The two sides of my brain were fighting just now. If you could sneak a microphone into my ear, you would have heard this:

“Oh… oh… my fingers itch! I want to do this so bad!”
“No! Wait until you get your paycheck on Friday!”
“But… but… but… I just got some PayPal payments and there’s enough money in the account!”
“Wait! It’s only a few days! Slow down!”
“Psssh… forget you! It’s just moving money between my checking and savings accounts… I can always move it back.”

*click*

And with that, I made the last payment into my Credit Card Payoff savings account.

My friends, that debt is gone.

Gone-ish. The cash is going to sit in the saving account until October, because my 0% APR lasts until the end of my November statement. I’m going to just collect the interest on the savings account, and make the minimum payments out of it, and then pay off the whole balance a month before the intro rate ends.

Booyah.

Tomorrow we’ll talk about what’s next. I’m gonna bask in the glow for just one day.

The following is a guest entry, written by one of PTY’s readers, Matt. If you have a personal finance story to share like Matt’s, please feel free to email it to me.
– Stephanie

Hi, my name’s Matt. I was briefly venting to Stephanie (your regular author) that I was about to take my first plunge into the stock market game tonight, and she invited me to write a guest entry, so here I am.

First, a little bit about myself. I’m a service member currently deployed to Iraq. I’ve got my wife who, like Stephanie, is a full-time student, and my young daughter at home waiting for me. Perhaps the best deal about being in Iraq is that my pay is increased by effectively 33% due to my tax-free status in addition to my “special incentive” pay that I receive while over here.

We just finished paying off our debt snowball in June, and have been studiously dumping money into high-yield savings accounts: first EmigrantDirect, then E*Trade after ED lowered their APY to 4.75%. It’s a proud time for me. For the first time in a very long time our checking account is looking pretty thin because we’re saving every last penny we can.

To get where we are today, my wife and I have adapted a few of Dave Ramsey’s rules to fit our military family mind-set.

1. Establish your strategic reserve ? Sun Tzu said something like, “Keeping a force in reserve to support the main effort can be the decisive factor in winning a battle.” As a military family who rents our home, our chances of encountering catastrophic expenses due to medical bills are statistically insignificant. Often the only “surprise attack” we’ll get is having to take one of the cars to the auto shop. However, I know the debilitating effect even a small doctor’s visit can have on the uninsured. For this reason, having a “react force” that can pay the hundreds of dollars for an office visit or a trip to the mechanic means you won’t have to wear out that plastic and build up your principal again.
2. Attack your debt ? You’ve got to hate your debt. Yeah, it has some nice things to teach you, but if you’ve gotten to the point where you want to get it out of your life, you’ve already learned the painful lessons. Gear up with the weapons of personal finance war: a budget, a disciplined mind-set, and a strong will to win. You’ve got to relentlessly slice expenditures out of your life. We had to cut cable, and skip vacations and buying nice things. Our tax return last year went to paying off one of our cars. We could’ve used a new dining room table, but we made do in order to get out from under our lenders.
3. Defend your budget ? This one can be tough, especially if your significant other or child(ren) want new things. On one hand, you want to keep your family happy and not become an overbearing miser who can’t let a penny go. On the other, you know what your financial objectives are, and every dollar you can keep out of the gas pump, restaurant or mall is a dollar that can go toward debt reduction. In my experience, it’s best to adopt a flexible, “bend but don’t break” philosophy. If you have a controlled splurge once a month, buying a new outfit or eating out at a nice restaurant for no reason, you can maintain domestic tranquility without wrecking your budget.
4. Don’t be afraid to call in supporting fire ? In the Marine Corps, we have our big guns: artillery and tanks. In the world of my personal finance, I’ve had to start calling in my family for backup. When I make my trip home, I don’t let pride stop me from letting my family pay for dinner or driving us to a far-off location (gas costs money!). On the same token, however, don’t get carried away. A loan is a loan is a loan. Borrowing money from family carries its own set of dangers you have to be on the lookout for. Also in this category, talk to the experts! Dave Ramsey turned our financial life around. I also subscribe to numerous personal finance blogs, like PTY, Consumerist, Get Rich Slowly, and My Money Blog.

There’s probably nothing new here for most of the PTY readers. The bottom line is still spend less than you earn. No matter how much you make, minimum wage or a six-figure salary, anyone can spend themselves into debt. There are so many personal finance generals out there, like Dave Ramsey (I love that guy, can you tell?), who have fought this battle and won decisively. Listen to your generals. Whether it’s Dave, your grandparents living well because of decisions they made about retirement 40 years ago, or even our girl Stephanie (who honestly I suppose might be a major, if we’re going to stretch this metaphor), listen to people who have turned their lives around! And focus! Victory is within reach!

A reader left a question in the comments (edited for length and spelling):

I just wanted to ask?

What Is A Debt Consolidation Loan? Is there anyone else here in a similar position as me with mountain of debt they are struggling to pay? I am seriously considering [a debt consolidation loan] to help my family.

Like a lot of people we started slipping into debt when I lost my job and couldn’t meet the monthly bills. I have heard a lot about debt consolidation loans but I don’t know what’s right or wrong?

Any feedback from anyone would be appreciated.

Deepest Thanks

Danni

Wikipedia defines debt consolidation as “taking out one loan to pay off many others. This is often done to secure a lower interest rate, secure a fixed interest rate or for the convenience of servicing only one loan.”

A debt consolidation loan can be a good idea if you need it, but there are several pitfalls to be aware of. Bankrate’s article “Debt consolidation: cure or continued credit problems?” does an excellent job of describing this pitfalls.

First of all, a debt consolidation loan is a lot like cold medicine – it treats the symptoms, but isn’t a cure. A lot of people who take out debt consolidation loans end up back in the same trouble again later. There has to be a shift in behavior and a commitment to stay out of debt in order to make a difference in the long run.

The Bankrate article offers some additional concerns and tips:

Before you sign on the dotted line, be sure that the costs of the new, bundled loan will truly be less than what you’re already paying various creditors. For many consolidation-loan candidates, their current credit woes mean they won’t get the lowest-available interest rate. Plus, when there is nothing to secure the loan (such as your home), expect the lender to bump up the rate.

Calculate interest and fees on all your existing accounts to determine the total of the payments you now make. Then compare those amounts with the consolidation loan numbers to make sure it truly is a better choice.

And, as with any product, shop around. The bank down the street may offer an attractive loan rate, but a check of your local credit union could turn up better terms, says Deborah McNaughton, author of “The Get Out of Debt Kit.”

Another problem with debt consolidation loans is that although they may offer lower annual interest rates, they usually come with a longer repayment term. This is how they why they offer a low monthly payment: because you’ll be paying on it for a very, very long time. And a long repayment period means paying more interest overall.

In general, working to manage your debt yourself before turning to another loan is usually better. Strategies like the Debt Snowball can help you plan out your own debt repayment plan – if you can manage to pay off your debts without the help of another loan, you’ll be better off in the long run.

I did something that probably falls under the category of “insane.” I pulled up all of my credit card statements for the past two years (thank goodness for online statements!), and I opened a new Excel spreadsheet. And I started entering all of the purchases I’d made on my credit card since the last time I had a $0 balance (March 4th, 2006).

The point of this exercise was not just to look at what exactly the purchases were that got me into credit card debt, although that was certainly something that I was able to do. But my real goal was to see which of these purchases were the ones still sitting on the credit card. What was is it that I’m paying off exactly, when I make a payment to the credit card?

So after putting in all of the purchases, I put all of the finances charges I’ve accrued. I’ve decided that in my mental account of what’s on my credit card, the interest goes last. I don’t even begin paying off the interest until I’ve paid off all the purchases. This makes figuring out what I’m paying off a lot easier.

After listing all of the purchases and finance charges, I started subtracting all of the payments I’ve made to the credit card since I started carrying a balance. After a purchase was “paid off,” I would put a strike through it. As I began doing this, I decided to estimate where I would end up. What am I paying off right now?

My guess was that if I were to make another payment to my credit card today, it would go toward something I bought in my big spender month of July, 2006. And when I finished moving down the list and subtracting payments and crossing off the paid off purchases… I ended up at a purchase from July 23rd, 2006.

Some pretty good estimation skills I’ve got there, huh?

So it turns out that when I make my next payment to my credit card, it will work to pay off my digital camera. The one I’ve had for over a year. The one I bought impulsively to make myself feel better when I dropped and broke my camcorder.

I also found that I have racked up $362.77 in interest so far. Ew.

I can’t wait until the day I cross off the last purchase on this list. Actually, the day I cross off the last finance charge on the list and can say “There. I’ve got a zero balance again!” It will be so nice to not have the purchases of last July still hanging over my head.

In the mean time, I’m going to try and find some credit cards with 0% balance transfer offers. Because these finance charges? Just not cool.

Oh man, you don’t even know how excited I am. First of all, I’ve never bought my own computer before. Every computer I’ve ever had before has been a hand-me-down from my mom. Not that I’m complaining – since my mom is an avid online gamer, her hand-me-down computers usually came with top-of-the-line graphics cards and as much RAM as she could shove in there.

But now I’ve got a computer that’s mine! And unlike my previous computers, it’s not chained to a desk. I am free to roam the world with my sexy new Toshiba. (And when I say “new,” I mean “new to me.”)

Yeah, I know, you’ve got questions.

“Um, Stephanie, can you afford this?”
Er… yes, and no. Technically, I should be throwing every penny I have at either my credit card or my savings. But by taking a small chunk out of both of those, yes, I can afford it. Also, I kinda need it.

“‘Kinda need it?'”
I am, as I’ve mentioned, going back to school in the fall. And I’ll be commuting from home, instead of living on campus. To help me bridge the gap between my living space and college, I wanted a laptop, so that I could work between classes. Ok, yes, I could go to one of the school’s numerous computer labs, but that would require lugging my external hard drive around, which literally weighs as much as this laptop.

Also, having my own computer when I’m in California this summer will help me get more done, and hopefully, earn more money. Yes, I’m hoping this laptop will actually pay for itself!

“Ok, so, wait. How much did you pay for this?”
$20. Seriously! Ok, I’m paying monthly. A friend of mine sold it to me for $280, and I’m paying him what I can each month (which will probably be right around $20 until the fall, when I’m hoping to pay more.

“Yeah… I thought you said loans between friends and family were bad.”
They are, so you’ve got to do it right. I’m hoping that I’ve done it right this time – I’m using an online tool called Buxfer to help. Basically, Buxfer tracks how much friends owe each other, if they split a dinner tab, or if roommates split a grocery bill, or if, say… someone sells someone else a $280 laptop, but that someone else can’t pay all at once.

“Wait! Doesn’t this break that ‘no buying stuff’ promise that you made?”
You mean the Compact? Nope. Compacting means you don’t buy anything new – I bought a used laptop! (Like I’d have the money for a new laptop, anyway.)

“Ok, fine. But you’re still crazy.”
I’m well aware of that. You’ll probably think I’m even more crazy when I get around to naming my laptop. I have a rather odd habit of giving my computers male names, and then referring to them as “she.” (Previous computers: Bob, Fonzie, and Fred – all female.)