Hi – this is Mr Credit Card from www.askmrcreditcard.com. Little House has written about credit on this blog and I’d thought I’d share some thoughts on how the cheap credit that became in the 2000s has led to our current financial situation. If you are looking a for credit card, please check out my best credit cards list.

Little House mentioned in her post about life before credit, how credit became more available to folks after the eighties. I would like to take this opportunity to expand on this phenomenon, especially after 2000, when the real estate market seems to have taken off. And how this easy cheap money has nearly ruined us. At the end of the day, I think there are lessons to be learned when things are cheap and come too easy for us. It almost always ends in tears.

The 90s was a decade best remembered for President Bill Clinton actually balancing the budget and having a budget surplus. It was also a decade of boom in the stock market as low commodity prices allowed big blue chip stocks to outperform earlier in the decade. It was also a decade where then Federal Reserve Chairperson Alan Greenspan made reputation for himself for having the Midas Touch. In reality (and on hindsight), what Greenspan did was simply to lower interest rates and print money wherever the first sign of economic trouble was in sight.

In 1998, after the Asian crisis and the Russian Default, Mr Greenspan lowered interest rates on fear that the US economy will slow down. Well, it slowed down a little, but the effect of low rates was a bubble created in the internet stocks and NASDAQ in particular. He then raised rates when the economy was overheating, and when 9/11 happened, Greenspan slashed rates to unprecedented levels. Rates stayed so low for so long that access to credit became really easy. There were some unintended consequences.

Firstly, it was the beginning of a housing boom that would devastate us years later. Cheap money and easy credit meant even that folks who should never have bought a home could get a mortgage. Everyone knows now that this was really the root cause of today’s financial crisis. But even folks like General Motors began their famous 0% financing. “Buy America” was deemed to be patriotic. That was also the beginning of 0% balance transfer credit cards. “Transfer your balances over because we want to make money of your interest!” – was what the credit card companies were saying. Even college students could get multiple student credit cards even with no income! Even if you had bad credit, there were cards available. Want to buy a furniture but have not saved up, there is always 0% no interest payment for 24 months financing! So rather than saving money, consumers were “encouraged to take credit”. (Note: Thank goodness Little House had very little access to credit!)

Proliferation of real estate related jobs!

One of the most damaging aspects of the easy credit of the 2000s was that the real estate boom led to all sorts of job creation, but in the wrong sectors. We had obviously a proliferation of real estate brokers, mortgage brokers, contractors, construction workers. Do not get me wrong, there is nothing wrong with job creation. But the jobs created by these “easy and cheap money” did not create products. These folks were mere middlemen whose earnings were really a tax on transactions. They did not really add value to the economy.

Next came the proliferation of real estate investment books and seminars, get rich quick schemes. All of a sudden, every one became a real estate “investor”. Everyone wanted to get a “second property” as an investment! As credit became easy, I know folks who took out second mortgages and tried to be like the big boys and invested in “commercial property”.

But almost all the jobs that were created by easy credit conditions were not manufacturing sector. In fact, we are steadily losing our manufacturing capacity to other “cheaper lower cost countries”. Therein lies the problem. We have a trade deficit (we export less than we import). We have a federal budget deficit (and Obama is proposing a budget that has a one trillion deficit this year). Listen again : ONE TRILLION DEFICIT. Can you imagine if you propose a budget to your spouse with a deficit! Put in this context, the jobs that we have created amount to nothing more than “internal wealth transfer” and did not make us richer as a nation.

I think there is a lesson here to be learned. And that is when something comes too easy, there are always unintended consequences. And if you do not understand the root causes, you will get into trouble. Let’s use a few examples.

1. Easy Money In Your Job – Many folks who got to be mortgage brokers or brokers got lucky during boom times and made lots of money. The problem when you “by chance” entered an industry that is booming is that you run the risk thinking that the good times will last forever. I know folks in Silicon Valley that made good six figures in the late 90s and have not been able to find a job that pays anywhere near since!

2. Your kids get good grades too easily – I’ve seen this a few times. Young kid does very well in math in elementary school. It comes easy for the kid. So he never learns to work hard because he or she does not have to. But there comes a time in middle and high school when the subject gets tougher and all of a sudden, they cannot cope because they never to fight through adversity in studies.

3. Large home equity line of credit and credit cards in your wallet – Many folks have gotten into this trap. Back a couple of years ago, getting a home equity line of credit and credit cards came super easy. Hence, many folks assumed that that they could be used for silly purposes without saving money – like renovating their kitchen, taking vacations!

5. Kids who excel in sports early in life – Ever seen a kid who is eight years old and you think will become the next baseball star only to see him fade away. When things come too easy, the kid forgets that to get ahead, you always have to keep improving.

Is your job merely involve a transfer of wealth in the economy?

Perhaps the biggest question we are all asking ourselves if how safe is our jobs. One good insight is to find out if the job you have adds value to the economy or are you simply a toll taker like a real estate agent. Because we as a nation had debt up to our eyeballs, it is very unlikely that consumer spending will recover anytime soon. I think you have to ask yourself if you are working for someone with a unique product that people around the world would want. For example, if you work for Microsoft or Apple or an equipment company that sells products worldwide, then at least you know that you are helping to contribute to the wealth accumulation of this nation. But if you are in any sector that depends on “consumer spending”, I think tough times lie ahead.

If you have been laid off, or are considering a career switch, kindly consider what I have said. Don’t be fooled by easy “network marketing” or any other “easy money makers”. There is no such thing as easy money. If there is, the good times never last. And we should all have learned that by now.

This may seem like a strange topic..When to Give Advice, especially considering I just finished a credit eBook that gives advice on improving credit scores. However, because I have learned many things about how credit works along the way to my own financial freedom, I’ve been asked to give advice to a friend or two recently.

Just yesterday, an older woman who I’ve helped over the years, asked me what she should do about her credit card debt. Now granted, this particular case is unusual and interesting, so my answer wasn’t complete because there are so many variables affecting her life of debt. Some background on this woman to put things in perspective:  She is nearing 65 years of age and has accumulated $120,000 of credit card debt over the years. Her excuses for this behavior are plenty: her mom died (10 years ago), her husband left her (12 years ago), her dad died (4 years ago). Her excuses go on and on. Her income is generated from her family’s businesses and her ex-husband’s social security and residual income, it comes out to about $80,000 annually. On top of this income, she also has investment accounts that her parent’s left her. Basically, she hasn’t really had to earn much of her income over the past 25 years, it just sort of accumulated from relatives. Her grasp on finances has dwindled due to this and other factors.

She asked my advice about calling and asking a credit card company to increase her credit limit or reduce her APR. The reason being was that Chase reduced her credit limits on two of her cards. She has stellar payment history, but her credit to debt ratio is well over 30%. I explained this to her, as it was one of reasons listed on the Chase letter she had received. She didn’t understand why they were looking at her overall debt including all of her credit cards. Once I explained that they see her as a risk because she is using much more than her 30%, she sort of understood, but felt it was unfair. My advice to her was to call Chase and ask them to either reinstate her original credit limit or reduce her APR. My thought on this was that it doesn’t hurt to ask, the worst they can say is no. Obviously the better option is to reduce the APR.

She then asked if she should pay more towards that card, thinking it might act as an incentive to change their minds. My advice to her was that she needed to figure out what the goal was: Was she thinking she wanted to pay off the card quicker? Her answer was no. Was she thinking of paying a large portion of debt off this year due to some additional income coming her way? Her answer was she wasn’t sure. I then explained to her that if she receives this additional income she is expecting, she might want to put a large portion of it towards her debt. However, by the end of the conversation it was clear she just wanted to reinstate her original credit limit of the card.

After I hung up with her, my husband who had overheard the entire conversation chimed in that she really needs to speak to a financial consultant. She did that two years ago, but didn’t like their answers: 1) Pay off the entire debt and save up to $20,000 a year on finance charges, or 2) file for bankruptcy. But I realized what the underlying problem is that’s causing her to be indecisive: She doesn’t realize that by paying off her debt, she will be saving the money she spends on finance charges.

There are some great calculators out there, like CreditKarma’s Debt Repayment calculator. I think my next strategy with her will be to show her how long it will take her to pay off her debt with the online calculator. Maybe then she’ll realize the sooner she pays it off, the better!

What are your thoughts? Obviously, this is an unusual scenario. She makes plenty of money, but just can’t seem to see the big picture. How would my credit eBook helped someone like this 25 years ago?

Okay, so I finished my credit eBook and am now looking for constructive criticism. My pamphlet is based on personal experience as well as sound advice that I have learned over the past few years. I’m trying to decide if I should offer my eBook for free, offer it for a nominal fee, or throw it in the recycle bin! All comments are welcome. Just remember that I am a sensitive human being.

P.S. I am temporarily hosting it on the adobe site for now. Once I receive feedback and figure out how I want to offer it, I will have a downloadable link from my site to my eBook.

As I keep tweaking my monthly budget, I’ve realized a few areas that need to be added, thanks to Money Funk. 1) Savings – both for my tuition and emergency fund, 2) life insurance – I originally left this out of my monthly budget, but pay for it every 3 months. It’s much easier to just budget it as a monthly payment, and 3.) bank charges. Since I have a couple of checking accounts that charge a monthly fee, I added them into my equations as well. In doing all of this budgeting to the penny, I realized I really need to pay down our line of credit to free up some money.

At a total of $8,380, I needed to come up with a realistic plan. As much as I’d like to send them huge lump sums and pay down this crappy debt, I have to be more realistic so that it actually happens. Using a couple of different calculators, I figured I could have it paid off between 3 – 5 years. Here are a few different scenarios using a couple of different online debt repayment calculators:

• CreditKarma’s calculator is very helpful. Based on their calculations, paying $300 a month, I could pay off our debt in 4 years. Their calculator offers a few different options to see how much quicker the debt could be paid off if I paid more monthly, or reduced the debt by a percentage.
• Bankrate’s credit card calculator lets me see how much of each payment is going towards principle and how much is going towards interest using their amortization chart. It’s shocking to see how much is paid in interest over the length of the loan. I think if more people saw this upfront before taking out a line of credit, more people would turn them down. I know I would have!

Each month, as additional funds come in that are over what I’ve set as my monthly budget, I intend to put more towards this debt. Over time, I’m hoping to pay this off before the estimated 4 years. If I can stick to my budget closely, and retain the income I’ve made in previous years, this should be rather doable.

What calculators have you used to show repayment? What about savings calculators?

I have to say that this past decade has been full of ups and downs. However, I’m glad that with those downs it limited the amount of credit that lenders extended to me. For instance, at the end of 1999 and early 2000, I made a bunch of really bad financial choices. These bad choices negatively affected my credit. My bad credit limited the amount of credit that was offered to me. So with this past decade’s housing boom (and bust) and easy credit terms, these things just weren’t available to me to mess up even more. And, it gave me time to really learn why it’s important to have good credit, how to get good credit, and how to keep my credit in good standing.

My bad choices in the long run were really silver linings in a sense. I know many people, younger than me, who were extended a lot of credit through credit cards over these past 10 years. They maxed out their credit cards at a whopping $29,000 and are now in a lot of trouble. The most credit I was ever extended, right before I completely dug myself into a hole, was $5,000. Before 2000, most credit card lenders were more cautious with their credit limits. These limits were thrown to the wind sometime in early 2001/2002 at the start of the housing boom. Everyone thought they could use their homes as ATM’s and pay off their massive credit card debt. Why not? Their home value would increase exponentially forever, right?

Wrong. I remember in 2003, a friend of ours had just gotten a dream job as a mortgage broker. Handing out ARM’s to people with sketchy credit made her a fortune (sadly she lost most of it right before the bust.) At the time, she said that because there were people like her to hand out loans to just about anyone, home values would never go down. Her managers saw no end to the housing boom. My husband and I were just flabbergasted that homes could possible continue on their upward movement. In 2005, a small fixer-upper was going for $525,000, we just couldn’t see why anyone would pay that much or more for such a place. We just didn’t believe what we were hearing.

Thankfully we didn’t buy into that trap. There was a moment where our mortgage broker friend tried to convince us to buy property on a 5/1 ARM loan. She really believed that home values would remain constant or go up. It’s not like we were predictors of the future, we just couldn’t figure out how to pay for a half-million dollar property. The skyrocketing values just didn’t make sense, and I’m one for common sense (most of the time.)

This decade of minimal credit made me pay for things in cash. The small credit card bills that we had 15 months ago have all been paid off. Our last remaining debt (besides a student and car loan) is a line of credit. With hard work, crunching the numbers, and determination I should be able to tackle it within 18 months.

What things did you learn this past decade? Are there anythings that you would change? What would you do differently?

The initial purpose of my article was to show that the majority of American’s have very low consumer debt, and that those with debt are throwing off the ‘averages.’ However, what sometimes happens with theories and research, you can be proven wrong! After searching many websites with statistics, I came across one site that showed more current data, contradicting my original position. These statistics stated that slightly under 50% of Americans carry very little debt. A larger portion of Americans carry much more. If you are curious about how I ended up talking myself out of my initial position, be my guest and read on.

I was reading TheSimpleDollar.com the other day and Trent was listing some averages showing figures for consumer debt, house size, and a few other topics. His main point was that statistical averages are just that, averages. Averages take everyone into consideration, and when you see what the ‘average’ American owes in credit card debt the discrepancy lies in those who owe a tremendous amount of debt versus those that don’t have any debt.  I think people sometimes feel that having debt is OK because they are under the ‘average’ amount. (I’ll confess, I was one of these people!) When the reality is they are just the ‘average’ minority, the minority being those with consumer debt.

So, I decided to do some quick research to see how many American’s were free of consumer debt. I also wanted to make a point that falling within that ‘average’ is just another way to continue the debt cycle. The misery-loves-company syndrome is alive and well within the consumer debt world. Here’s how that scenario plays out:

Your neighbor just bought a flat-screen TV at a well-known electronics store. You think you deserve one too. You don’t have the cash, so you apply for the 6 months no finance charge plan and take on another $3,000 worth of consumer debt. No problem! Your total credit card debt, once you add it all up, is under the average American’s $8,000, so you pat yourself on the back for doing such a good job of not over spending.

Here is where the problem lies: thinking it’s okay to carry this much debt because others do.

While researching I came across an article by Liz Pullium Weston which pretty much says the same thing. She used data from CardWeb and FairIssacs for her statistics. According to CardWeb, 55% of American’s have no consumer debt. That is the majority of Americans. Most American’s do carry credit cards, about 74%. And according to the same statistic source, half of  credit card holders pay their balances in full each month. Taking a closer look at the numbers, only 1% of consumers have more than $21,000 on credit cards. This small percentage of people with high consumer debt makes the average much higher than a median figure.  Since averages add up all the numbers, from lowest to highest, the average is heavily dependent on just how much that 1% credit card holders owe.

With a little more research, I found a fascinating article (and more current) that breaks down some more ‘averages’ on credit card debt. The data shows that 43% of Americans spend $1.22 for every dollar they earn. That’s 22% more than what they make. However, the 43% who are spending freely is still less than the majority of Americans.

Wait! Hold it! Another, more recent, article states that only 40% of credit card holders carry less than $1,000 in debt. This completely contradicts my initial statement. I’ve just talked myself out of my original point. I was hoping to shed some light and make people strive to pay down their debt, because they weren’t the majority. I’ll stop babbling now.

Some friends of ours recently closed all of their credit cards and signed up for a debt consolidation program. While I think it is admirable of them to finally confront their problem, I wonder if that was the best solution to repairing their overall finances?

As soon as I heard that they had done this, I immediately started thinking about a time when I had turned to debt consolidation. It was when I was in my mid-twenties and I didn’t really want to confront the problem or pay down the debt. I just didn’t want to mess up my credit any more than I already had. So, I took what I thought was the easier way out, I turned to a company who promised lower monthly payments and repaired credit.

If I had actually stuck with the plan, maybe this would have worked out for the best. But the initial problem, the fact that I wasn’t budgeting and keeping consistent records of how much money I spent versus what I made, was the ultimate problem. I wasn’t really ready to confront my problem: I was spending more than what I earned.

My fear for my friends is that they are doing the same. Instead of confronting their problems with a self-made plan of action, they are hoping another company can solve their problems for them. The reason I think this is that the day after my husband spoke to his life-long friend, he and is wife decided to drive to another state and purchase concert tickets for a kid’s show. They were concerned about how much a hotel was going to be. However, they made their last minute plans and  made the trip anyway.

To me, this sounds irresponsible. If you just realized you are living above your means, close all your credit cards, and sign up for a debt consolidation program, you shouldn’t be traveling to a concert in another state the very next day. Am I being too judgmental?

This leads me back to my initial point, I’m not so sure debt consolidation programs are very successful. These companies claim to have a better rapport with the credit card companies and in turn they can get the interest much lower than an individual would be able to. However, if the person is unwilling to change their habits, and assumes the debt consolidation program will cure all their problems, then that person will continue down the same path.

I did some quick and dirty research and found that “78% of the time, the debt grows back,” to quote Dave Ramsey, after an individual has completed a debt consolidation program. I also quickly browsed Dave Ramsey’s article and found the same main idea: the basic problem is the person still hasn’t learned how to manage their own finances, set a budget, and stick to it.

I wish my friends luck and I hope they sit down and figure out their budget. Hopefully, this program if anything, will allow them to get their credit back on track.

Financially Free

When I think about the times I felt financially free, it was when I was making less money than I do now. It’s sort of ironic how that works out. Years ago, after I had graduated from college, I was working two jobs and making just enough money to cover my expenses. I never worried about money because I was employed and didn’t ever feel like I was going to be let go at any time. I felt financially free in some ways. I didn’t have an emergency fund, but I always had some money in case I needed new tires or some other emergency popped up. I wasn’t in debt, and that was the key to my financial freedom. I didn’t owe anyone any money. I was living below or at my means.

Then, my lifestyle changed. My husband and I started our own business (he was actually my boyfriend at this time) and that sunk us into our initial debt. We were stressed about money most days, always trying to figure out how to make more and keep up with our expenses. For many years we felt strapped down to our debt. Slowly, we paid it off or let it expire off our credit reports. We were young and figured we would have time for the negative items to fall off and be forgotten.

Once this started happening, I again felt more freedom. We didn’t acquire any new debt, we were living below our means and even had a savings account started. Our small business was bringing in just enough money to cover our costs and we didn’t have to work 80 hours a week to make this happen. We felt financially free, we were even working on improving our credit. We were able to purchase a new car at a decent APR and didn’t stress out about the payments. We felt excited and  happy most days about our new path.

Then, our lifestyle changed. (There’s a pattern evolving here!) We decided we wanted to move out of our 2-bedroom apartment in a shady neighborhood, and into a rental house in a slightly better community. I had figured out that we could afford $400 more in rent and an additional $200 more in utlities. We had enough in our savings account for the deposit, and chose a fixer-upper of a rental house. At the time, my husband liked the idea of the landlord living 2-hours north of us, rarely visiting, and being able to fix the house up to our liking. I originally didn’t factor in the cost of fixing up a rental.

A month into living in our rental house, our small graphic and web design business was picking up new clients. I was subbing full-time and didn’t have much left over time to help my husband. We decided to hire a part-time employee. Another $1,600 a month that I hadn’t factored into our inital lifestyle change. Luckily, our business was able to keep up with the cost of having a part/full-time employee, and later that year we gave him a raise.

Slowly, our financial freedom began to wane. I was becoming stressed out due to all of these added expenses that I hadn’t originally factored into our move. Our business slowed down over the summer months and I stopped working because school was out. We took on a line of credit to get us through the first summer with our employee. We didn’t want to let him go since he had only been with us a few months and was working out quite well.

A few years have passed, and this year, my husband and I decided we are tried of feeling so stressed out about money. We started saving towards a down payment on a house. We’ve also started paying off our debt and trying to get back to that financial freedom we once had. Meaning, not oweing anyone any money. We’ve reduced our employee’s hours, so the stress of trying to pay him his salary is slightly relieved. We have also stopped improving the rental house. We realized it is silly to put in our hard-earned money towards something we don’t own. The house is in slightly better condition than when we moved in. The two rooms we spend the most time in have new carpet, paint, and window treatments, thanks to us.

What I’ve learned, looking back, is that the key to financial freedom is not having any debt and living below your means. My husband and I are planning on purchasing a house within the next year, another lifestyle change. However, this time, we will be doing so without having any other debt to pay off. We are also restucturing his business so it is something he can manage on his own and not have to pay someone a full-time salary. Hopefully these tactics will allow us to feel financial freedom even with another lifestyle change.

My parent’s recently asked me if our graphic and web design business was doing alright in this down-turned economy. I told them that we were pretty much making about the same, or a little less, but spending less; so overall we were doing okay. They tend to worry a little bit about us because we are self-employed, even though they know that I also substitute teach to bring in additional income and provide us with health insurance coverage. Due to their questions,  I decided to pull a couple of QuickBooks reports to verify my answer and make sure I was correct.

Sometimes, it’s easy to say, “Oh, we’re fine,” but I didn’t really have any substantiating evidence. Throughout this year I have been comparing our total income to our total expenses through QuickBooks, and my answer to my parents was pretty much on the mark. We have made a little less this year, so far we’ve brought in about $11,000 less than this time last year. However, we’ve also spent an equal amount less, about $10,000 less.

So far this year, we've earned less than last year, but managed to also spend less.

When I thought about how we did this, it all boiled down to really thinking about what we needed versus what we wanted. Last year, we had a few additional business expenses because we decided to upgrade our computer network. So, right there we saved money this year in comparison to last year on business expenses. We also made a point of eating at home more often and becoming more aware shoppers. We also spent less on things we needed and have put off a couple of other items that are not necessities. In addition, I reduced my travel this year. Usually I plan a trip back east to visit my family, this year I decided I could wait an additional 6-12 months and intend to focus on saving up that money instead. You can see in my comparison image that we have significantly reduced business expenses, eating out, and household items.

With the holiday’s approaching, my husband and I will need to get creative with gifts for his family. His family seems to go bonkers during the holiday season and shop mindlessly for ‘things’ instead of thoughtful items that someone might need. My husband and I have always felt good about the gifts we’ve purchased for them and we try to get creative and stick to a budget. This year, I think we will redefine that budget and see if we can reduce our overall amount. This amount usually tends to fall somewhere between $700 – $900 (there are a total of 8 people we shop for.) I’d like to reduce this amount to $500. If we can continue reducing our overall expenses, and live below our means (basically spending less than we earn), we will be on our way to financial freedom, our ultimate goal!

My husband and I have been really good about paying off our credit cards and saving some money. We’ve also revised our budget for the coming months that will take us into ’savings-mode’ as we start the new year. Our budget is looking great, we can pat ourselves on the back. However, we still have a couple of really large bills that we now have to tackle.

To begin with, we took out a line of credit a few years back to get our business through the slower summer season. We had recently hired a full-time employee and we really wanted to keep him. We originally thought we’d only use half the amount of the line of credit and pay it back within 6-12 months. Well, sometimes if you open a can of worms, you get a rotten smell, and that ’s exactly what happened. Instead of only using half the line of credit, we gobbled up the whole thing and at a horrible APR. (Maybe my analogy isn’t the best one, but you get the picture!)

We made the monthly payments in the beginning, which were a whopping $275 a month, then I fell behind. I was able to get them back on track within a couple of months, but with an APR of close to 30%, the finance charges and late fees had added hundreds of dollars to the original loan amount. My husband was able to work out a deal with them and reduce our APR for a limited time, it allowed me to catch up on payments and reduce the total due back to the original loaned amount.

We are now at square one again, meaning I’m looking at a $9,000 loan with payments averaging $275 a month. So, our new strategy is to pay this sucker off as quick as we can. Our first step, which we are taking this coming month, is to pay off $1,000 of the loan. This will reduce the total to $8,000. The $1,000 will most likely be coming out of our savings OR an outstanding invoice that we are waiting on (click here to see our outstanding client invoices.) In November, my goal is to then pay another $500, or close to $1,000 if I can, to reduce the loan amount to $7,500 or less. If we can get this monster of a loan down to a more manageable $6,000 or less by the end of this year, we will be looking pretty good.

Our other two large items that we owe money on, which aren’t that unfamiliar to most people, is a student loan, totaling $10,000, and a car loan, totaling $11,000. Both of these loans have decent APR’s and affordable monthly payments. We’d like to tackle the car loan in the beginning of next year, but this will largely be due to our success on paying down our line of credit. My husband and I both think that we will be able to get approved for a mortgage if we have a car and student loan. Although, a mortgage broker may not look so kindly on the line of credit.

Some readers may think we’re crazy to be thinking of purchasing a house when we still have close to $30,000 in outstanding debt. However, our rent alone is $1,800 a month, which is affordable in Los Angeles. I’ve used a few mortgage calculators and if we can actually find a house for $250,000 – $270,000, our mortgage payment will be less than our rent. Even once I add in property taxes and home owners insurance, our total monthly payment should be close to what we are paying in rent. So, my thought is, “Why throw this money to my landlord, and watch as he uses it to improve his house next door, when I could be paying it toward something I own?” Literally, every time we pay rent, my slum-landlord (who lives next door) does something cosmetic to his house within two days of receiving our payment. That really irks me.

Does anyone have thoughts on my debt repayment plan? Obviously, I still have a way to go over the next few months, but any suggestions are helpful. What about purchasing a home even with our outstanding debt?