johnny_dog: (negative)
[personal profile] johnny_dog
Yesterday, after getting my Federal tax refund back, I initiated my plan to pay off what I thought was my highest interest credit card; Home Depot @21.0% APR. I prepared an online payment for the full amount and submitted it, then went about checking on my general financial situation.

Sears
A week ago, I had used my Sears card to get Kupok an eye examination and glasses. When I opened my Sears account information I happened to notice the interest charge from a previous purchase and thought it was way out of line. Looking further I saw that my Sears card had an unbelievable 30.14% APR. WTF!!!? I had paid the card in full numerous times and had not been late in payment for quite some time. I called them and was informed that their interest rates were not negotiable. Most credit cards have negotiable interest rates and since Citibank owns Sears credit now and Citibank negotiated a much lower interest rate for me, I was quite upset by this. I demanded a supervisor and told them that they had two choices; lower the interest rate or loose a customer. They gladly closed my account and I ended the call with a “You and Sears can both go to Hell and get fucked!” Yes, I know that was immature of me. I decreased my planned payment to Home Depot (also owned by Citibank) by $700 and paid Sears in full, then shredded the credit card. I am now boycotting Sears and K-Mart.

Radio Shack
Being on a tirade from my dealing with Sears I went though all of my credit cards and the only other one I had with an APR above 21% was Radio Shack. Again they are owned by Citibank now. Anyway, I called them and like Sears, they would not adjust the rate. This card has been paid in full since November, so I simply closed my account and shredded another card. After over two years working for Tandy Corporation in the early 90’s, I hate the company anyway and only do business with them when I can’t find what I need elsewhere.

Home Depot
As I said above, Home Depot is also owned by Citibank and their 21% APR is not negotiable; however, I decided to keep the card in case of any household emergencies or to take advantage of any exceptional no-interest offers that I know I can pay off long before terms are due. (Working at Radio Shack I became well trained in the catches in these offers and I know how to keep form getting screwed by them.) Having to divert the money to Sears to pay them off, I am still left with owing Home Depot $700, which is down from the $3,300 that I did owe them.

JCPenney
Like Home Depot their APR is 21% and like Home Depot, I am keeping them for emergency usage when cloths are desperately needed between paychecks. (This has happened to me a disturbingly high number of times in my past.) Penney’s has been paid in full since December. At his request, I did remove Symeon from my Penney’s account.

Capital One
This is my general usage credit card. Thanks to several phone negotiations the interest on it is actually my lowest APR card. It once had an APR of 28.15% but I got it lowered to 19.8% APR sometime last year. After some customer service issues and problems on their part, I was given a courtesy credit of about $25 and my interest rate was reduced to 14.9%. Currently the card is nearly maxed out ($500 credit line that I do NOT want increased) but it almost always gets paid in full each month. Tomorrow is payday and I have already budgeted the necessary funds to pay it in full.

Citibank
In 2001, when the economy went to Hell, I was nearly 6 months unemployed. I used every scrap of credit I could get and then some to make it through. As time went on and I began to financially recover again I was paying off debts and consolidating debts whenever I could. Sometime in the early years of the decade, I had ended up doing a lot of balance transfers and in the end, my Citibank card was maxed out at $7,100. Citibank also ended up with an unbelievable high interest rate, but I managed to get it lowered. Unfortunately, I have had to use the card every now and then and as paying off other debts has been my focus, it remains nearly 100% maxed. Of the current balance, $4,400 is at 16.24% APR and $2,600 is at a mere 3.9% APR. Of course all payments go only to the low interest balance. This ends us costing me an average of $65 a month. Home Depot at half the balance was costing me $55 a month in interest!

NON CREDIT CARD DEBT:

If only that was the end of my debt, then the light at the end of the tunnel would be visible. Unfortunately, I have much more debt to my name.

US Bank Home Loan (Second Mortgage)
Back when I was consolidating stuff into my Citibank card, I also took out a second mortgage to make some improvements on the house and to consolidate a number of debts, including my car loan. On 6/21/2002 the co-owner of my house (Tom) and I initiated this 15-year loan of $34,250 @11.3% APR. I had intended to pay it off in 3-5 years. Unfortunately, I am far from reaching that goal. At this point in the amortization schedule, 33% of each payment goes to principal and 66% goes to interest. While I have not done a phenomenal job, I am 6 months ahead of the original pay-off schedule. Unless I am able to speed up the process, it will be January of 2011 before the interest/principal reaches a 50/50 split, and January of 2017 before it is paid in full. At least I get to use the interest paid as a tax write-off, which gets me over $1500 extra back each year!

Student Loans
Like most of my debt, Citibank also owns my student loans. One might say that Citibank controls my life! At the end of acquiring my Bachelor degree, I had accrued a total of about $26,000 in student loan debts. Currently these are consolidated at an interest rate of 5% APR with a current balance of $22,400. Like the second mortgage the interest is tax deductible, but because I have crossed the $55,000 a year income mark, the amount I can claim has been reduced.

Countrywide Home Loan (First Mortgage)
As far as I am concerned, you either throw money away renting or you use the same money investing in a home. In January of 2000, Thomas Bowles and I bought a house. The original loan was for around $135,000. It was refinanced in 2002. Currently there is a balance of about $124,000 at 6.625% APR with 25 of the original 30 years remaining. At least this is another tax write-off I can claim.

THE PLAN FOR THE IMMEDIATE FUTURE AND BEYOND:

Once my Savings account is back to about $650 and I have my Capital One credit card paid in full again, then I will make large payments on my Home Depot account to get it paid in full before June. It may even be possible to pay it sooner than that, but I wont know for at least another month.

Once Home Depot is paid in full, my concentration will turn to my Citibank card. I want to be paying at least $300 a month on it. It would be nice if I could be paying $600 a month on it, but I do not see how I can swing the funds to pull that off. Still, at $300 a month, there is a very good chance that by this time next year I will be writing about using my tax refund to pay my Citibank card off in full. Only time will tell.

One to two years down the road, after Citibank is paid in full, if I have still been unable to consolidate my first and second mortgages into a single mortgage with a lower interest rate, then my financial focus will shift to paying off the second mortgage. According to the amortization schedule, if it is March of 2008 when this happens, the balance will be about $26,600. If it is March of 2009 (more likely, unfortunately) then the balance will be about $24,700. My estimates are that it will take 4-5 years after paying off Citibank to pay off the second mortgage, but again, only time will tell.

As for the primary mortgage and my student loans, I am in no hurry to pay them off. One exception to this would be the purchasing of a new home and selling the current one, in which case I would hope to either consolidate all debt but my student loans into the new mortgage or sell the existing house for enough of a profit that I can pay off all other debts that I have. Of course in such a scenario, Tom’s debts would have to be taken into account as well.

IN CONCLUSION:

With all of this, it is easy to see how I can be living from paycheck to paycheck even though I make $29.00/hour. For many years I have been – and for many more years to come I will be – paying for past financial blunders, mostly involving high interest credit card debt and getting thrice-screwed in bad automobile deals. All I can do now is plug away at it and hope that I find some way to speed up the process.
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