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Credit surprises of the good kind

I ordered a credit report today, and was pretty pleased to find out that my score is now 769. This doesn’t mean that I am going to rush out and use up the remaining 96% of the credit available to me on beer and salt and vinegar potato chips. That’s not just because that would be more of those commodities than I could possibly store, regardless of how awesome they are. I have been on a get-out-of debt mission since college ended in 2005, and the end is finally in sight. Why would I mess that up?

So, here’s a little history of Christine’s debt.

The under $12/hour nonprofit job I got when I was first out of college was too close to the poverty line to help me make much progress on a couple of key problem areas: credit card debt and student loans, both unfortunately due to medical expenses incurred in college that were not covered by health insurance. I had no car payment at the time, which really helped keep me afloat. (Thanks, mom and dad!) A pretty great promotion was quickly balanced out by increased housing costs due to a move, and then buying a new car a few months later, which meant $20,000 or so in new debt.

I have since played around with different ratios of saving and paying down debt, trying to find a way to both increase my financial cushion and also avoid directing so much money to credit cards that I had to then use them to tide me over to the next paycheck. So far, what has worked best for me is to save at a rate of 8% of net and to direct 10-12% of every paycheck to credit card debt.

This theoretically would have me out of debt and rolling in savings in no time, except for the fact that I am allergic to taking money out of savings for occasional expenses. So, a couple months of being a good girl are repeatedly undone by, you know, using a credit card rather than savings to pay for a family member to come up from Mexico, or gifts, or those random crazy shopping excursions.

Regardless, I have been fantastically good for the last several months (thanks, I’m sure, to being crippled and thus way less likely to buy the entire inventory of a store, and to the lack of holidays/birthdays). I got the credit card debt down to a place where it suddenly made sense to me to wipe out a big chunk of it with some savings. So I did that, then scheduled all the necessary remaining payments to pay off the last, and oldest, credit card debt. What that means is that, barring some huge change, I’ll be done with this albatross by mid-summer…and that without really killing myself and feeling deprived. AND despite the generous pay cut we all took at work, which is a topic of some bitterness.

The remaining debt I will have after that is my car loan and my student loans. I consider that latter one good debt, but I’ll still probably double my very manageable monthly payments on them after the credit card stuff is done. The former, the car loan, has a pretty large monthly payment, but it’s worth more than I owe because of how large those payments are. To me, these are simply expenses for stuff I use all the time in the pursuit of regular income: my car and my education.

It’s pretty exciting to see the credit card debt wrapping up. I’m also thinking about how to avoid getting there again, and as hard as it is for me to do, I think changing the way I use savings is going to be pretty key. Knowing I am going to have to transfer money out of savings is a real disincentive for me to spend money on something I don’t really need. And getting back into credit card debt after trying for so long to get out of it seems even less desirable.

So anyway, all that AND I have a pretty awesome credit score? That makes for a happy Friday!

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