Day 25: Start a debt reduction plan.

Does this include student loans if I haven’t graduated? I won’t include them yet because I am not being charged anything currently and I do not really know what I’ll be doing next year to pay them off. I only have a small amount of personal debt that I need to take care of, from a credit card I took out last year to help meet summer expenses, ironically when I had many more work hours than I do now. I shouldn’t have gotten a credit card in the first place, I’ve certainly used it when not absolutely necessary (like yesterday when it was the only card I brought to the grocery store), but it’s helped me out when cash flow is weird.

My plan is to pay it back completely by December 31st of 2012. I wanted to be done a year from now, but I am anticipating a few significant expenses in the months preceding that so I will need to budget accordingly. I already have a monthly mandatory payment, and I’ve been good at keeping up with that, but paying everything by that deadline will require some serious effort and planning. I think I will apply the following policies to help speed up the process:

1. Use all windfall income to reduce my debt (aka tax returns, deposit returns, and maybe I’ll consider that last paycheck that never arrived from my internship windfall too, depending on how I am doing).
2. I wish I knew how to establish separate “folders” within an account with Citibank, so that I could set aside a certain amount that _must_ be used to repay debt. In the absence of that, I might just deposit a fraction of every paycheck immediately towards the credit card.

The lesson is: Don’t get a credit card, and if you do need it for a certain period of time, pay it off once that time is over and then cut it up!

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