Happy Holidays from DebtorsPrison

Happy Holidays to all from DebtorsPrison. It’s been a lean Christmas in the DebtorsPrison household, with Mrs. DebtorsPrison having had only sporadic employment over the past six months. We exchanged modest gifts, and took care of gifts to others by baking lots of goodies. All in all, Christmas cost us well under one hundred dollars. I realize everything is relative, that many people in the United States were unable to afford even that much, and that for many people around the world, one hundred dollars represents months of earnings.

Still, Christmas would have been a lot leaner had we not gotten rid of the $23,000 credit card debt that was the original inspiration for this blog. You can read those early entries about the debt HERE. Or you can just read on, as I’m in the mood to recap the story.

We are a liberal and fairly non-materialistic couple who nonetheless slowly found ourselves drowning in credit card debt. Indeed, the debt is only part of the story…Mrs. DebtorsPrison had gotten a legal settlement of around $30,000 in 1995, so the actual turnaround of our finances—running through the 30 grand and building up the debt—is actually more like a $50,000 hole.

Some of the money went towards the down payment for our house. Some of it went towards a ‘new’ used car, since deceased and never replaced—we’ve been car-less for going on two years now. Much of it went towards our stubbornly striving to live our lives the way we want to. In that period, we took three two-month trips, one to Kenya and two to India, Nepal and Tibet, as well as shorter trips to the US southwest and to Peru. Immersing ourselves in other cultures and seeking to become more global citizens is important to us. These trips were financed partly from savings, but also partly from the settlement money and in smaller part on credit. Another chunk of the debt came from both of us voluntarily giving up stressful jobs for less-stressful ones, despite pay cuts in each instance. Some of the money went towards Mrs. DebtorsPrison’s efforts to develop a consulting business in which her considerable experience with comedy improvisation could be used both for corporate training and for wellness workshops for those suffering from chronic and/or terminal medical conditions, a venture which so far has brought us a minor stream of income.

Very little of the debt came from the accumulation of ‘stuff,’ per se. Nevertheless, the money we devoted towards the pursuit of our life goals meant that ever-so-gradually even our day-to-day expenses eroded our financial position.

Last Spring, thanks to rising real estate values, we refinanced our house, taking out enough additional debt to pay off the credit cards. The debt didn’t actually get paid off, in other words; it just got folded into a new, higher mortgage, and we gave up whatever equity we’d built up in our house over the previous five years. We didn’t really save much in interest costs, since the entire credit card debt was at very favorable 6% and 7% rates. Nevertheless, the ‘nut’ we had to come up with every month for minimum payments decreased dramatically.

It is those reduced monthly payments that have allowed us to stay afloat and virtually debt-free these past seven months despite our greatly reduced income. In fact, thanks to my fistful of credit cards no longer tied up with debt, I’ve even managed to make some money back off of them.

With the accumulated ‘points’ on one card, I had enough to cash in for $175.00 worth of gift certificates at various retailers. In addition, I took advantage of a couple limited-time, no-interest, no fee deals that two cards offered me. I borrowed $13,000 on the cards and used that money to open up accounts at two internet banks. Both banks offered $50.00 bonuses for opening new accounts, so that alone earned me one hundred bucks.

In addition, the accounts paid 2% interest, so over the time I was able to keep the large sums in the accounts, I earned an additional $65.00 in interest. I simply paid the minimum payments out of the borrowed money itself, and when the no-interest period expired, paid the debt off. No interest paid, $165.00 in interest and bonuses earned, and I’ve managed to keep both accounts open with smaller sums, continuing to earn interest.

Finally, two cards offered me limited-time 5% cash back on purchases up to two thousand dollars. I took each of the cards up on the deal and have been charging everything, including groceries, and paying off the balance each month. I already hit the two thousand dollars on one card, thus earning the maximum $100.00 back, and am well on my way to doing the same on the second card.

In short, over the past six months, I’ve made about $540.00 off of my credit cards. Sure, they’ve made more off of me over the years in interest, and yes, a truly daring person might have taken that limited-time, no-fee interest-free thirteen grand and swung a real estate deal to make more money, but I’m happy. Unfortunately, now that my credit profile no longer shows me as a home-owner with a large yet manageable credit card debt, the best deals are no longer coming in the mail so often. But I remain alert for ways to earn more money off these cards, and we are resolute in never getting back into those huge debt problems.

Anyway, it has been a wonderful Christmas, despite our strained finances and all the craziness in the world. We feel refreshed, focused and ready to continue trying to make the world a better place. I hope all who read this have had a wonderful holiday as well.