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Debt is an Emergency

March 11, 2015

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When you're in debt, you need to get out immediately. Why debt is an emergency at @shoeaholicnomore

Do you remember just a few short weeks ago when I was stoked to announce that I’d paid off another credit card? Well, it’s happened again!!

In February I told you all that my next debt focus was CC#8, which had about $1,350 to go. I decided that debt was my focus because I wanted to make sure that I could get my 0% interest promotion (for my computer purchase) paid off in time. I did put all of my debt snowball toward that debt in March, but I’ve also been making snowflake payments here and there since the beginning of the year whenever my monthly cash flow spreadsheet showed more than about a $20 surplus.

After talking with my accountability partner, Laurie, I decided to continue putting my snowball payment toward CC#8 to make 100% certain it gets paid off before the September deadline. But after I paid off my last credit card at the end of January, I’ve been putting all of my snowflake payments toward CC#5, which was my lowest balance card and also one of my higher interest rate debts.

2014 was a sad year of very little progress, but then I read this post by Hayley, which suggested putting small payments toward debt whenever you have a little extra money sitting in your account. Thanks to Hayley’s post and Laurie’s encouragement, I’ve made more progress in the first 2.5 months of 2015 than I did the entire year in 2014. I’ve finally decided that debt is an emergency and I need to get it paid off now!

With that in mind, I decided to go ahead and pay off the final balance of CC#5 today. I borrowed the last $21.28 from my emergency fund to do so. Some of you may not agree, but as soon as I get paid from some of my freelance work at the end of this week, I’ll immediately be replacing that amount before I decide what to do with the rest of it.

Yes, I could’ve just waited until this weekend to make that last payment on my credit card, but for some reason I just woke up today and wanted it gone once I realized how small the remaining balance was.

I’ve already gotten my March statement for the credit card I paid off, so it won’t officially show up as paid off until my next statement comes in early April. But I’m going to go ahead and remove it from my list of debt on the side bars already.

I’m feeling really excited and even more encouraged that I’ll be able to get my next card paid off well before the 0% interest promo expires! Here is a table with my shrinking list of debts in order of how I plan to pay them off:

CC#Balance (2/28/2015)Monthly Payment (Minimum Payment)Interest RateGoal Payoff Date
#8$1,083.45$220.00 ($26.00)22.9% (ABOUT $375.00 AT 0.00% TILL 9/2015)9/1/2015
#4$1,192.22$40.00 ($40.00)26.99%4/1/2016
#7$1,083.45$40.00 ($40.00)24.99%7/1/2016
#10$1,245.92$28.00 ($28.00)15.24%10/1/2016
#11$1,877.30$58.00 ($58.00)24.9%2/1/2017
Parents$2,900.00$50.00 ($0.00)0%6/1/2017
Student Loan$6,618.42$93.07 ($93.07)6.55%4/1/2018
TOTALS$16,000.76$529.07 ($285.07)--

I didn’t update the payoff dates based on the new snowball amount, so these should actually be able to be paid off at least a month ahead of the dates listed (if not more).

When did you finally decide that debt is an emergency? Would you have borrowed from your emergency fund to pay off that small of a balance?

When you're in debt, you need to get out immediately. Why debt is an emergency at @shoeaholicnomore
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Kayla

Kayla is a mid-20s single girl living in the Midwest, USA. She is focused on paying off her consumer and student loans, while simplifying her life and closet. You can join her on her journey at ShoeaholicNoMore or follow her on Twitter.

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19 responses to “Debt is an Emergency

    1. I have more than that too (my mortgage is around $115K). I just couldn’t wait to pay it off this weekend, I wanted to do it TODAY! 🙂

  1. I’ve never commented before, but I LOVE your blog! Great job on making such awesome progress…having accountability certainly helps a lot! Something you might want to consider, is leaving up the debts on your sidebar, after they are paid in full. That will help us as readers to see all the progress you’ve already made, but it will also be a visual reminder/motivation to you, to constantly SEE all those FULL purple bars! Anyway, keep up the good work1

    1. Hi Liz! I’m so glad you decided to comment. I did decide to delete them as I like how much cleaner the side is getting as I remove the bars, but I do have the very first one that tracks my entire debt progress as a whole (excluding my mortgage). Thanks so much for commenting and making a suggestion. 🙂

  2. We had steady income: disability, a little bit of contract work and unemployment. We knew it wouldn’t suddenly disappear like if one of us were fired. So we decided not to build an emergency fund. It made sense for us, since we were living on $3,200 a month (with $700 rent and $500 high-risk insurance).

    We needed to focus on the debts earning interest rather than saving a small amount that would earn almost nothing.

    Obviously, everyone needs to operate within his or her own comfort zone, but I stand by our decision. And it sounds like yours brought you peace of mind.

    1. Yes, I feel that I must have an emergency fund because I am the only breadwinner (since I’m single). If I lost my job today, I’d be scared. But now that I have freelance income and a part-time job, I would feel more secure than before I had other sources of income. I also feel more and more secure as I get my debts paid off too.

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