Except that most people suddenly find themselves with a little extra cash during the month and a stack of empty credit cards. They've been "paid off" right?
The result? A pile of new credit card debt and a situation worse than what they started with.
This is how we're avoiding that trap:
- I used the money that was put into my account to pay off my Capital One card. This gave me $5500 of available credit and a zero balance.
- I paid off my BOA and Fleet cards.
- I transferred all of my WaMu card to my Capital One card. (Note: even with transfer fees and such this and the next step actually save us over $1500 in the long run.
- I transferred most of my Chase card to my Capital One card.
- I checked to see that the payment had been received by BOA, Fleet, and WaMu and then called to cancel those cards.
- We paid off both of hubby's cards in full.
- I am paying back the amount of the loan that we did not use as soon as all the checks clear.
- In seventeen months I am going to borrow from the loan (it's like a revolving credit) to pay off the Capital One card in full.
- Credit card purchases over $20 in one month must be discussed and approved by both in writing.
- Receipts are stapled to the written slip and filed.
- The card is paid off as soon as the amount shows on the account. (Since it's a BOA card it's so easy to do.)
- Both of us will have account transparency (the other spouse has access 24/7 to the account online to see that there are no sneaky charges)
- Avoiding using the "overage" to pay for anything, thus doubling our debt.
- Not giving ourselves the temptation of using our "paid off" credit cards by closing the accounts
- Reducing our monthly payment by almost half... and continuing to use the great majority of the difference towards the loan anyway
- Using the small difference that we are saving with the reduced payments to avoid "having" to charge anything else since our margin of error is so tight