Blech

I applied for a loan yesterday, in an attempt to consolidate my debt and lock in a lower interest rate.

I was denied.

It's hard to say that. I had repaired my credit and it was pretty and shiny and good. Now, it's in the crapper. But, our bills are paid. We are owed a bunch of money that we have no idea when it will show up. We have plane tickets to fly home in December. It's not all bad. The biggest thing is that we aren't going further into debt. We may be moving at a snails pace, but at least we are moving.

I checked the interest rates on my credit card... something everyone should regularly do. It's not too terrible. The biggest problem is the Prosper loan that I took out in order to pay our taxes. I thought initially that I would be able to pay it off in three months. Here we are, six months later, and we're paying just over the minimum. Now what I need to do is focus on it, because the interest rate is 21%. Everything extra that we can swing will be going on that loan. I'm seriously hoping that no more surprises come along and we can really get all of this taken care of.

Honestly, if you are trying to get out of debt, remember that the best thing you can do first is to stop charging on your cards. Even if you think you'll pay it off immediately, if you are carrying a balance, stop charging now. Don't be me.

Poor Decisions Regarding Cars

So, I'd previously mentioned that I'm back in debt again. It makes me sad when I look at how far I came before and where I am now. Granted, I'm making more money than I ever have before. I have great benefits. I absorbed my Stunt Guys salary with some extra. I should be in great shape. So why am I not?

Well, there were many many contributing factors. One of the biggest ones though was a 2002 Ford Escort affectionally named " I Hate You You Stupid Car".

When I moved to Las Vegas in January, I took a look at my beloved 1996 Toyota Corolla and I realized that it wouldn't make it to Nevada without falling to pieces. I thought about what to do and decided that what would be best would be to leave it in Atlanta and buy a new (to me) car once I got to Vegas. I figured that I should be okay to find a car quickly.

I got to Vegas in the middle of the night and quickly realized that I would be spending a fortune if I had to apartment hunt with taxis. As I was losing relocation expenses every night I spent in a hotel, I decided to hurry along and buy a car to make my life easier. I found a dealership with a $2900 (eek!) car that looked promising, and took a taxi there in the morning, knowing I would be driving out of there in a car.

This was my first mistake. I was in a hurry and I left myself with no room for error. When they didn't have the car I saw online in stock anymore and I asked what the next cheapest one would be, the only option I was given was a car that would be $5,000 including taxes. I shouldn't have done it, but I decided maybe that would work. It was a much newer car, a 2002, but I wasn't too worried because I figured I would drive it to death and it would be fine. I asked to finance it.

Then, things went very very wrong and this is where I should have walked away but I didn't.

They wouldn't finance a car less than $8,000. Not wanting to spend that much, I decided to pay cash for the car. That would save me money in insurance too I thought. I also bought a warranty because I wanted to make sure the car wouldn't break down. Because I didn't really have the cash, I called my bank, extended my credit limit and charged the car.

This was the dumbest decision I think I've made in a long long time. I shouldn't have done that. I regret it. It was the beginning of a big pile of trouble. Extending my credit limit mean that my minimum payments on the car would now be much higher. I was also a lot closer in the realm of maxing out that card than I had been.

Bad choice. I should have found a cheaper car. I should have taken more time, but I was in a hurry. So I messed it up. Now I'm paying for it. That car also ended up needing $600 of work. I haven't really paid off any of it yet.

So my advice is don't rush, take your time, and listen to yourself when you realize you are about to make a mistake. I'm going to be literally paying for this one for a long time.

Switch Your Credit Card to Save Money

Photo by Alfredo Neto

I had an American Express Delta Skymiles credit card for the longest time. When I opened the account I did it because I got a huge Skymiles bonus with my first purchase, and I knew I had some traveling coming up in the future. After a time, though, it became evident that without more bonuses like that one, I would never earn enough miles for a second flight after I took my first. 

After realizing this and deciding it wasn't worth the annual fee if I was unlikely to earn the rewards, I decided that I would switch to a different American Express credit card. 

The benefit of changing to a different card within the same company is that you can make the move relatively easily and you can essentially get a different credit card without having an inquiry to your credit history. 

I moved to a Blue Cash Rewards card, which allows me to get cash back and has no annual fee. American Express also refunded me $61 of the $85 annual fee that I had already paid this year. 

This account is the current target for my debt snowball and I am fairly confident that I will have it paid off by the end of next month. I've been using the card here and there, but paying off the amount immediately from my checking whenever I charge something. This allows me to get the reward benefits for very little extra work. 

So now is a good time to look at any credit cards you have that you still use and check the company for one which has rewards that would better benefit you. 

This is my 100th post at Distilled Rose! Here are my five personal favorite posts from the last 100. 

Measurements Were Invented by Heartless Bastards

Five Things You Can Do Without

Why I Won't Buy a Hybrid.... Yet

Querying : A Brief Introduction

Frugal Food : Cost Analysis of a Lasagna

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Making Plans to Snowball My Debt

A long time ago I had a really firm debt plan. I knew how much I owed everywhere and I knew what all of my minimums were. I had a plan to get out of debt and I was consistently working out it. Then, for some odd reason that I can't explain, I got off track. 

Now that I'm going to have to start insuring a car again, I need to get back on track. I need to have a much firmer plan. Being on bedrest really does enable you to have the time to formulate a plan. 

I am going to try and Snowball my debt. This worked once before so I'm going to try it again. 

I have the following minimum payments:

Banana Republic - $20

American Express - $15

Bank of America - $98

Prosper - $101.01

This is a total of $234.01. In order to afford all of my minimums and car insurance, I need to reduce this to no more than $125 pretty much immediately, or I need to be making more money.

 

I'm going to pay my minimums and throw everything else onto the Banana Republic card. The BoA card minimum will decrease by about $5 to $9 whenever I make a payment, which I will also apply to the Banana card. Then I will take care of the Amex, then the BoA, then Prosper. 

The balance on my BoA card is higher than my Prosper loan, but my Prosper loan is fixed and has lower interest, so I think I should worry about that last.

I'm going to try and get a second job on the weekends and any money I make from that will go to debt reduction and the car insurance. I'm hoping that I'll only have to hold a weekend job for 6 - 9 months to get this taken care of. 

I've been letting all of this slip and I now realize the answer is hard work and getting this all taken care of as quickly as possible.

So what do you think? Is this a good plan or am I kidding myself?