If you haven’t noticed, we are drowning in a crapload of debt. Between the two of us, we have eight credit cards (down from 20+ a year ago) and about $18K in credit card debt. Because we are also trying to save for a wedding, right now we’re only putting an extra $100/month towards the highest rate card (mine at 20.99%, eek, I know). This feels like using a band-aid to cover a gaping wound. We need some sutures!
In order to speed up the process of paying those pesky cards down, I’m thinking of reducing my Simple IRA (a 401k-like plan for small businesses) from 6% to 3%. In doing so, that will free up $80/month that will all go towards credit card debt reduction. When our debt is all paid down, then I’ll put my contribution to 6%. My company matches dollar-for-dollar up to 3% of my salary, so in essence I’m still going to be receiving 6% when all is said and done.
We’ve already looked at our monthly budget and think that we’ve trimmed most of the budgeting fat. Do you think that this is a good idea?