Part of my post-summer refocus is to get back to some of the basics with regards to my family’s personal finances.  First step was to reassess my family’s cash flow and make the appropriate changes.  Second step is to take a look at my debt, and come up with a plan.

As of September 1st I have the following debt:

Bank of America$5,567
Chase Sapphire$871
Amex (Outstanding)$3,606
Cell phone$264

Total: $11,355 (it really is $8,555 since American Express will get $2,800 by Saturday)

First and foremost, I have the liquidity to eradicate the debt if I chose to.  I actively choose not to risk my liquidity due to the following caveats:

  • The American Express card is a charge card so $2,800 of that $3,600 needs to be paid off by the end of the week.  So the total debt number is approximately 20% higher than what it will be come Saturday of this week.
  • The Bank of America Account is 0% for 18 or so months.
  • Sapphire Card – I didn’t really need it but if I spend $3,000 on it in the next few months I get 50,000 points!   So I have stopped using the AMEX until I get those 50,000 points.
  • The Mattress purchase and cell phone purchases were at 0%.

Creating a Personalized Debt Repayment Plan

Spending down my cash reserves and/or completely liquidating non-qualified investments seems like a terrible idea to me.

  1. Step One – End of this week get the AMEX down to where it has to be (leaving a little bit over a grand).
  2. Step Two –  Pay off the Disney Card ASAP.  It is a small card, with an interest rate.  There is no reason to keep a balance on it.
  3. Step Three –  Get AMEX down to $0 and try to keep it there (I say try because it is my main card and so it has auto payments).
  4. Step Four – Pay off the cell phone and mattress purchase.  While they are at 0% for those small amounts there is just no reason I should even have to think about them.
  5. Step Five – Keep Chase Sapphire Card under $1,000 balance
  6. Step Six – Attack Bank of America aggressively.

My goal is to reduce the balance above by a net $1,000 per month.  If it is a few days before the end of the month, and I haven’t done that I am going to force myself to take some of my dividend investment portfolio gains off the table to meet that goal, which should be done pretty easily. Notwithstanding the foregoing statement, I will try to follow my strict sell guidelines, however, if I have to liquidate to keep this goal I shall.  While I will sell overvalued assets if I have to, I plan on still buying undervalued dividend stocks.  I am going to bring down my purchases from $1,000 lots to $500 lots.

I enjoyed the feeling of being consumer debt free for years, there is no reason I shouldn’t get back there relatively quickly!