So I’m doing the whole avalanche method for debt reduction, and it’s working for me. But the fact that my individual debts are ridiculously large (well for someone who doesn’t have an outstanding car loan or a mortgage) and paying off one of them involves months of payments, makes it feel like I’m not actually doing anything.
Sure the balance owing reduces by about $700 every pay-day, but that just means I have 13 days every two weeks when I’m looking at my budget imagining my younger self and then hitting him with a two-by-four for hours on end to teach him a lesson about incurring this much credit card debt.
So in order to keep myself from going completely insane at the fact it won’t be till August 2012 that I will be finally free of credit card debt. I played around with the percentages of my current debt vs my available balances.
“What does he mean, and wow he looks great in with the spiffy new haircut and suit today!” I hear you say.
First of all, aw shucks. Thanks. I am rocking this ensemble today.
Second of all, it’s one of the things I read about whilst doing research on how a credit score is calculated.
They take what credit you have outstanding, and divide that by the maximum credit you have available. For example, you have a $5000 limit on your card, you currently owe $4567 on it. Which means you are currently using:
$4567 / $5000
= 91.34% of your available credit.
And I’ve used high figures as above, because well that’s about how much I owe. On each card. I have 4 of them. Yes slap me with a two-by-four, I was that stupid.
So currently I am using 76.85% of my total available credit. Which means I am teetering on the brink of bankruptcy. Well to me anyways.
But it’s not all bad news, if I extend those calculations to each individual credit card (rather than calculating it as a whole) for every $700 I pay off that particular card goes down by a whopping 12% or so. Which looks a helluva lot better than the 3% reduction in total debt every time I pump half my paycheck into credit card debts.
And while I know these numbers really don’t mean anything to anyone else, and yes they could be considered highly arbitrary, it’s nice to feel that I am getting somewhere with my debt.