Again, I love tax season. This year I received a large chunk of money back from Uncle Sam and immediately threw that on top of my existing payments for this month. The result was a (near) 25% reduction in my credit card debt and a 54% increase in my overall net worth. If it weren’t for the big hit to my investment accounts – especially my 401(k) – I would be close to a zero net worth, which at this point sounds really, really good.

I kept track of my accounts in December, but didn’t get around to posting an update due to holiday travel and just plain laziness.  Obviously, I took a step backwards in credit card payments – which really were based on finance charges.  But as always, I’m really looking forward to the next few months since I tend to get a pretty nice tax refund which I apply directly to my debt.  I’m hoping to knock off one of my cards and increase my snowball payment amount.

Pretty good progress across the board this month – though my savings did drop a bit due to some minor car repairs that couldn’t be put off.  The big news is that I dropped below (above?) the -10K net worth mark.  Though it’s the credit cards that really need to be my main focus.  I was able to put $783 towards them in October, so we’ll see if I can increase that amount to at least $1000 and make it consistent here on out.

So this October net worth update is extremely late, but I wanted to get it up on the blog before I post the November chart in a few weeks.  As you can see, not a lot has shifted.  I need to re-evaluate what money is going to where in order to make sure I’m throwing as much towards my debt as I can.

In fact, this has become even more urgent to me now that I did a quick estimation of the student loan debt that I will have upon completion of my MBA.  For about half a second, I considered starting a student loan debt payment account to begin collecting money to start off with a large lump sum payment.  However, I quickly realized that it would be smarter to pay down all of my other debts in the hope that once the new student debt shows up – it will be the only debt that I will need to focus on at that time.  Sure it will be big – but it will be really nice just to have the one debt item.

Now, that I wrote my intentions, I do have to be upfront in saying that I did just take a vacation. During the vacation I spent about $800 or so.  I take one vacation a year, and many have commented that I shouldn’t be taking vacations or spending money like that if I’m really serious about paying down debt.  However, that money comes out of a “vacation fund” that I do not count towards my net worth and, to be honest, I don’t regret getting away for a bit and recharging the batteries.  In fact, going away on vacation (with a dedicated fund / budget) is a nice way of showing yourself how life could be if you didn’t have to worry about money – which is the ultimate goal.

Anyway, it’s back to reality and time to really start planning for 2010 and how to make the most of it right from the start.  The end of the year is always tricky.  Just like vacation, I have a dedicated holiday or gift fund that I save up throughout the year (not counted towards net worth).  This way, the scramble for Christmas gifts doesn’t impact my budget or debt payment.  Plus, there’s the hope of year-end bonuses and next years tax refund to look forward to.  Usually, a nice boost to the plan.

All the asset accounts are up – especially savings and the liability accounts are slowly making their way down to zero.  I haven’t slowed my debt pay down, from what I can tell it’s a slight increase in finance charges that is negating some of the payoff.

Plus, there were some slight set backs this month since I just realized that I get paid every other week and not on set days of each month – as I believe I had originally been told.  Well the bills went out and the money didn’t go in, so I got hit with some overdraft fees and spend about half a week kicking myself.  I’m back on track now and don’t expect anything like that to happen again.

But little mistakes and finance charges won’t stop me or hold me up for long. Especially since today I paid off yet another credit card! Yep, the debt snowball keeps on rollin’ and that bigger payment of $300 has rolled into an existing $115 payment creating a – you guessed it – $415 monthly payment to the card with the next highest interest rate.

It’s ironic that the day I look forward to each month is the day that huge chunk of cash goes out of my account to pay down that debt.  It’s a sick sense of satisfaction watching the effect those big chunks have on that total debt number.

A nice little bump in overall net worth this month, again helped by a pretty nice increase in the assets column as well as a decent amount of debt payoff. Within the past few weeks, I was able to completely payoff the remainder of my Bank of America debt – which felt really good. And may a pretty large payment to another credit card account. Now that Bank of America payment will be rolled into the next card which will hopefully will speed up that pay down. I realize I still have a way to go, but I can start to see the finish line from here and it’s adding much needed motivation.

The debate going on in my head right now is whether to close my zero’d out credit card accounts or just leave them open. My fear is that if I close them my debt ratio increases and my rates could go up even further. The plus side to closing them now is that any damage to my credit score that comes from closing an account would not really effect me much and I’d be able to wait it out while I pay down my debt. I’ll have to do some more thinking and research about this since I definitely want to end up only having two cards once I’m debt free – the ones that have treated me the best during this entire time.