My Payment Goals

I visited Benjamin, over at Feed the Pig, to find out how long it will take me to pay off my existing debt.

Benjamin has a useful credit card payoff calculator, here.

I rounded up my debt amount, to $112,000. I estimated that I will continue to have new spending of approximately $1200 per month. This is the amount that I seem to spend regularly, even if I am avoiding frivolous spending. I spend this amount on:

1. After-school care costs for my two kids (I avoid late fees by having the amounts charged automatically to my card);

2. Gas, groceries, and online bill-paying for the electric or water bill, insurance, property taxes, and so forth, when I don't otherwise have the money to pay them because I have sent it all to my credit card companies for their minimum payments. (It is truly a vicious cycle.)

3. Internet access for my disabled friend (I know, I know, I should probably cut her off / make her pay her own, but it's only $20 per month, and it gives her access to her friends when she otherwise can't get out of the house. She can't afford to pay it herself, as she is on social security disability income. I know, I know, I can't afford it either.... it's a dilemma, isn't it? But I just can't stand to cut her off, so I won't).

4. Clothing and shoes for my kids and (rarely) myself. Since I never have any money in my bank account, the credit card is the only way I can ever buy these necessities. And I haven't gone clothes-shopping just for fun for at least a year. I have only bought things we truly need, such as when my kids' shoes are falling apart, or their pants no longer fit them.

Benjamin advises me that if I want to pay off this amount of debt in 60 months, I need to send $4,035 per month to my creditors, rather than the current minimum payments of $3,700.

If I continue sending the current minimum payments of $3,700, it will take 76 months to pay my debt -- an additional 16 months!

16 months x $3700 = $59,200

$335 x 60 = $20,100.

So by paying an extra $335 per month, I will pay the total debt down 16 months sooner, and will save $39,100.

If I can find the extra money, I definitely should do that.

Of course, we come back to the initial problem that I haven't been earning enough to even make the minimum payments each month, so I may be pie-in-the-sky dreaming to think I can come up with the minimum payment amounts plus an extra $335.

But I will have to try.

And now I am going back to work - you know, to earn that money!