A few notable things happened during January and it's time I filled you in.
I realized I needed a better handle on my 0% credit card debt after I blogged about it last month. Almost $9k split across multiple credit cards with different introductory rate periods was really stressing me out. I found that the Chase Slate* card offered 0% APR for 15 months, with (get this!) a no-fee balance transfer promotion. That's a pretty unusual offer nowadays so I decided to take advantage.
It looks like they're still offering the no-fee transfer promotion, too, so it could be something to consider if you're carrying credit card debt. Just remember that if you do transfer a balance, you're not allowed to carry a balance on any other card you have ever again, or Mr. Money Mustache will punch you in the face. I'd like to avoid credit card related face punches so I've set automatic bill payment for the full statement balance on every other credit card I have. In this way my debt will continue its downward trajectory automatically, since I won't be able to pile on any more credit card debt without thinking about it.
Now I have 15 months to tackle $9k in 0% credit card debt. That's enough breathing room to fund some tax-advantaged accounts before April 15th while still vanquishing my student loans.
So let's talk about my student loans. My march toward financial freedom has been largely automatic for at least the past few months. I made a payment of $1600 on 12/27/2012 and one of $2940 on 1/22/2013. As of today my balance stands at $4,049.68. The balance of my checking account is $4,251.72. Thus I have the rare pleasure to report that, for the first time in 8 years, the balance of my checking account exceeds that of my student loans. I don't want to cut my finances too close this month, so I'm going to wait until my next round of debt service occurs before I send in my final payment, but it looks like I'll be student loan free in early March.
Now for the (relatively) bad news: last month was the first month I ever missed a credit card payment. The cause was solely inattentiveness. I thought I had auto pay set up on all my credit cards, which was true except for my Amazon.com Visa. My bill pay reminder emails were filtered automatically out of my inbox and I went more than a month before checking them. They even sent me snail mail to tell me that my payment was late; I let it sit for two weeks before opening it. The only way I found out was an automatic alert from my Credit Karma** account saying that I missed a payment.
This is obviously no one's fault but mine. As soon as I found out I immediately logged in and paid my balance in full. It was only about $300, mostly Christmas spending. At first I was a little upset that my previously "good" or "excellent" credit score was now only "fair". But the more I thought about it the more I think it's a blessing in disguise. For one, it was the kick in the butt I needed to get my figurative house in order: I had been letting little things slip like chores, home maintenance, emails, etc. But the bigger benefit is that it effectively removes my ability to continue the kind of credit shenanigans I've been doing for the past year.
I don't anticipate being negatively impacted by the hit to my credit score. I already have all the credit I could possibly want; indeed, I have too much. I'll be de-leveraging for at least another year or two, paying down my 0% debt and car loan. I already have a mortgage and a personal line of credit. The only other credit I could possibly want is a home equity line of credit, and it will be a few years before we have enough equity for that.
Never borrowing money is a great way to get ahead financially. Sure you can do better, in theory, leveraging your credit to take cheap money and invest it for higher rates of return. That is a risky approach. It is much safer to spend less than you earn, save and invest the difference, and keep out of debt.
* This isn't a sponsored link, so I won't get any money if you apply using it.
** Credit Karma is free, and while they don't give you your actual FICO score, I highly recommend the service.