Thursday, February 2, 2012

Black is the New Red

It's certainly a happy day today! After 8 and a half months of seeing red each and every time I logged into Quicken, I've finally broken through and into the Black! I only include my checking, savings, and credit card accounts in this total, as this gives me the best picture of the funds I have to work with, but it is certainly an accomplishment! And it happened about 3 months ahead of schedule!

To give a little history, I saw the red storm coming when I was finishing up school. It became particularly worrisome when I accepted the residency position. Now I wrote earlier about how I have a good deal of money left over at the end of each month, but it certainly did not start that way. The most worrisome part about starting the residency was not the lower paycheck as compared to if I had went retail, but the delayed start date. I would be living with no income until July, and my first paycheck would not come in until 7/22. The expenses associated with interviews hit hard, and I was feeling my funds running out when I took the position. I knew it was the right decision, and I would find a way to make the money work.

In the meantime, I had been receiving offers in the mail from my Citibank credit card (with a fairly high credit line) for a balance transfer offer that would offer me 0% interest on the transfer AND new purchases, through May of 2012. Normally I throw these out as soon as they come in the mail, but I saw this as my ticket to financial breathing room. There was a 3% fee associated with the transfer. Well, that was paltry compared to having an unknown amount of money sitting on the cards for an unknown amount of time. I hate paying any more than I have to for anything, and interest charges and fees are the worst expenses I can think to come across. I avoid them as much as possible, but I saw no other way out of this one. I transferred close to $2000 that I had on my primary card and paid the fee - $56.87.

After I received a few paychecks, got a handle on my new monthly expenses, and saw my account balances stabilize, I calculated how much I would have to pay each month on this debt to meet the May 1 deadline. It was close. My initial plan was to take any extra money I could use to pay off the card and throw it into an online savings account to gain at least a little interest. Unfortunately, knowing that interest was most likely accruing on the debt from day one and would hit like a Mack truck if I missed the deadline, I opted to pay off as much of the debt as I could each month. Again, not my first choice, but it would give me some peace of mind.

Then I saw offers online about cards offering 0% on purchases for 21 months. Did I want to get another card? My credit is spotless, and I knew I would have no issues getting approved, but I was not keen on taking that step if I didn't have to. I sat on this one for a while (I certainly had time). After about two weeks I decided to bite. I was given an extra $2300 line of credit. This would suffice, and I was certain I would be able to pay off the original debt, which had topped out at $7400) by May 1. This was the greatest relief I had felt since accepting the original balance transfer offer. I wasn't going to get hit with hundreds of dollars of interest!

Now I have the money to officially pay off the debt that's been revolving on both cards. But I haven't. I still have about $3700 left between the two of them. Last month, I realized that I was going to hit my goal way ahead of schedule, and I have been stashing the money away in an online savings account so I can take advantage of a little interest on the way. Sure, it'll likely amount to a few bucks, at most, but it's more than nothing.

This is quite a milestone, and I never though I would be happy with seeing a 3-digit black number. This experience is sure to be short-lived, though. Sometime this month I'm expecting to get my reimbursement check from work for attending Midyear ($1000), and I will be submitting my taxes when I receive my final W-2, with an anticipated refund of over $2000. Then I will have a big buffer, and no worries about the Red.

It's been a fun experience, and I've learned a lot. Now I can finally start playing around with my money again. I've been following the markets more, and will likely start stashing extra money away for long-term goals outside of retirement (instrument training, trips, a plane?).

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