Whilst I may have bored you all to tears with my own tears, let me just share with you the slim ray of sunshine that I find tanning my manly forearms:
I have stopped paying interest on my debts.
If it weren’t for interest payments, I would have paid off my original loans a dozen times over. Don’t get me wrong, I have nothing against the concept of interest, I have just had enough of paying so damn much of it.
For example; say you get a credit card with those charming fellows at MBNA and in a short amount of time, run up a 3 grand balance by buying lots of things with it. Not exactly a far flung scenario as many people get themselves into this position, others into the tens of thousands of pounds stages. For the sake of keeping things simple, we’ll run with the three grander.
The monthly interest payment on a standard MBNA credit card, which has a balance of £3000 is around £75 a month. If you can only afford to pay £100 a month towards that card, only 25 pounds comes off of the bottom line. If that scenario only applies to you on a good month, it won’t take long before the balance, and therefore the interest, increases due to late payment charges and the like.
It’s a vicious circle and no mistake.
Being in debt with a credit card is a pain in the backside because of the massive amount of interest. The key is to stop paying the interest and actually make a dent in the debt. I started doing this last summer and the difference is already appreciable. The only other item that is costing me money is my overdraft which, to be fair, I will find much easier to pay off thanks to already paying off one loan and doing the 0% balance transfer dance with the credit card.
But why should I continue to pay interest on it when I don't need to? The answer is quite simply, I shouldn't. I did some googling and came across a method to switch my overdraft to a 0% Balance Transfer card. This method is called The Mule Card Technique.
Luckily for me, I've been in debt for so long and made so many regular payments, my credit rating is fantastic! I applied for another credit card with generous 0% on balance transfer terms and got it. All I had to do now was get an Egg Money Card to act as the Mule. I was dealt yet another stroke of good fortune when I told a friend of my plan and he said to me "Don't bother getting yet another card, I have an Egg Money Card. Balance transfer the money to my card from your new 0% card and I'll put the cash from there into your account!"
Bonus! I'll be interest free in no time and can actually make a massive difference to my debt!
Well, I say "in no time" but it'll have to wait a week or two for my mate to get back from his holiday he went on yesterday. Talk about unfortunate timing eh readers?!