Minimize expenses and Generate more income!!

Realizing how bad off we are, my wife and I have to make some decisions. We've already cancelled the cable. We figured we had to have the internet so that is still here. The extra $26 a month we pay for the phone we will keep for now too. My wife has a part time job from home that requires a landline. It is very flexible and provides a few extra dollars a month.

What else could we do?

We decided to take out the last little bit of saving we had in a 401K and pay off some debt. We have two 401K accounts. One with $14K and the other with $500.00-I also own about $200 in stock-everything is on the table.

We made a decision to take the $14k and pay off two credit cards. I know many people will disagree with this decision, but I've been spinning my wheels long enough and I felt like I had to create some breathing room since without doing so would give me a negative monthly cash flow. I realize though that I have to stay committed because there is no more 'buffer' in place if I don't follow through this time.

We paid off First National for $6K and one Discover for $4k. We took $1k and placed it in ING Direct as an emergency fund. We had a car repair to take care of and that left us about $800 to pay toward Chase.

That took a huge chunk off the table of $11K and helped lower our monthly credit card payments from $1003 to $787.....A little bit of breathing room. Now I wanted to figure out how long it would take us to get rid of the rest of the credit card debt. Seven cards left with a balance of about $34K. I went to www.powerpay.org and input all of our payments. We committed to pay $10 extra monthly to our first card scheduled to pay off. That is Chase. All of the other cards we will pay the minimum without change. In other words, when they lower the minimum each month by a buck or so, we will pay the original minimum that we are at today. Across the board.

According to Power pay's calculations, we can have this total debt paid off in 4 years. This does include me using my tax return each year. So I've estimated adding $1800 February, 2011. And $1k each year after that for the next three. I'm trying to be conservative in my estimates.