Let’s just call this month a big fat “How NOT to Use Credit Cards.”

Have you seen pins like the one on the right in your Pinterest feed? Beware, advertisers hire wily copywriters to separate you from your money. Even though this pin says transferring a balance is ingenious, and even though I did exactly what it says, I have to disagree with the “ingenious” part. No, I’d have to say it’s the slippery slope of managing your credit. Let me tell you why:

1. You’ve just opened yet ANOTHER credit card.

   Welcome to a credit score demerit for the additional risk of having more credit extended to you.

   I lost 25 points on my FICO score by opening my new account. I know I already have too many accounts. It’s a real challenge keeping an eye on the carousel of due dates on the calendar.

2. You just paid a 3% balance transfer fee.

   If you might have paid off that balance in four months, you just paid a 3% balance transfer fee, which does not offset the zero per cent rate you were offered.

   I transferred nearly four thousand dollars in balances and paid $120.00 for the convenience. I’m not saying I could have paid off four thousand dollars in four months, and I’m not saying it couldn’t happen, but it felt like paying four months of interest upfront. Ouch.

3. More than likely, you will transfer more balances than you can comfortably pay in 21 months.

   It’s just too easy to transfer not only your high-interest balance, but this month’s general expenses, too.

   Grand. Now we’ve increased our total credit card debt and our debt payoff date for what? Milk, canned goods, and fuel? NOOOOooooooo!!!

4. At the end of the teaser rate your rate increases to about 13.49%.

   Is that a better rate than you were getting on your other card?

   Maybe, unless it was the credit union credit card. It’s not terrible, but the ad copy makes it sound like they don’t expect you to actually try to pay it off over that 21 months. Actually, it reads like they’re trying to convince you to take advantage of the zero percent rate by spending even more money on lifestyle upgrades. Maybe that’s just the way I read that section. See for yourself and tell me if that’s how you read it. 

5. What happens if you can’t pay the balance when the 21 months is up?

   What if you can’t get approved for another balance transfer?

   Here’s an ugly truth about credit card companies: they cheerfully give you enough rope to let you hang yourself. If you keep rolling balances from old cards to new cards, adding that month’s daily expenses, and only making minimum payments, you are contributing to your own ever-expanding mountain of debt. Eventually, creditors are going to wise up and stop giving you credit. 

You should probably thank them for not letting you hang yourself, instead of cursing them. 

Reckon I can’t delay it any longer.

Here’s a recap of how September 2016 went down on Burton Farm:

Our total debt crept from 1.58% to 1.78% paid off this month.

It is AGONY just getting to two percent.

By tracking our debt progress, I can see that the total debt is still going in the right direction. And although it would be easy to only focus on that improvement, I must level with you: our credit card debt did increase this month.

While I’m sick about increasing debt when we’re supposed to be paying it off, we pulled off another month without a missed or late payment, even though what we’ve done is risky. Did you hear that? It was a risky move and could kick us in the butt down the road. But for now, we’ve managed our setbacks with a credit gamble that we expect to win.

Setback #1 – The townhouse still hasn’t sold.

I have to hand it to my realtor: she’s been working hard to get offers, and we’ve received several offers in the past six months, which is more than the previous realty group had secured in the nine month hostage situation contract. However, all of the offers have been so low, we’d have to bring money to the closing table just to sell the house. This is not going to happen.

*Update*

Our contract with the realtor expires this week. After a great deal of thought, I’m going to be pursuing a FSBO (For Sale By Owner) like a maniac.

SOMEONE is going to be moving into this townhouse by Christmas. I’m so over paying two mortgages.

 

Setback #2: Non-sufficient Funds charges TWICE!

So, I know, I should have checked it again, but I’d already logged in three times and the interwebs was giving me fits, so when I finally got to log into Paypal, I just clicked “Enter” through to the end, and moved on to the next project. It wasn’t long before I got one notice and then a second that my payment had been rejected by my bank, and, BONUS, the bank had charged me two NSF fees of $25.00 each!

A few years ago, I switched some bank accounts around and renamed two checking accounts, but I never bothered to update Paypal because I always switch to paying with a credit card. Since I never keep more than five or ten bucks in that checking account, when I bought our new tennis shoes on eBay, even though I paid in one Paypal transaction, I purchased from two vendors, so I got hit twice.

This story has a happy ending, though. I immediately transferred more than enough money to pay all the fees and the original charges into the account. Then I emailed my credit union and asked them to consider removing one of the fees. I had, after all, thought I was making one transaction. I also explained very quickly that the purchase was for shoes so that we could continue working without back or knee pain. I also let it slip that money was kind of tight between two mortgages. Then I promised I was going to update the payment information as soon as the charges cleared from Paypal.

My credit union generously refunded both fees.

Have you hugged your credit union lately?

Setback #3: The Return of Hand, Foot, and Mouth Disease.

It’s not just for Florida State University, y’all. And it came back with a vengeance. The Ax man was covered with painful blisters from head to toe, across his back, chest, and rump. Although today, only little curls of dead skin remain all over his little feet & toes, he had to stay out of daycare for a week and a half while he healed. I was unable to take off work, so my husband had to stay home, which means eight days of lost pay, in addition to the eight days of daycare paid to hold his spot.

::Throws $1,000.00 into the chiminea::

Because of these lost days of work, we couldn’t pay our day-to-day expenses.

I couldn’t pay the American Express card that was carrying regular monthly charges for fuel, groceries, cell phone bills, and the home satellite internet service. Instead of being able to make a payment, I rolled that balance onto the new Citibank card with the zero balance for 21 months deal we discussed above.

It cost me about thirty dollars for the balance transfer, but with no interest for nearly two years, we should be able to pay it off before we lose money to interest. I’ll just have to pretend that thirty bucks was a quick trip to the Dairy Queen for my little family and let it go. If I keep marinating in the loss of that thirty bucks, I might attract more loss, and we’re not doing that!

Net Worth & Debt Payoff Progress through September 30, 2016

*I reduced the value of the townhouse to more closely match current “Comp” prices in the neighborhood. This rots my soul as much as paying retail.

How’d you do last month? What are your goals for this month? Tell me in the comments below.

I am determined to cross that 2% line by next month.

~ Erica