January 19, 2011

Resolution Revolution

It happens every year: as the clock ticks down to the new year, I start thinking about new year resolutions.

Or rather, I have no choice but to think of them because the idea is rammed down my throat at every opportunity for about a ten-week period.

Make a resolution - any resolution - or you're swimming against the stream.

For years I picked the obvious and easy ones, like getting more organized and losing weight. But these "resolutions" disappeared like morning mist under the onslaught of a Southern summer sun.

This year, once again, I was forced to consider what my "New Year Resolution" would be. Since none of the other resolutions had worked for me, it seemed time to come up with something new.

This year, my resolution is to pay off all my credit cards and stop using them except in emergencies. And I mean real emergencies. Charging that Michael Kors bag because it's marked on sale is not an emergency. Being caught without cash and with a car needing a fill-up and running on fumes is.

It's not like I haven't tried getting out of debt before. Seems debt follows me like a heavy shadow. But then I've always worked at a day job (and sometimes a night job as well) so paying the minimums on the credit cards wasn't a problem. But getting them completely paid off was.

Thing is, as long as you pay the minimum payment each month, the credit card company would prefer that you take years to pay off that Michael Kors bag you charged on impulse and are still paying for, even though the bag has long since outlived its usefulness. Why would they want you to pay it off sooner? They are earning a hefty profit from the interest they are able to charge for loaning you the money to make that purchase.

Sometimes credit card companies will run special promotions, such as especially attractive interest rates if you transfer an amount from a higher rate account. But once you've done this, be sure to pay off the balance within the time period of the discounted interest to take best advantage of this feature. And resist the temptation to max out your old credit card that now has a zero balance.

Cherish that zero balance! Fall absolutely in love with it! And accept nothing less. Using your card just for emergencies means you should (in most cases) be able to pay off the balance when the statement comes around without having to spend a penny on interest. Try adding up your interest over the course of a year and I think you'll be shocked at how much money is just flowing right out of your pockets on a constant basis. Now times that by the number of years you've carried a balance on your credit card.

Quite an eye-opener, isn't it?

This year, I vow to get all my credit card debt paid off. It's especially important to me now because I will be losing my day job due to downsizing as a result of the current economic climate. Being able to keep food on my table and a roof over my head is going to be stress enough without the added stress of worrying about where I'm going to come up with the money to pay even the minimum amount due on my credit cards. I'm going to have enough to worry about without credit card debt too.

But I have from now til around early July to accomplish my goal. And since I've been steadily whittling down my debt year by year, it's around the $3,000 mark now,
which means that in five months, if I pay about $600 a month on my credit cards, I can have them paid off by the time my final paycheck comes. I should be able to draw unemployment, but as everyone knows that's not even enough to supply your basic needs, so forget scratching around to come up with credit card payments.

No. This time I'm going to do it. This time my resolution is going to stick. This is the year I get rid of credit card debt. I'll keep my cards, because they are an indicator of my credit worthiness and everyone does need an emergency fund they can call upon. But no more impulse spending. No more buy now pay later.

So if worst comes to worst and I can't immediately find a suitable job, I will be able to at least survive on unemployment until something comes along for me. It will mean scraping and scratching and scrimping every penny just for basic living expenses. But what a relief to only have to worry about rent, utilities and food. Payments to a credit card company for purchases that I can't even remember now will no longer be a concern.

It's not going to be easy finding another job. But at least the stress and urgency won't kill me, because I will have eliminated my debt and lifted that burden from my shoulders.

July 4th will be my independence day! And that will be something to celebrate!

What are you doing to help yourself create real change in your life in 2011?

Disclosure: I wrote this blog post while participating in the SocialMoms and Simply Orange® blogging program. If I am one of the first 65 blogs received by SocialsMoms, I will receive a $25 Target gift card and a gift pack that includes a Simply Orange® cooler bag and logoed fleece.

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