Dollars & Sense

Like a lot of folks, I am working on lowering my debt. Behold! I've finally learned the secret!

According to the "Budget Guru," Kathryn Greiner at UMCU here in Ann Arbor, I can start reserving money for emergencies on an ongoing basis. This way I don't use my credit card for those unexpected occurances and then wonder why my balance never reaches zero.

My way of "budgetting" for the last 10 years is trying not to spend anymore than I "need" to. Unfortunately, I'm finding that for me this is not the best way to eliminate debt.

What happens is that whenever I earn a little more money, I try to pay as much as "possible." Then, when something of immediacy occurs, like tires or car repair, the expense must be applied to my credit card since I used my cash on last month's payment. The card never gets paid off and I end up switching cards when the 0% financing runs out!

What I do now is to pay the same amount off each month, in my case $100 goes to one of my 0% credit card each month. Then instead of paying $200 or $300 on a credit card balance, I put that money into an emergency savings account (The Credit Union showed me how to open several different savings accounts to help me with this).

Since I have been implementing this plan, nothing has gone onto my credit cards and my amount owed is steadily lowering. If I continue to work this program, I will be debt free by August of 09. Just in time to start saving for a replacement car if I need to.

I spend less too. In the grocery store my budget is always on my mind. In the past, I might have sprung for some expensive treat, etc. But I am saving a lot of money by not indulging in so many little things. And I don't feel deprived at all because it is my choice. Each time I decide not to buy something I keep focused on my budget and the good feeling I have of that amount lowering each month.

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