iWillBeDebtFree.net

After I discovered that I only reduced my total credit card debt by $500, and added $1,500 to a high-interest Discover Card account, I started thinking about what I did wrong. I made $65,000 in 2009. I should have saved much more. Where did the money go?

Unfortunately, I kept horrible records, but I started thinking about where and how I spent my paycheck.

I didn’t go on any major vacations in 2009. In fact, for the first time in many years, I didn’t go snow skiing because I wanted to avoid paying $75 for lift tickets and hotel rooms.

My one major purchase was an LG flat screen TV. My 12 year-old Mitsubishi CRT television died in October 2009. I installed a TV tuner card in my PC and planned to watch television on my 19” Benq LCD computer screen.

But it didn’t work. The tuner card was not compatible with the cable set top box and I could only get the basic broadcast channels. I had also been drooling over flat screen TVs for several years. I finally broke down and spent $820 on a 42” LG LCD television. I wound up using some emergency funds and avoided putting this purchase on a credit card.

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It is a few days past the one year anniversary of the iWillBeDeptFree.net blog and I decided to tally up my credit card dept and check the progress after 12 months.

I am very disappointed. After checking the numbers, I now have $15,773.94, which is only $479.69 less than the $16,253.63 that I had on May 12, 2009.

This is where I stand on May 17, 2010

Chase Visa $2,230.31
Discover Card $8,832.22
Bank of America $4,711.41

Total: $15,773.94

And there is what I had on May 12, 2009

Discover Card: $7,235.97
Bank of America American Express: $4,736.97
SST Visa (formerly Sharebuilder Visa): $1,230.15
Chase Visa: $3,050.54

Total: $16,253.63

The bad news is I added $1,596.25 to my Discover Card account. This is a high-interest account. I am paying out 27% interest to this company. I need to review and see how this money was spent. I recall using this account to pay off my cell phone and cable company bills. I will analyze my account and detail my mistake in another post .

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After yesterday’s bad experience with Chase Visa, I was hoping my luck would change with Discover Card.

Unfortunately Discover also declined my polite request to reduce the 20.24% APR that they are currently charging me.

I spoke to Sharon, who said she was working in Phoenix. I explained to her that I have never missed a monthly payment in at least three years and that I needed help to lower my monthly expenses.

She told me that she was not authorized to help me, but she would send an application letter that I could fill out and mail back to Discover. (Hard to believe that in this the era of the Internet, there are still companies like Discover Card that want customers to use the US Postal Service! Why can’t Discover make it easier and set up an online form?)

I accepted her offer of the letter and asked if I could speak to her supervisor or someone who could lower my APR today. She then told me that when she submitted my account through their system and it told her that my APR could not be lowered. At least she was being honest. Now I have to wait for Discover’s letter. I have a feeling that even after I mail in my request for an APR reduction that I will have to continue to pay the 20.24%.

At least Discover’s APR isn’t as high as the 27.24% that Chase Visa charges, but it is still very high. There are not many investments today that provide a 20 percent return.

One part of the Discover that bothers me is the DiscoverCard.com website does not post the APR. It seems like the only way for a customer to get their APR is to either read it on their monthly statement or call up DiscoverCard customer serve. At least Chase Visa posts the APR online.

I have managed to chip away on the balance of my Chase Visa card. The debt is now down to $2,630.58 from $3,050.54 in May 09. But I was hoping to trim it down even faster. I looked at the APR, and was surprised to see that Chase was charging me a whopping 27.24% interest! This is insane considering that I have never made a late payment. In fact, I always pay my bills at least two weeks before they are due.

So I did some searching on the Chase.com website and came up with a customer service telephone number and after three minutes of getting through a series of automated questions, I finally got to speak to a human customer service rep.

I told her my story about how I have been a good customer and requested an interest reduction. She told me that I was already paying the lowest rate! I was shocked to hear that 27.24% was the minimum. She added that my account was up for review and that the rate might go lower, but she was unsure when my account would be reviewed.

Out of curiosity, I asked her what would happen if I was late with a payment. She said the interest would rise to 29% but would not go higher.

I asked again to lower the rate from 27.24% and told her that I had offers from other credit card companies that were much lower. She again refused to budge and said she was sorry but that was the rule.

So it looks like I’ll be shopping for another card. To pay 27.24% is crazy.

To say that I was surprised when I went over my credit card accounts yesterday is a big understatement.

Discover Card: $7,235.97
Bank of America American Express: $4,736.97
SST Visa (formerly Sharebuilder Visa): $1,230.15
Chase Visa: $3,050.54  
Total $16,253.63 on May 12, 2009

 My immediate thought was how did I ever let this happen and how am I going to get out from under this heavy financial weight on my back? 

This is very scary because my pre-tax income is $60,000 so credit card debt now accounts for more than 25% of my annual salary. I estimate that this debt is probably close to 40% of my income because I live in New York City where everything is taxed.

So how am I going to get out of this bind? I briefly considered filing for bankruptcy. I have had several friends who have gone this route and it’s not as bad as it sounds. In fact one of them just purchased a house after spending a few years cleaning up their credit.

And I know this won’t be an easy journey.