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Debt Rut

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:
Housing 35%
Other living expenses 25%
Transportation 15%
Debt 15%
Savings 10% 

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.

Seriously, Karissa


  1. The thing about ruts Karissa is that there is a beginning and an end so hopefully the end of your rut is in sight. By following the Debt Diet you should hopefully have enough $ for the other areas of your life besides debt which will keep you from going further into debt. For my own peace of mind I need to both SAVE and pay down DEBT - it means the debt reduces more slowly but when I HAVE to spend I have the savings to do so.
    Sounds to me like you're on the right track:)


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