My Journey Out of Debt

I started this blog to track my journey out of consumer debt.

I'm not struggling with money at all and have no trouble paying the bills and having money left over for a few luxuries but I still am striving to curb my spending on frivolous things and to stick to a budget allowing me to pay off my LOC sooner. I'm using http://www.youneedabudget.com for my monthly budget and really like this software. It helps you to stop living paycheque to paycheque and to start living today on last month's money (money I earn this month of June is for living on in August as July's money was already earned in May).

Though I have been thinking about making serious efforts to pay off my $19,000 LOC and my MasterCard for a number of months now, I have not really been making any great progress. I have been paying well more than the minimum payments due but could be contributing a lot more.

A week or so ago something clicked and now I am determined to get rid of this debt.

I left a job almost three months ago and received a 2 month pay out similar to severance but I resigned and left on my own accord whereas severance is usually for being let go. This was a nice chunk of change (although after taxes was much less than I had anticipated it would be) and I immediately used $1,000 of it to pay off a "small" CC balance and used another $1,200 to purchase new bedroom furniture. Other than that, the remaining money had just been sitting in my chequing account. Why I held onto it for so long I don't know. I guess I felt like it was security for me.

A little over a week ago I used $2,500 of this pay out and put it onto my MasterCard. I put my last two cheques from my part time job directly onto the MC, which were $400 and $250, respectively. Two more cheques from my part time job should see this card paid off and that will feel great. I will continue to use my MC for most everything as I collect Air Miles with it but it will be paid in full every month.

I was recently faced with the option of applying for a HELOC large enough to pay out my mortgage and have about $50,000 remaining for home improvements (intend to finish my basement) and perhaps for buying a car in a couple years, etc. I mulled that over for some time and decided I did not want to have a HELOC that large as the interest on it would fluctuate with prime whereas if I just renew my mortgage in October when it is up, it will be at a fixed rate of approx 5.1% for the next five years. I felt this was a better way to go. So I applied for a HELOC but for much less than what I was originally thinking of.

Once I get my HELOC in place I intend to transfer the $18K from the existing LOC at prime +1.75% as the HELOC will be at prime -0.51% for the first 12 months and at prime thereafter.

My bank has a promotion on right now where if you get a HELOC in June you will receive a voucher for Totem Building Supply (similar to Home Depot) for 10% off a single purchase up to $20,000 as well as a $50 Totem CG. Since I am planning to have my cousin's husband renovate my basement, this 10% discount will come in very handy when we go to purchase all the building supplies.

I think I've rambled enough for a first post. Thanks to anyone who took the time to read.