A plan to get out of debt -- steps 1 and 2

Friday was keep-Zoe-from-freaking-out day. The realization of our impending debt settled in. It was time to start making a plan.

Step 1: Make sure we have cash when we need it. 

I sat down with the calendar and figured out how much debt we'll have and when. We are at risk of overdrafting our bank account as early as next week. At our worst point, it looks like we'll be $4400 in debt by September with our current bills before we're able to start paying back our debts. What to do?

I stopped by the bank that manages our loan for the kitchen (~$4000 balance). It's a line of credit which means we can borrow against it again without having to take out a new loan. So I took another $5000 out of the loan. The loan balance is now $9000.

Step 2: Find cheaper credit than our credit cards. 

The line of credit is currently at 1.99% interest. Yay! But in October it goes up to 14% interest. That's still better than credit card interest rates. We may be able to do a balance transfer onto a zero percent interest card before that happens. We'll have to see how much we can pay off before then.


We're taken care of for the moment and our mortgage checks won't bounce now. More steps of our plan tomorrow!

Have you ever made a plan to get out of debt? What worked for you? Any suggestions would be appreciated.



p.s.

For your viewing pleasure, here's the progress on the kitchen I wanted so badly that's gotten us into all this mess.