Yeah Oops. This is why everybody hates into APRs. Previously this debt was sitting at 1.9%. My monthly finance charge was a very reasonable $19.40. Now – it’s $133.54.

Major oops.

I knew the payment was going up at some point, but I didn’t know when. Couldn’t remember if it was on a 12 month, 9, 8, or 6 month intro. Guess I know now.

I hate HATE double digit interest rates! This goes against my very grain of being! Everything else I owe is in the single digit range.

Looks like my debt reduction project is going to need a re-vamp.

Where I stand right now:

  • Minimum on my car – $13,684 @ 7.14%
  • Bi-monthly contributions to max out my Roth IRA by Dec 31st – contributions to date -  $1040
  • Minimums on my mortgage – 6% and 9%
  • Minimums on my Citibank -  $10,308 @ < 5%
  • Minimum on Costco Amex – $10,684 @ 14.97% (was 1.9%)
  • Aggressive debt reduction on USAA Amex – $2110 @ 9.99%
  • $100 per month to my Christmas Fund

My previous calculations had me paying off the USAA Amex (1st) and Citibank (2nd) by Dec 31st 2008. While the balances are almost the same, with the APR difference between the two – my debt payoff needs to be more aggresive if I’m going to make my target on the Costco Amex instead.

While I would love to change direction – the truth is that paying off the USAA Amex is the key to getting my spending under control. While I have made significant improvements (thanks to snowflaking, free food @ work, and less frequent trips to Costco) I still need to learn to use debit most of the time.

Anyway – I think I’m going to cancel the Roth contribution for now and change the scheduling to automatically pay that extra amount to my Costco Amex instead. Will keep diverting all of my other aggressive debt reduction efforts to my USAA Amex until paid in full.  (Should be fairly shortly as quarterly bonuses are coming out next month.) I think I will keep the $100 per month Christmas fund though.

This has been a MAJOR eye opener! I was hoping to work on the Citi first – as that’s the one showing up on my credit report. But if you run the calculations and realize it will cost you an extra $2000+ plus dollars to do it in the wrong order – is it really worth two weeks of working 100% for American Express?

You will notice a change in my progress bars shortly…. I will be replacing the “Car Loan Payoff” bar with a “Costco Amex Payoff” bar. Stay tuned ’til next week’s episode.