Ask Terry Questions How to save?

How to save?

By Terry Savage on December 04, 2019 | Credit/Debt

Hi Terry, I emailed you last week re: how much to save ($25,000 in credit card debt). I guess I need to be more clear. We only have one credit card (no store cards) that we share. It’s an Amazon Visa that we get cash back on. We use it for everything, including regular expenses like cable/internet, State of IL tolls, our church contributions, personal care like haircuts and manicures, clothes, groceries, etc. We pay about $5000-6000 a month on it and right now the balance is $15,000. The only other debt we have is our mortgage, and $3000 that we owe on a Wells Fargo credit card to pay for a new air conditioner. I guess what we would like to know from you is how to get the financial discipline to stop dining out and purchasing media – small regular expenses that aren’t important but add up. We hired a financial planner who is a member of the FPA, who helped us re-organize our 401k, IRA and ROTH investments; we have a will and an estate plan. It seems like we’re doing everything right, and that the $10,000 in credit card debt is the only thing we haven’t been able to tackle. The interest rate on the Amazon Visa is 11.25%. Some of our ideas were: 1) Home equity loan; 2) Stop contributing 20% to each of our 401 k’s until the $10,000 is paid off; 3) Credit union loan; 4)
Loan from one of our 401k’s, so we’d be paying ourselves back. None of these? Thoughts? Thank you!

Terry Says

The first rule of debt is simple: “When you’re in a deep hole, stop digging!”
You can’t get out of debt by taking on MORE debt! And there is no such thing as “good debt” at this stage of life.
There is only one answer, and I know you know it! It’s called: SELF-DISCIPLINE!

Take the Amazon card out of your wallet, and delist it from your Amazon account. And if you’ve memorized it, call and ask for a new card saying yours was lost. It will have a slightly different number, so you cant use it from memory! And it won’t impact your credit standing.

LIFE ON CASH for 6 month! (Forget the “cash back” deal because it is NOT a deal because you are paying over 11% interest on it!) You didn’t need me to tell you that.

So here’s the challenge. Can you live only on your debit card and cash for 6 months — till Memorial Day? Promise yourself a significant reward if you do. And during that period, pay DOUBLE the minimum monthly payment on your credit card (double the CURRENT minimum) same amount every month. You’ll be well on your way to paying it off.

And one more challenge: EARN SOME EXTRA MONEY! I don’t know your life situation — but drive an Uber, become a paid babysitter for some working mother who desperately needs help, etc etc. that’s the fastest way to find extra money to pay down your credit card.

Please write back in 6 months and let me know where you stand!

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