In this post, I am going to break down exactly how I paid off thousands of dollars in credit card debt in six easy steps. Actually, I paid off $20,000 in credit card debt. Yes, once upon a time, not long ago – I was saddled with $20,000 in credit card debt. The total balance was paid off between the years 2014 – 2016. I had a mix of credit cards including store cards with balances of a few hundred dollars up to thousands of dollars on my Visa, Mastercard and Discover cards. Ultimately, I took 6 steps to finally get out of credit card debt:
1st Step: Got fed up with making credit card payments.
Simply put, month in and month out I got tired of making numerous payments to the credit card companies. It became exhausting to keep up with who I owed, how much I owed, due dates, etc. So, I made my mind up that I was tired of making those payments and decided to get out of credit card debt once and for all. I wanted the bills and payments to stop so my mindset became set to being just plain tired of being in credit card debt. So, I created a plan to get out of credit card debt for once and for all.
“Do you know what you can do with your money when you don’t have any payments? Anything you want!”
2nd Step: Stopped charging items on my credit cards.
If I didn’t have the cash to purchase something then I simply went without. Afterall, you cannot get out of debt while doing the same thing that got you in debt.
3nd Step: Created a payment plan using the debt snowball.
I had recently read, “Total Money Makeover” by Dave Ramsey and was definitely inspired to get out of debt. Therefore, I listed out all of my credit card accounts from the smallest account balance to the largest account balance with a plan to pay them off using the debt snowball which I had learned about from Dave Ramsey’s book.
“Debt snowball is a method of debt repayment in which the debtor lists each of his/her debts from smallest to largest (not including the mortgage), then devotes extra money each month to paying off the smallest debt first while making only minimum monthly payments on all of the other debts.” – Investopedia
4th Step: Reviewed my income and expenses to determine did I have an income problem or a spending problem with the amount of debt that I had.
At this point, I’ve had credit cards since the age of 18 and honestly couldn’t remember if there was ever a time that they were all 100% paid off at the same time. I pulled a month of my paystubs from work, 2 months of my most recent bank account statements and a couple of highlighters and starting marking 2 main areas: Food and shopping. Those were the two areas that I figured I could back on first. What I realized was that there was room to cut back in the areas of food and shopping but I definitely had an income issue. I simply wasn’t making enough money to cover all of my bills and have enough for food, gas, etc.
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5th Step: Realized that I needed to make more money.
Since I had an income issue, I picked up a part time job. In fact, it was a retail job and I even created a spreadsheet to track my paychecks from my part time job to make sure that the money was tracked as it came in and then paid toward debt to work my set debt snowball. However, my part time didn’t offer that my many hours which equated to income and I admit, I was shopping at the store so my checks really didn’t make a huge difference since I was spending my paychecks back in the store. (Note: Please don’t work at a place to earn money where you will also be tempted to shop/spend.)
5B: Personally, I still needed to make more money because the part time job wasn’t cutting it so I went after a promotion at work and got it. That is when the snowball really got traction. Getting the promotion, did take some work and even took moving out of state but the increase was worth it. (Let me note, If you have a spending problem, then you will need to cut back on your shopping.)
From there, I was able to work my snowball and pay off each debt one by one from smallest debt balance to highest debt balance.
Step 6: (Optional Step) Completed a balance transfer.
One of my credit cards had an offer for a balance transfer. I used that offer to transfer a higher interest credit card to a very low interest credit card with the plan to pay the card off before the balance transfer rate expired. It proved to be a good way to save on interest while paying off my $20,000 in credit card debt. I know this isn’t a preferred option for some people but if you are committed to not getting back in credit card debt and you are committed to paying off your credit cards for good, this could be a good tool to use to save on interest fees while paying off your debt.
In conclusion: To pay off your credit debt, it will take a few steps but it can be done. Steps include: Getting fed up with credit card debt, no longer changing items on credit cards, listing out all debt/balances using the snowball method (however, you could also use the avalanche method), determine do you have an income problem or a spending problem and fixing that specified problem, considering a balance transfer option and then lastly, work that payoff plan you created and stick to your plan until all of your credit cards are paid off. Please remember that by believing that you can pay off your credit card debt, you are halfway there!
So let me know of any questions you have? Do you believe that you can pay off your credit card debt? How long do you think it will take to pay off your credit cards in full?