Thursday, December 20, 2007

Paying Off My Credit Cards

For the past six months, I've been on a kick to pay off credit cards. I've completely paid and canceled 3 out of 5 major credit cards and am currently working on reducing the final two cards to zero balances. I plan on keeping 2 credit cards from now on. No more, no less. I don't see real need to have several credit cards. The more cards I have, the more payments I have. I know you're supposed to pay the balances in full each month and I think that's a wonderful idea, if you have the money to do it. However, since that is rarely the case for me, I think I'm better off to limit myself to no more than 2 revolving charge accounts.

I know what all the experts say about paying off your credit card debt before you start an investment program. They say that the interest you save is a guaranteed return??? I don't know about you, but my credit cards have never "returned" any money I've sent them. Yeah, yeah I know, you save on interest. But I happen to think it is more important to concentrate on increasing your cash flow, so you will eventually be able to avoid using credit cards altogether. Let's face it, we're always going to have some kind of bills to pay. So doesn't it make sense to cultivate the good habit of increasing your earnings each and every month by increasing your investments. Even if this means you're making credit card payments for another year or two.

I used to spend so much time worrying about bills. Got to get this paid, got to get those credit cards paid off, but I found that when I spent all my earnings on reducing debt, I simply began to get depressed a lot, feeling as though it was pointless to work so hard all the time, since all I ever did was pay bills and have nothing left to show for all the hard work. When I stopped worrying about the bills so much and concentrated instead on building up my investment portfolio, I became excited about working again. I know that every time I go to work a portion of everything I earn is mine to keep. It really excites me to think about putting this money to work, earning passive income (money I don't have to expend any additional labor on) and that the money I earn in this way will earn me even more money. It's kind of like getting a raise every single month! Who wouldn't be happier about going to work every day, when they knew that each and every month they were going to make more money, without having to do any more work. It just doesn't get any better than that.

Of course, I do intend to get my credit cards paid off and to keep them that way. But I'm satisfied with reducing my total debt by a certain amount every month. My car loan will be completely paid off by October of next year and I won't be needing a new car any time soon. So there will be plenty of freed up cash to pay off any remaining credit card debt then. I estimate it will take an additional year to completely pay off the credit cards and then I will have only my monthly living expenses, which are quite low by today's standards. With all that in mind, I intend to keep concentrating on building my investments and increasing my income, month after month and year after year. Life is good again!

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