The solution to debt is obviously more debt. Early this month it became apparent that I would not be able to keep up with my current debt load without incurring interest. My delivery work has slowed a bit but really the problem is the amount I owe is too high. I burned through 80% of my savings trying to keep up but the debt has been persistent.
I have a few options at my disposal. I have the Interest Free Loan Idea and the Return Loan Idea which have worked fine up until now. I could have decided to take some money out of my IRA. I have regretted doing this in the past and consider it a final resort. I could also ask members of my family for a small loan. They wouldn't mind but I'd like to save that type of favor for a crisis, not an inconvenience. This debt feels more like an annoyance.
Luckily for me during all the crazy events of 2020 I have been able to maintain a stable credit score. I'm hovering around 729. I check my score once a week on Nerd Wallet. www.nerdwallet.com. They list different credit card offers that you can qualify for based on your current credit score. I opened a section called 0% APR balance transfer cards.
There are different types of transfer cards. Make sure you read the fine print. I signed up for a card from Citi Bank. The offer was a no fee card. If you transfer a balance, there will be no interest charged for the first 18 months. The cost is a 3% transfer fee. I qualified for a $3,600 credit limit after I was approved for the card.
I transferred $3,000 from a couple of cards I have at Chase Bank. The total cost of doing this was $90. So for that $90 I have a year and a half to repay this debt. What they don't make obvious is that if you do not pay the full amount in the period, they charge you for all the interest for the entire year and a half at a rate of 20%. Gulp.
I essentially converted my short term high interest debt into long term no interest debt (minus fee). I will have to pay at a minimum $172 a month to service this debt.
Why would the bank do this? Interest rates are at all time lows. They want the $90. Statistically a certain number of people will default on this and be forced to pay the huge pile of back interest which is also free money for the bank assuming they get paid some day.
This is a reasonable solution to my debt problem in the mid term. I need to start looking into the future and ask myself: Why am I having these debt problems? This debt can be tied directly to my delivery job. 100% of the money I owe currently is from massive car repairs. Now that the car is fixed I can pay for the repair, by further breaking my car.
My initial plan to address this negative cycle was to auto deposit $50 a week into a savings account for repairs. Turns out that amount is not enough.
I enjoy my delivery job. I like the flexibility, the freedom and the autonomy. The problem is I can't just be sending all my pay to the auto repair shop.
I was also recently popped by the IRS for "Irregularities in my income" which is also a problem tied directly to my work as a delivery driver. I'll be able to sort that problem out by it wouldn't exist if I had a more traditional income.
I have to face facts. It's time to find a different source of income. These problems are going to continue as long as I continue as a delivery driver. There must be some job out there that has all the freedom, flexibility and autonomy I want but doesn't slowly grind my car into dust. I just need to use my imagination. It would be challenging to spend less money. I need to begin making more.
