Barbara's Plan

The truth is that Barbara probably will have to use a combination of methods in order to pay off her whole credit card balance. Here is Barbara’s plan to pay her $221 bill in full this month:

  • Looking at her last month’s spending, Barbara sees that a lot of these purchases were lunches out and coffee breaks with coworkers.
  • Barbara values these times she gets to spend with her friends at work, but she enjoys her dinners out and the occasional movie on the weekend as well.
  • Barbara sets an aggressive goal to spend only $60 this month on “wants.” She plans to allow herself one small splurge of $15 per week – one lunch, one inexpensive dinner or movie, or a few coffee trips. It will be challenging, but Barbara is very motivated to pay off her credit card and keep herself debt-free.
  • Barbara estimates that she can save about $25 on gas and groceries. Also, she won’t have to pay the $15 minimum payment on her credit card since she’ll be paying the whole bill, so $25 + $15 = $40 in projected savings.
  • Barbara suspects she could probably get a better phone plan, but she won’t have time to research it this month.
  • She does call her bank about the $10 fee monthly fee for her checking account, and she finds out that she is eligible for a free account at the same bank. 
  • She switches to the free account, and the bank even credits her account for three months of prior fees, giving her $10 she would have paid for the coming month’s fee, plus $30 in reversed charges, for a total of $40. 
  • While she did have $88 left last month, Barbara knows that she has some expenses coming up that might use up that cushion, so even with her aggressive savings plan for the month, Barbara might have to dip into her savings to cover the remaining $22 balance. 
  • Another option would be for Barbara to carry the $22 balance over on her credit card and pay it off the next month, but Barbara’s goal to remain debt-free is important to her. 
  • It might seem logical for Barbara to cut her regular savings contribution of $50 down to $25 for this month, but Barbara likes the regular habit of putting the same amount into her savings no matter what — even if she has to take some money out of her savings to meet another financial goal.

Infographic: Barbara's plan

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