Wednesday, September 12, 2012

How to Get Yourself Out of Dumb Debt... I Hope

Confession: I am still a bit swamped in my dumb debt. I have not gotten myself out of it yet, but here I am, proclaiming to the world that I have been an idiot with my finances in the past (and present) and it is high time I gave myself a public shaming.

It would probably make sense if I first explained what I consider to be "dumb debt". I'll start by explaining what I consider to be debt that is (usually) reasonable (there are exceptions to every rule): student loans, car payments, medical bills, and your mortgage. Dumb debt is most everything else.

What Is My "Dumb Debt"?
For me, most of my dumb debt is still related to my early years of "independence" when I got my first credit cards and thought I could get away with paying for most everything with them, including occasional trips across the country with no real purpose. Other forms I've incurred are the "I thought I could afford to pay just that much more extra on this bill, but turns out I can't do math" debt that actually puts you further in the hole than you started. The shit that turns into a truly vicious circle.


Plan Time - Part 1
Here's  what I'm doing, then. I've already created a full list of bills I must pay each month, where to pay them, logins and passwords, and the amount of money these bills tend to be.
  1. List out all the credit cards and determine which ones you have had the longest.
  2. Cancel ALL of the credit cards other than the oldest (the older the card, the more credit you are building with it, the way I understand it).
  3. Take the still active credit cards and lock them away somewhere safe so you won't use them.
  4. Continue to pay minimums on everything and put any (actual) extra money you can toward the cards that you have canceled until they are nothing but dust in the wind.
  5. As you keep going, choose one of your other bits of existing debt at a time to focus on and knock down.
I've just finished Step 2, so that's the easy part done... Once I have a chance, I'll be securely locking away my remaining active cards (my oldest is a Discover, so I figured it would make sense to keep one MasterCard as well since Discover is only valid, well... occasionally). Making the payments will also be manageable. I just need to pick one account at a time and knock that shit out!

Plan Time - Part 2
Obviously, I'm not exactly addressing ALL of the issues related to my dumb debt with Part 1 of my plan. That's where Part 2 comes in.... lifestyle change.
  1. Make a list of all the non-debt-related bills you pay every month and identify which ones are necessities.
  2. Cancel anything you can live without.
  3. Call some of the places that provide things you require (e.g. your internet provider) to see about any deals they can offer.
  4. Come up with a game plan that works for you to stop impulse spending in its tracks.
Well, I've got Step 1 taken care of, but now I really need to rock out the hard part of cancelling the things I don't need. Then the oh-so-fun part of calling Comcast to request that I pay less for the same internet speed.
It's Step 4 that I'm really stuck on, however. Part of my impulse spending is in regards to food and eating out. For that, I can just work harder to make food at home and bring lunches to work. But what about all the rest of the impulse spending I do? What about my penchant for travelling and taking absurd weekend road trips?

Unfortunately, I don't have any answers for those questions other than, "Don't. Fucking. Waste. Money!" Clearly, that's not the greatest game plan. But I guess it's a starting point.

Oh yeah. And one last thing. Give yourself a freebie every once in a while! Just make sure that whatever it is is within reason(able pricing for your money). You can't be perfect ALL THE TIME. So don't try or things'll just suck.



  1. I am currently dealing with my own dumb debt/monster debt/oh-my-golly-gee-must-not-cry debt so it was refreshing to read someone else that's dealing with it. Even if you call it "public shaming," it makes the rest of us closet-dumb-debters not feel as alone. Good luck lady! Hopefully we can both be filthy rich soon!

    1. Glad it helped in that regard! It's definitely nice to know that others are going through the same things we are. I was talking with a coworker earlier about it and he was telling me about how he worked his ass off and changed his habits in order to get out of his own dumb debt and is now doing really well in that regard. So there is a light at the end of the tunnel!


      Just not anywhere nearby, necessarily. ;)

  2. My personal guide to spending less on "impulse weekend road trips" and the like: Make more plans. If you're already planning to do X activity, that costs just $20 and will occupy most or all of your weekend, and then that crazy home BBQ the weekend after (with the meat already in your freezer), and then the weekend after that you've planned to attend a local party, and then, and then, and then... you won't be *able* to spend a few hundred on an unwise trip.

    1. Oooh.... That's a good idea. I do want to start planning things more, anyway. Sounds like a step in the right direction. Thanks, Drew! :D

  3. Mind if I offer three tips (plus or minus)? Take or leave them as you see fit, but these have helped me.

    1) When choosing which card to pay off first, pick the one with the lowest balance. It may seem counterintuitive, but it actually makes a huge difference. Paying off chunks of debt is a huge rush. If you haven't done it before (and I mean completely paid off) you'll be shocked at how good you feel. Starting with one or two small chunks will let you become familiar with how good you feel, which will make the big chunks easier to deal with, because the bigger the debt, the better you feel.

    2) Set up an inconvenient account. This will be an account that you can get to, but not easily. Mine is a simple ING Savings account. (I have to transfer money from that account to my normal checking account to withdrawal anything) Then set up an automatic debit transaction for the account. So for me, 2 days after one of my pay checks clear, $300 gets automatically sent over to the ING account. I never see it, so it's out of site out of mind. Same with the account. Then one day you check the balance and it's all OMG, I'M RICH! ROAD TRIP!

    Bonus tip: As you pay debt off, bump up how much your saving each month.

    3) If you don't belong to a credit union, find one. Then go in and talk to them about what you're doing. They'll help you flesh out your current plan and may be able to get you a debt reduction loan. That will cut down on the interest your paying, and since Credit Unions aren't about making piles of cash, they'll give you a better interest rate then anyone else.

    Bonus tip: Once you belong to a credit union, talk to them about ditching your current credit cards and using theirs instead. They'll give you the best rate.

    Final tip: get rid of your debt and those impulse trips actually become a lot easier to pay for.

    Preachy tip: My advice, don't try to get a handle on your debt, focus on getting rid of it. As in all of it! Your impulse trips will ensure that you'll usually have a little debt, but if you focus on getting rid of it, instead of just managing it, it won't turn into this thing that you're constantly in fear of or trying to dig out of. Sorry for getting preachy, but I see to many folks that are convinced that "a little" debt is good and so they try to manage their debt. In the end, every one of them is is a slave to their debt.

    Final thought, the vast majority of this country is buried under crippling debt. Congratulations on being one of the few folks that have decided to actually do something about it! Yeah Dinah!

    1. Thanks, Matt! That was a whole bunch of great tips!

      I definitely like the idea of paying off the smallest problems first. That makes a lot of sense to me beyond just how it will feel nice to know that little chunk is gone. It is also one less thing to pay off each month, meaning that much extra available to dedicate to the bigger chunks (or whatever else) each month. It's amazing how much those minimums add up when there are so many of them!

      I have got a Savings account set up, but unfortunately don't have any money to put into it that isn't required for my bills (yet). My hope is that, once I have at least paid off the cards I've closed entirely, I'll be able to start shifting a minimum of $50 per paycheck over to savings and not need to touch it.

      I'm very intrigued by the credit union idea. My concern is that they are usually so localized and it's tough to access ATMs when travelling without fees. Maybe that would just be something to discuss with them as everything is being discussed in general. I am definitely intrigued and going to start looking into this.

      Also, don't apologize for being preachy. I didn't take it like that at all! I appreciate you taking the time to write out your tips and to give me some new ideas for how I can approach this endeavor!

  4. I sorted mine out last year amalgamated my CC into a loan with a definitive time frame of how and when it will be pay'd off. In 3 and a half years I should have no debt :) Well other then that house I part own.

    1. That's awesome, James! I'm looking into options to see if I can do something similar to that. Got my fingers crossed it'll be possible!