Just think about it how large was your purchase, and how small is the minimum payment? Store credit cards aren’t designed to help you finance a big purchase for free; they’re meant to lure you in and make extra money through high interest rates.
For example, I once bought a new laptop with a 12-month, 0% interest Best Buy card. The total cost was $780. The minimum payment on that card was about $25 a month. Over 12 months, paying just the minimum would total $300, leaving $480 unpaid by the time the 0% period ended. To avoid this, I paid $80 a month to make sure I’d pay off the balance before the interest kicked in.
What’s worse is that store cards often don’t just start charging 25% or more interest on the remaining balance they apply it to the entire original balance if you haven’t paid it off before the introductory rate ends.
When I worked at a store, I can’t tell you how many times I was only allowed to tell customers what the minimum payment would be when they asked about the 0% interest offer. This leads people to think they’re all set. The store’s financing company doesn’t calculate your minimum payment to ensure you’ll pay off the balance on time; they actually try to prevent that. If I were you, I’d check the terms and conditions carefully.
That is excellent. If there is a balance transfer on the card, I wouldn’t add any more charges. It will take longer to pay and accrue interest if you can’t get the new expenditure at 14.66% be paid before the 0% balance transfer money. Using a different card that you pay off each month is safer. Think of it as a debit card.
With the additional $600 each month, what are you doing? Applying it to the 13.75% would be my first step in clearing the path. Set aside $100 of it, perhaps, for an emergency fund.
I used to set aside $610 for an emergency fund, but it got depleted due to unexpected car repairs (I need a car for work as there’s no public transportation). Now, I’m allocating around $1,210 each month to rebuild that emergency fund, aiming to reach $3,500 in the next three months, as that amount gives me peace of mind for now.
After that, I’ll save $1,200 for a car maintenance fund and $500 for a “sick fund” to cover takeout and medications for minor illnesses like colds or the flu.
Once those funds are built up, I’ll set aside $60 a month for the car maintenance fund (for oil changes), $100 a month for the emergency fund, and $300 a month towards a vacation fund.
The rest of my budget will go toward paying off my lowest debt first, followed by my line of credit. Once those are paid, I’ll leave my 0% APR card alone, making payments over five years since it doesn’t accrue interest, allowing me to use that money to build up six months of non-debt expenses (since the credit union would cover those six months if needed).
Over the next 18 months, I hope to save enough to move into a new apartment without a roommate for my own peace of mind. I’m expecting a 3.5% raise next year, which, combined with $300 of the $600 I’ve saved, will help me afford rent closer to work, reducing my gas expenses. In total, I expect my monthly expenses to increase by about $100 after factoring in savings on gas and reduced utility costs like electricity.
Congratulations on a wise decision! Until the debt is truly paid off, I would proceed cautiously when it comes to things like a “vacation fund” and breaking up with housemates. Every little amount counts.
I’m so glad you were able to meet real individuals that genuinely want to assist! Well done for keeping to the budget, being open to communication, and listening. All of it is difficult, so hopefully you feel pleased of yourself! Well done!
Having banked with my credit union for forty-five years, I would never consider using a big bank. I am well familiar with the staff members. They now bank there, so they are familiar with my kids. I’m delighted credit unions might make a difference in your life; they’re fantastic.
For your credit profile, the credit line they assisted you in obtaining is unprecedented. Bravo, you’re almost a miracle. I hope you manage to turn green and stay there. Interesting tale.
I’m grateful.
I refuse to even try to understand how any of this operates.
This truly makes me feel warm and fuzzy. I appreciate you sharing.