Use the "points card" for groceries and gas and such, get the cash back I've accumulated as credit on the card, then use the cash that I would normally be using to pay for those gas and groceries, and snowflake them to the card with debt.

Clear as mud? Yeah, I had to explain it to myself 3 times to be sure I was understanding. But it worked. The "points card" has a zero balance, and the card with debt has an extra $100 paid towards it. I'm going to experiment with using the points card on a regular basis. I will be paying it off each week though (instead of each month) just to be sure I am keeping myself in check. I'm hoping that although its a SMALL cash back reward (just 1%), I'll accumulate a few extra debt snowflakes to move that balance down faster. Wish me luck!