How I got rid of $50000 in credit cards

A few years ago we found ourselves in a really desperate situation.

Through a snowballing effect of bad luck, our own stupidity, and some small crime of one of our employers, we found ourselves in massive debt.

At the time my wife had just started a new job that had use move 300 miles away. I had no problem with that as I wanted to get away from where we were. I had been traveling doing shows. The travel costs were high but the pay was okay and it kept us afloat. That is, until things went sour.

When I left the job I was owed over $10000 in back pay. During a lapse of insurance coverage, my wife had a trip to the ER, the transmission in my car went out a few weeks later, and the list goes on. Things snowballed and we had one hell of a hole to dig ourselves out of.

Credit card debt alone was just under $49000. We had already been enrolled in with a credit counselor (who didn't do much, but I don't want to get into it.) We also owed $16000 on a timeshare, $9000 in student loans, and another $3000 on a credit line. This was July 2007.

I started loosely budgeting and we were making progress. Not much, but every step is important. It wasn't until I started bike commuting that I started visiting my local library and reading personal finance books. After enough reading, I started to really hate debt. But, when you have a big enough hole to dig out of, it seems impossible.

Then Chase Bank really pissed me off. They lowered my credit limit to how much was outstanding, while there were pending transactions (this was our everyday card for gas and other regular expenses.) They tried to jack the interest rate up to 30%, they tried to sack a bunch of fees on there as well. In the end, I said "Enough is enough" and by January 2009 I had my plan in place.

I listed our debts from first to last in the order of which bank I HATE THE MOST. Here was the list:

1) Chase Bank/Bank One
2) Bank of America
3) Capital One
4) American Express
5) Citibank
6) Fifth Third Bank
7) US Bank

Some banks I had multiple accounts but it was very liberating getting rid of them.

So March 22, I was able to pay off the last of the credit cards. The story doesn't end there though. As I write this I'm back $10000 in credit card debt.

Why?

The timeshare balance was around $10000. The timeshare company, Wyndham Consumer Finance, sucks. They did not give me online access to financial information, I had to call them to find out how much I owed. Interest compounded daily. And to top it off, if I wanted statements in the mail, they wanted a "$5 service fee." Furthermore, when I would send in an extra payment, they would put it toward maintenance fees instead of loan principal. Idiots. Screw them. So I want to be completely in control of my personal finances, so I found a way to get rid of them.

I applied for a bunch of new credit cards (after the new law passed) and transferred the balance over to 0% for 6, 9, and 12 month periods. Thus eliminated the interest paid on the timeshare. Thus no longer having to deal with the incompetent timeshare people.

So now I have to get my credit cards taken care of again, but this is less pressure since we have more cash flow and honestly we've gotten very good with our money throughout this process. Tuition in the school of hard knocks I guess.

We currently live (both needs and wants) on about 35-40% of our income PER OUR BUDGET. The reality our income is underestimated and the expenses are based upon the highest bill I've gotten in particular categories. So we always end up with a surplus at the end, which is put toward debt or savings.

I'll need a separate entry for the things we do to cut our budget.