Paying off $30,000 worth of credit card debt in 13 months!
Written by P. Graham   

Every Penny Counts!


I thought I would post my story so that it could provide some motivation/help/support for anyone going through a similar situation.

My wife and I both graduated from college in June of 2005 and supported ourselves solely since we were 18 (we were 23 in 2005). During that time I worked full-time and she worked part-time and we managed to accumulate about $22,000 in credit card debt. Over the next 6 months or so we added to that sum due to moving expenses, etc. and when it was all added up we owed almost $30,000 total as of February 1st, 2006. We both wanted to go back to graduate school but knew we would need to pay off this debt first. We decided to get serious about paying it back and we sent in the final payment on today to finish it off.

Here's how it happened. I set a target of 18 months to pay off all of the debt. I figured that using our current interest rates we would need to come up with about $1,700 per month to pay it off. The first few months it was tough so I decided to get a part-time job to supplement our income and this made all of the difference. To everyone who is struggling with debt, the best way to pay off your bills is to increase your income. We've struggled with this for years and every time we tried to decrease our expenses we failed at it. Increase your income and it will go away. Over the summer I was working upwards of 80 hours per week and trying to save as much as possible.

Around September I was able to balance transfer the rest of it onto a new $15,000 limit American Express card at 4.9% for life. This really made all of the difference. It was so easy to be able to just make one payment and just send any extra money I made to reduce the balance. After getting my tax return last week we were at $3,700 left on the American Express and we had $3,800 in our savings account. We're filling out financial aid forms for grad school now and we wanted to be honest with our checking and savings balances - so we went ahead and sent our savings to American Express and finished paying off our credit cards today.

It is very exciting and uplifting to have it all paid off. My wife says that she's glad we went through this experience because we learned so much that will keep us from going through it again later in life. We learned so much about finance and ourselves over the last 13 months. 

If I could give one piece of advice to everyone else in a similar situation, paying off debt is like losing weight, quitting an addiction, etc - you have to make a full lifestyle change but you have to do it in steps. If you decide tomorrow never to eat a piece of cake again your diet will fail. We focused on the big things and kept our little luxuries (Starbucks coffee, breakfasts out some times, etc) to make the big stuff tolerable.

Summary of Steps:

 

  1. Set a target date to pay off the debt.
  2. Increase your income, possibly by taking in additional work or second job.
  3. Lower your expenses or at least keep it from increasing.
  4. Save as much as possible of your earnings.
  5. Seek balance transfer opportunities to consolidate your accounts into a single one.  Concentrate in paying off that one.

 
Last Updated on Friday, 08 July 2011 04:22