Washington, District of Columbia, USA
September 12
Chief of Cheap
i blog about money and culture, and i have very little of both.


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JANUARY 22, 2012 3:32PM

Loans, Damned Loans, and Statistics

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Last week I started blogging again about the debt pay-off project I've often called The Big Drift. My first try at this was pretty satisfying, if you like Pyrrhic victory as much as I do.

I called the first campaign against debt Europe on $35 a Day, and set a goal of  $12,775 to pay down credit cards or save by July 2011. After extending the deadline by five months, I still only came to within two-thirds of my goal. But I did gather courage for another try.

My new goal is $26,000 within the next two years. Not a penny of that represents actual savings--yet. That is still just the figure I would need to pay off the amount of consumer debt I have on four credit cards. The good news is that all but about $2,000 of that debt is on zero-interest balance transfers at the moment. The bad news is, those transfers do expire. The first one expires in July, the next in August, and the next in October.

So my challenge is to live on a largely cash basis while paying down those bad debts plus the so-called "good" debt of my home mortgage and student loans. (Read here for a subversive and eye-opening take on the common wisdom of "good" versus "bad" debt from the husband-and-wife blogging team Broke Professionals).

Last year, I made a few ground rules:

1. Even though the biggest priority was paying down debt, I wanted to develop the savings habit too. Although the conventional wisdom is to pay the debt off first, I did squirrel away some untouchable savings at a net loss, just so I could get the hang of it.
2. Charitable gifts and gifts to friends counted toward my goal, because I didn't want to become a penny-pinching Citibank-subsidiary-owned whore with nothing but my own interests at heart. If I wanted a war chest, I'd run for office.
3. It'd have to be some fun for a distractible magpie like me to stick with it, so I used Piggymojo's game-like app, along with some of my own little pet hacks like 24-hour and 7-day money fasts, the Free Weekend, or Match-for-Shame Magic to get there.

This year, I've tightened up a bit:
1. No more petty saving until the debt is gone. I say "petty" to mean passbook savings, as opposed to college and retirement savings, which have never been counted toward my goal anyway.
2. Charitable gifts still give me credit, but gifts to friends won't this year. I still love my friends and family, of course, and I look forward to showing them love in creative ways that don't break the piggy bank.

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