Paying off $5800 of debt - Was it a fluke?

Lat month (October) we paid off $5833 worth of debt, I have been wondering how much of that was a fluke or one time event.

We had big plans for October, all of which did not pan out. The biggest plan was I was taking over the bill paying. This darn near caused a war, my husband felt that I was blaming him and saying that he was not capable of managing a budget. I swear I never said that but I am pretty sure I was thinking it. We have been married well over a dozen years so I do have some ideal how he thinks and the last thing I want to do is make the situation any more tense or ugly. So I have been very careful not to lay blame and to place blame on myself. But still my husband felt the way he felt, personally I think it was /is his own gilt and I can say that here since he is not aware of this blog.

After determining that divorce is not what we want we have come to an unstable payment plan. My husband still pays the bills and I check credit card balances and the bank account on a regular bases (2x a month) to make sure we are on target. The good side of this plan is that he retains some of his manhood (I guess) and all the budget and bill pressure is not on me. The bad side of this plan is that we could pay the credit card debt off a lot faster if I did it but it would damage the relationship even more.

For last month we got paid back about $3000 on a loan we made to a family member, we gave it expecting to never be paid back so this was a great surprise. All of that went to paying off the remaining balance on the credit card we use on a regular basis. Now that card is paid in full and will be paid off each month. We also get points on the card so it is the only one we are using at this time. The other credit cards have been put up and others shredded. One was closed when the credit card company wanted to increase our interest rate not because we had done something but because the "economy was bad" From about 12% to over 20%, I declined and they closed the account. No problem , decided that credit rating hit I would take.

October was the first month that we did allowances, $150 each for the month. I would like to include more things in that allowance like hair cuts but marriage is give and take and the things that caused the major drain on the finances like eating out is included. We have bee cooking at home more, by we I mean me. This took some getting use to but is turning into a nice experience, cooking new things and trying different recipes.

We are also working on planning out our purchases. Still need a LOT of help in this area, but this is what checks and balances is for. I am hopeful at the very least if it doesn't work there will be lest debt to split up if we split up.

An interesting article

Here is an interesting article on debt negotiation written by fellow blogger David Nikson:

Debt negotiation: A useful technique to come out of debt

Debt negotiation is one of the popular techniques to become debt free. The reason why it has become so popular is that it assures that you can pay a lower amount than what you actually owe. Debt negotiation is also known as debt settlement.

How professional debt negotiation helps you

When you contact a debt negotiation professional to assist you with settlement, you no longer make payments to your creditors; the company you deal with is expected to do it for you. You just have to make a single monthly payment to the debt settlement company and this money is deposited into a trust account. When a debt settlement is decided on, the settlement company collects the money from the trust account for paying off all your creditors.

Under debt settlement, you have to inform your creditors that you're directing your payments to the settlement company. The debt settlement professional talks to your creditors to accept an amount to close the account and term it as "settled". This suggests that the creditor does not receive any payment throughout the procedure. However, you must remember that debt settlement docks your credit score. If you have several creditors, it would be docked again and again. Debt settlement would spoil your credit score to such an extent that it might require 6-12 months to rebuild the score.

Why debt settlement is accepted by creditors

Creditors, particularly credit card companies would agree to debt settlement since they have already profited from you. If you have huge credit card balances and just have been paying the minimum for quite a number of years, or only some extra, then the credit card company probably recovered the whole amount borrowed along with interest. This indicates that the company is not truly suffering a loss when it enters into a debt settlement contract. But debt settlement permits the company to at least get some money, which they would not receive if you file bankruptcy.

Self-help debt negotiation

You can negotiate debt on your own. Nevertheless, it might take time and a lot of effort. You might have to bargain for more time. On certain occasions, you might succeed to get a viable repayment plan or an affordable interest rate from your credit card company.

Update Debt Elimination - October 2009

My family and I started on the debt reduction journey about 6 weeks ago. Tonight I finally called the credit cards and got the current balances; I was suppose to do this at the start of each month but in the past it ALWAYS went bad.

1. Pull out spreadsheet of credit card balances, see last time it was updated, always a year to 14 months out of date. Verify with DH that we have been paying bills off for the past year.
2. Call the credit cards and update the spreadsheet.
3.See that the over all due balance is higher then the year before.
4. Get sick, mad and have a HUGE argument with spouse.
5. Put up the spreadsheet and be too scared and nervous to pull it out again for another year.

This time it was different.
1. Pulled out spreadsheet that was updated last month
2. Call the credit card companies
3. Yeah our overall balance is LOWER!!!


Credit Card Balance
Started September 2009 = $95,351
Current = $89,518