The dreaded debt rut. I think I'm in one.
I recently posted that I switched my focus from paying the credit card debt as quickly as possible to building a proper emergency fund, which I expected to deplete either if I went on strike or if I got the car repaired.
I didn't go on strike, but I did get the car repaired. Yet my EF still sits at just over $1000. The thing is, where recently I thought having savings would be detrimental to my aggressive debt repayment schedule, instead I decided I liked the look of a nice four-figure number in my bank account. I changed my mind, and that's ok. The debt gurus would be proud, because I now have a minimum EF.
So not only had my debt sat at $6500 for over a month, it's now actually increased to $8000, because I decided to use my line of credit to pay for the car repair, so that I could keep my little EF intact in my savings account.
The other thing I have decided is to re-visit the "Debt Diet," which I think Oprah was endorsing a few years ago. I watched her show a few times when I was home on mat leave in 2006, and I recently came across some notes I took during the show.
The Debt Diet tells us to create a spending plan as follows:
Other living expenses 25%
Modifying my budget to follow this chart means I will pay only $400 toward my debt each month, clearing it off by July 2012 (given I don't accrue more debt in the meantime). Meanwhile I should be able to save around $300 a month, which makes me feel pretty good about the future.