It really is freeing to write so openly about one's money. The stigma of moneytalk is one of the things that make it so easy for married couples to avoid discussing it. We all have experiences and baggage wrapped up in our feelings about money, and these feelings definitely contribute to the way we handle it.
|Just imagine this hanging over your dining room table.|
This public declaration of our state of fiscal emergency is like having a huge whiteboard in our apartment, with ideas and problems and solutions scribbled all over it, reminding us of our current situation and encouraging us on to find the solution. It's like having one of those fund-raising thermometers tacked up in our living room. (By the way - if anybody has a good link to one of those gadgets we would love to use one on our blog to show our progress, but we can't find one anywhere.)
As we check off more boxes, I find myself getting more frustrated about the biggest danger of credit card debt: interest payments.
Last month we paid $87.54 just for the pleasure of being in debt to these credit card companies. $87.54! And we are paying far less interest than the average consumer, thanks to low-interest cards and an interest-free introductory period whose end is approaching quickly. According to indexcreditcards.com, the average credit card interest rate for October 2010 is 16.75%, so for an average borrower in our position, they would be paying $4,020 a year, or $335 a month! And this is assuming no fees, fines, compounded interest or other dangers.
This is where the dreaded "snowball effect" comes into play, and can swamp families that aren't prepared. It is most frustrating to me, knowing that each month of interest payments is another box we can't check yet.
Our plan: Know our interest rates. I have made a list of all the various interest rates, and will be paying off the high rates first. Transferring balances to introductory rate cards if possible can be helpful, as often this original fee will only equal what one month of interest payments would cost you, and you will save money over the rest of that interest-free period.