Program

Is the Micro-Payment For You?

The other day NCN talked about an experiment he did with micro-payments on one of his credit cards during his debt-reduction phase. Firstly let me say that I’m a little in awe of NCN because he’s such a disciplined person with respect to his finances. While I’m quite knowledgeable about mine, I know I’ve got tenacity and discipline issues when it comes to spending my money, so I find reading his blog quite inspiring from that perspective (another person I admire in terms of financial success is Fabulous Financials, because she’s another one who set out her plan and stuck to it.

Anyhoo, enough with the gushing, and back to the micro-payment idea. One of the main reasons I’m intrigued by it is because it’s basically the debt snowball but in reverse. Instead of adding all your snowflakes together before tossing into the snowball of a debt, you end up tossing it directly towards the debt as you receive the money. I don’t know how any of you using the Debt Snowball method do your thang with respect to your payments, but I’ve actually just tossed the money directly at the debt, so I suppose I’m already doing the micro-payment thang. But NCN took it to another level by actually sending $5 every day to his credit card, and managed to reduce his bill by a further $150. He cautioned that some financial institutions don’t allow this much activity on a card, which I find hilarious. How could a lending company not take your money? I suppose in the end it’s more of an administration cost for the lender, but still, there are N number of people sending payments to them every day, so what’s a few more from you? Now if we all did the micro-payment thing every day I could see that we’d probably crash their system, but since I know we don’t all do that, I think they should be able to handle the workload.

One of my freelance writing gigs pays me $10 a post once a week, which adds up to an extra $40 a month that I can throw at my debt. Using the Debt Snowball method of paying down the smallest debt first, this is helping me chip away at it more consistently. I’ve even been taking half of my insurance reimbursements and tossing them at the debt too, and I’ve been making good progress on it. But I like the idea of doing micro-payments, maybe in bursts, to see how that would affect my debt. I might try that once I get down to only 1 or two debts and see how that affects things. Right now I’m too busy juggling it all so I won’t bother. But I’d like to try it one day.

Have any of you tried it? Have you had any success?

New Ideas for the New Year

With the start of the new year, I’m going to be starting a few new “programs” here chez moi.

Program 1: I will not buy any new clothes this year

Yes, you read that right. I am going to do a “no new clothes” thing this year. I have more than enough clothes in my bedroom that I don’t need to buy any more. Last year I did the Great Clothing Experiment where I tried to see how long I could go without doing laundry, and this is an off-shoot of that. I’m just not going to buy any more clothes this year. Don’t get me wrong, I’m not the type to go out and buy loads of clothes, but I obviously have more than enough, and they’re all still in good enough shape that there’s no reason for me to go buy more. I admit I did buy a new pair of boots today, but I actually needed those, as mine were starting to get a bit too old (my feet were cold, they were starting to leak water if I was out and about in the snow for more than 15 minutes, that kind of thing.) But that’s it, NO MORE CLOTHES!

Program 2: Paying off my smallest debt first, then moving onto the next largest

This one’s always a point of contention in the personal finance world, and I myself have waffled over which way I wanted to pay my debt off (higher interest first or larger amount of debt first.) I’ve even blogged about it here as well, but regardless of what I might have said previously, 2009 is the year of the Smallest Debt First!

Program 3: Eating cheaply for 2 months to make a serious dent in some of my debt

I’m going to pull out the old standby of boxed mac n’ cheese for a month, and then move on to some cheaper pasta meals for variety, but I want to make a serious dent on that smallest debt the first two months of the year, so bring it on! I did my shopping today for the month, even managed to get that 12-pack of mac n’ cheese on sale too, which was nice. So let’s see how long it takes me to get sick of it. No, seriously, I need to make a concerted effort and a bit of sacrifice, and try to make a big dent in my debt.

Program 4: Take the credit cards out of my wallet

This one might seem like a no-brainer, however it’s not a terribly obvious one for me because I don’t use them for “big” purchases or anything like that. But since my problem is the small accumulation of debt rather than the “I just bought a new living room set and big screen tv” kind of debt, using the cards at all just causes more problems. (And that’s even with me transferring money over to them once I got home. *sigh*) So they’re coming out of my wallet and it’ll all be cash in 2009!

And there you have it, my four-pronged program to get a handle on my debt for 2009. Of course there are other little things that I’ll be trying to do as well, like earning extra cash, snowflaking, that kind of thing, but these three are the major programs I’m going to try to make more of a dent in the debt. Because I don’t have much patience to just see the numbers come down slowly but surely, these programs will hopefully help me decrease things in bigger chunks. That way I’ll see more progress and feel better about things.

Wish me luck!