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Back to Zero With Credit Card Debt

by My Journey to Millions

When I started my personal finance blog in 2008 I had over $16,000 worth of credit card debt.  It took about a year or so but I paid that all off, and The Wife and I were one of those people with literally zero credit card debt that carried over month to month.   This lasted a few years until this past January when we bought our new home and subsequently “had” to get new carpeting, furniture and a TV.  Fine, none of those things listed were necessities, but they certainly felt damn important to get…especially my TV. While The Wife and I had the cash to buy those things, I opted to call my dormant credit cards and ask for a long term 0% options.

For me, the liquidity was more important than a zero balance on my credit card, but I am not in this game of life alone and The Wife feels otherwise.  Her very valid concern is that without a zero balance it is hard to tell if we are making net gains on paying back the debt.  Is it impossible? Obviously not, I would just have to keep a record of the balance the month before and compare it to amount I paid to the company (or even just hook the card up to mint).  The Wife’s response, is that it doesn’t provide enough clarity for her liking.

Normally, I would bust out an easel, power point or even excel to prove my point with The Wife, but this time it had almost nothing to do with math (the interest I am earning on that money is almost nil).  This was just a personal preference…my need for liquidity vs her need for clarity as to what is going out.

Since I wasn’t completely against the idea, and it was obviously very important to her yesterday morning I sent in a payment for $6,800 which with outstanding payments should bring us to about zero.

As soon as I am done with my current short term goals (started in June) I will focus on getting my emergency fund back up to where it was.

I am not 100% Convinced it was the wrong or right decision, so I’d love to hear some opinions.

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slug 09/05/2013 - 3:18 pm

Yeah, I figure the family harmony you just bought is far more valuable than the nominal interest you gaining through this arbitrage. Good choice.

Evan 09/17/2013 - 9:01 pm

1000% lol

kara 09/05/2013 - 5:03 pm

I tend to agree with you that overall, if the interest is 0% (or close to it) then the liquidity is more important. But I also get that sometimes there’s a bigger benefit to avoiding spousal strife. 🙂

Currently I am paying off a 401k loan. I could go ahead and pay it off in cash, but the interest rate is minimal (seriously less than $1 per payment) and having the cash in my savings account makes me more comfortable than paying off the loan and having no emergency fund would. Especially since I drive a 12 year old car – which is a nice car and in great condition, but s**t happens, you know?

I will probably pay $50 in interest total before I pay off this loan, but to me the $50 is worth the peace of mind of having cash on hand Just In Case. 🙂

Evan 09/17/2013 - 9:12 pm

While I completely agree with your way of thinking, but alas it doesn’t matter LOL

Sun 09/05/2013 - 5:56 pm

Some conversations are difficult to have with a spouse, but they are necessary so both are clear on the priorities before making big decisions.

Makes me think, there should have been a conversation in January when you were furnishing the house whether you wanted to: 1) stay debt free, and 2) if so, how you were going to furnish the house. It seems like your wife wants to stay debt free. It also sounds like furnishing the home was important. Could you have staggered your purchases so that your emergency fund was not touched. It sounds like furnishing, zero debt, and emergency fund is her priority. Sounds like for you, emergency fund, furnishing, and zero debt was your priority. I could be wrong, but in any event, I do seem some conflict in priorities that was not discussed prior to the two of you moving forward in how both of your money was going to spent.

Jack 09/07/2013 - 5:51 pm

Great insight, Sun.

I’m recently married as well, and we quickly learned how to recognize those signs of a conflict in priorities. It’s almost always due to the underlying assumptions everyone has and assumes everyone has the same ones.

Never ceases to amaze me how two people can have the same conversation and come away with two completely different opinions as to what was just decided.

Evan 09/17/2013 - 9:18 pm

We were on the same page until The Wife, as they often do, changed her feelings lol

Funny about Money 09/09/2013 - 10:06 am

Hm. Keeping the marital harmony is big. Definitely worth $6800. And from my point of view, it’s also worth raiding the short-term emergency fund if getting that month-to-month balance down to 0 provides one or both of you peace of mind.

I’ve done similar things by way of paying for big-ticket items and thought {GULP!} at the time I was shelling out the cash. But before long found I didn’t miss the money — it soon replenished itself (money happens!) — and I did very much enjoy the furniture or home upgrades it purchased.

Bet you made the right decision.

Evan 09/17/2013 - 9:21 pm

“Bet you made the right decision”
– It has been about a week but in the past week it has been easier to look at the account to determine what is being spent.

The Wife 09/20/2013 - 5:10 pm

I just didn’t want the credit card to get out of hand. It’s easy to say “oh we still have zero percent..we can pay that back later” but all of a sudden the bill is higher than you expected. With the AMEX we HAVE to pay it off each month with forces us to live with in our means. If that means not having a dinner out, or refraining from something else so be it. I find CC debt scary. I don’t need anything bad enough to be in it. As for the furniture we had the money in the account but chose to use a ZERO percent card rather than taking it from our savings. In the end we took it from our savings anyway. Made me feel better. Thank you dear…I think you will see my idea was the right one 😉


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