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Micro-Payments

That’s how we paid off our credit card debt.

Back in 2005, my wife and I created our debt reduction plan.  Fans of Dave Ramsey, we established a mini-emergency fund and then we set to work on our debt snowball.

We were locked-in and focused – ready to get out of credit card debt.  Rather than send just one extra payment, we made several micro-payments, throughout the month.

This kept us connected to the debt reduction process.  Watching our credit card balances drop really kept us motivated.

Each month – we followed the debt snowball list – and made minimum monthly payments to all of our creditors.

Four years ago, my wife and I began to search for a new home.  Our family had grown and we were looking for a new place to live – our home for the next 20+ years.

Before looking for our new home, we spent several months saving up enough money for a down-payment.  Our goal was to avoid PMI – private mortgage insurance.  Once we had saved up our down-payment, we began the process of looking for our new house.

We set a budget – a desired purchase price and a desired monthly payment amount.  We began our search with these numbers in mind – and fixed.

One of the things I was concerned about was qualifying for a mortgage.  We had never been through the process before – and were a little apprehensive.  Our credit scores were fine and we were debt free, but the housing market was in an odd place.  So, we placed a few calls with some local mortgage companies and did some research on the internet – and we were amazed.

My family and I have lived in our current home for almost 5 years.  We are working hard – paying off our 15-year, conventional mortgage.

I use a simple pie-chart to track our progress.  Having a visualization keeps us motivated and excited about the progress we are making.

We purchased our home in February of 2010.  Hopefully, we’ll pay it off in less than 10 years – which is our stretch goal – but as of right now, we have shaved 6 months off of the length of the loan.  Our progress was slowed, just a bit, when I changed jobs, but we are back – on-track – making principal-only payments on a regular basis.

Here’s a chart with details for our current progress –

The percentages above represent the amount of our mortgage we have paid – 27.25% – and the amount we still owe – 72.75%.

This tip is an oldie but a goodie – and it works for me:

From time to time, I call the companies with which I do business – and ask for discounts.

I just (literally, one minute ago) got off the phone with our television provider – and was able to reduce our monthly bill by nearly 30%.

All I did was call the company – and after trudging through their labyrinth of language-selection, account number-entry, and option-choice – I managed to speak to a customer service representative.

I then had the CSR explain to me, line-by-line, the details of my bill.  (I had a copy of the bill pulled up on my computer so that I could see what we were discussing.)

I then asked about the “end date” of my contract – and soon…

I was transferred to another department – and after going through my bill a second time – I was offered both a credit on my current bill, a selection of free channels, and an ongoing monthly discount.