As I sat down to write about eliminating one of credit card debts, I started looking up the numbers to include in this post. But doing that, lead to even more number crunching. I became so consumed by the shocking numbers, toggling between three spreadsheets I created, I spent the entire evening looking up old credit card statements. I wanted to document and log all the history associated with my credit card debts: the balances I carried each month, the monthly payments I was making, along with how much I was spending in interest!

Well, first to the good news! I paid off one of my credit cards!!! YAY! Now I only have 5 more to go. The highest balance I ever had on this card was $1,444 in July 2007. Thankfully, due to good interest rates, I only paid a total of $21 in interest fees for carrying this balance for 4 months.

With further investigation into my other cards, I was astounded at what I found. My situation was worse than I imagined. I noticed that nearly a year ago in November 2006, I was in the deepest debt we’ve ever been in. I cleaned up the majority of our debt by selling some investments. But now as of October 2007, I’m right back where I was a year ago. The reason? We never changed our spending habits.

I fell prey to the 0% offers. The buy now, pay later schemes. But recently, I’ve started a program developed by John Cummuta, Transforming Debt into Wealth. It’s really a quite simple philosophy. Don’t buy what you can’t afford. Pay cash for everything, never borrow again. Live on a budget, find the margin between what you can live on and what you make. Take that money as your accelerator margin, and apply it to one debt at time. Following this method, you should be debt free including your mortgage in 5 to 7 years.

Well, naturally, I plugged our debts into a spreadsheet and used his formula. Sure enough, I will have the $14,000 in credit card debt paid off in a year. Then our vehicles in the following 3 months (current balances of $7,000) and the student loan next (presently $11,000) will be gone by November 2009. Then we’ll be able to apply our accelerator margin plus the minimum payments we were making on all our other debts to our mortgage. By dropping $2,500 a month towards our mortgage, we should own our home outright by the end of 2012, right at 5 years time.