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Happy Independence Day

Let me leave the goal of achieving a second independence day this time from corruption to the likes of MMS and Anna Hazare (you can pick your messiah who will deliver to you a new improved India).
Let me focus on more mundane and day to day affair of credit card debt and share with you my story how I got into it and how I got freedom from my credit card debt.
As they say it was a long time ago and I had 4 credit cards, each with approximately my 3 months’ salary equivalent as credit limit, which effectively meant I had a credit limit equivalent of a year’s salary.
This made me believe that I can use it and pay it with in a year.
What a mistake!
Here are the things that I forgot:
  • 1.       You pay around 3% per month interest on the credit card outstanding on a daily reducing balance, which makes it almost 40% per annum.
  • 2.       One has other things to spend money on and not just the credit card payment, which means you are unable to pay the full amount every month which leads to more charges in form of interest.
  • 3.       There will be OOPS! Moments in between when you will need money to take care of emergencies and you will end up paying only minimum payment on the credit card.

Long story short I maxed out all my cards and was working for 4 different banks, as all my money was going to pay for the credit cards. It took me almost 2.5 years to get out of this hole that I had dug for myself.
I recall this today because it was this day almost 5 years ago on 15th of August I cut the last check to the credit card company to pay the last balance outstanding.
Does this mean that I have stopped using credit cards? No but I just spend what I can pay and use credit card just like any other means of payment and not as a overdraft.
It is a very good feeling not to worry that you have credit card outstanding that you cannot pay.
For me that 15th August  was an Independence Day from credit card debt. Jai Ho
When is yours?

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