How I Paid Off $30,000+ of Credit Card Debt in Two Years

happyWomen

Yes! Recently credit-card debt free and exhausted from a marathon session of bad dancing, I’m back to share how I did it. By writing this, I don’t mean to imply that everything that I did was necessarily the best course of action, or that it would work for everyone. I’m only sharing what worked for me, a single female with no dependents.

There were 5 simple components that all played a part. None of this was easy to experience, but the steps were simple.

1.  I resolved to do it.

I had a wake up call back in late 2012 when I did a bit of math and realized that when my student loans came out of forbearance, I would no longer be able to make ends meet. I knew that I had to start paying off these two debts. Dave Ramsey books and DVDs got me psyched up and motivated. I wanted freedom more than I wanted stuff.

2.  I made a plan.

Because my smaller debt (credit card) was also the one with the highest interest rate there was no conflict between the Debt Snowball approach and the Debt Avalanche approach of debt payoff. I knew the credit card would have to go first. We all know that the only way to pay off debt is to lower expenses and/or increase income. I made plans to do both.happy-black-woman

3. I reduced my expenses and financial obligations

A.  Lowered housing expenses: This was a big one. Yep, I’ve pretty much lived at the poverty level during these two years, not including the time I spent locked into an expensive apartment share right after arriving in the region where I live now. I had to accept the painful fact that I could not afford to live alone with this huge debt over my head. I got roommates. It hurt to realize that, in my late 30’s, I could not afford to have my own place. I hated the loss of privacy, but I had no choice. I had to turn to Craigslist.

B. Lowered other living expenses: I did not have, and still do not have a car. I had no salon visits, no vacations, etc. Yes, I had no life.

C. Reduced the number of financial obligations:  In my housing search, I looked for rooms to rent that included all utilities and internet so wouldn’t have to deal with keeping track of those.  I cut out miscellaneous expenses. Netflix…gone. Amazon Prime…gone. Now, each month I only pay for three things – rent, student loans, and my mobile phone. (My public transit pass is paid for with pre-tax income directly from my paycheck.)

D. Lowered my credit card interest rate:  I got lucky on this one. Because of all the deep debt that I was in, my $30,000+ of credit card debt had an interest rate was 19% and no credit card company would give me a 0% balance transfer option. And why would they? What credit card company would give up hundreds of dollars each month in guaranteed interest payments?  It is only because of a deal that I got via my current employer company, that I was able to get a 0% balance transfer. With the interest gone, this helped me a lot to gain traction on paying it down. Yet another reason to be thankful for my current job.

E. Lowered my student loan monthly payment. I changed my payment plan from 10-year Standard to 10-year Graduated. This lowered my monthly student loan payment by $500/mo. I plan to return to the Standard payment plan now that the credit card debt is taken care of.

Happy-woman-1000

4.  I increased my income.

A. I got a new job. I can hear the eyes rolling. Yes, I know that making more money is easier said than done, but it can be done. How did I do it? It was easy. I got fired. I made my first big dent into my credit card debt by March of 2013. In mid-April, I was fired by my employer. I spent the next four months on unemployment until I started my current position. Back when I was still with my old employer, I didn’t think I’d ever get a job that paid more than what I had been making. I felt trapped. I was struggling with the work and not happy where I was, but was afraid to leave and end up someplace that was worse. Well, my old employer was just as unhappy with me and gave me the axe to put us both out of our misery. I was angry and hurt at the time, but it ended up being the best thing for me. My new job, which is great, pays 50% more per year than my old job. How did I do this? The new job was in a high cost-of-living-area in another state, which was responsible for most of the salary bump. If you can keep your expenses very low (think roommates, and no car), you can skim the difference in salary to put towards your debt.

B. I got a second job. I even got a second job for a while. However, after 6 months, I had to quit it because of the toll it was taking on my health for such low pay.

Happy-woman-jumping

5.  I focused on milestones to bolster perseverance.

When I started making payments, I focused on having a balance under $30,000. After that, I looked forward to having a balance under $20,000,  under $10,000, under $5,000, and finally under $1,000. I stayed focused on my mini-goals.

That’s it. The steps were simple. Living through it was the hard part.

Have you paid off a ton of credit card debt? How did you do it? Tell me in the comments.

.

“Debtor’s prison is real, and opportunity cost is a bitch.” (DDSW)

Debt Update: February 2015

debt update

Hey Peeps!

I know. I know. Long time, no write.

Where have I been?  Where else… at work.  I certainly can’t afford to go anywhere else.  I had a string of projects that left me too drained to blog. It all culminated in an all-nighter session to get some deliverables submitted on time that took me three days to recover from. Getting older sucks.

overwork at workplace stress and debt

Since then, things at work have returned to a manageable level…at least for the time being.

Meanwhile, back at the BatCave, I have some good news on the debt front. As you can see from my progress bars in the footer of this blog, I have made great progress on my credit card debt. I just received a year-end bonus at work. Yeah, I know it’s February, but that’s how my employer works. Anyway, I took every penny of it…well, every penny of what was left after taxes (ouch!), and put it towards the credit card debt.

credit card debt due

I now have $520 left in credit card debt!. *screams*

It’s only a matter of days now before the final blade lowers.

ILLUSTRATION: Credit-card guillotine

I…CAN’T…WAIT..!!!!!

I can’t wait until I can finally end this credit card debt once and for all.  I already have a nice place picked out for it to rest…eternally.

RIP Credit Card Debt 3

I get giddy with excitement every time I think about it. No more credit card debt. Gone forever and hopefully burning in the fires of hell where it belongs. Does this make me sound evil?

evil woman

I assure all of you that I am not…well, not much. 😉  It’s just that $30,000+ of credit card debt has been financially strangling me for years. I have likely single-handedly financed someone else’s retirement with all the interest I’ve paid over the years. I will not be sad to see that debt die. 😈

Finally, I’ll be able to save up for a small savings fund. The next few months will give me a breather to save at least a $5k – $6k buffer, so I can sleep better at night. After that, I plunge into tackling my mountain of student loan debt. Watch out Sallie Mae, you’re next!

In another bit of good news, my retirement savings (investments) are accumulating faster than expected. I have increased my 2015 investment savings goal (including employer match) from a $20,000 total to an even more ambitious $30,000 total.

In the meantime, will DoubleDebtSingleWoman defeat the Evil Plastic Menace? Come back to see part 2.  Same Bat time. Same Bat channel.

batman logo

“Debtor’s prison is real, and opportunity cost is a bitch.” (DDSW)

Goodbye 2014: The Year in Debt Review

end-of-2014-300px

As the clock ticks down on 2014, it is a natural time for reflection on the wins and losses and ups and downs of the year. It always seems as though the year flew by, and this was no exception.

I started off in 2014 with high hopes of finishing what I started in 2013 – finally killing this infernal credit card debt. In January 2014, I had $22,770 left in credit card debt (of my $30,340 total) and measured optimism. I knew that the single woman with double debt faces certain additional challenges to being able to turn around her finances. I also knew that in my case, the key to getting rid of this credit card debt within the year would hinge on lowering my living expenses.

I was not happy in my living arrangement for most of 2014. I really wanted still want to have my own place, but that is completely impossible in my high cost of living area. To live in a nice place, and in a nice area, many people spend on rent what I bring home in an entire month.

Ummm, no.

umm no cat

Sadly I can’t afford that. So, if I must live with roommates then, I knew I needed to make it as financially worthwhile as possible.  I couldn’t wait to get out of the onerous lease that I was trapped in.

At work, my awesome direct manager left to work at another employer and…

lolcatsdotcomph1bn8ragyuj06jp

Yes, she did. And I was afraid of reporting to the senior manager as she was quite intimidating to me. I was afraid that I might lose my job if I displeased her. I am happy to report that the senior manager and I have since worked together on a couple of projects and I no longer find her quite so intimidating at all. She has been quite kind to me, however I do know that I have room for improvement.  In other words I’m not shaking every time I get called into an unplanned meeting, but I’m not still naive enough to think that I can get comfortable in my role. The job is challenging and is at the upper range of my skill set, so it will continue to be draining as I develop professionally.  I also have a new direct manager who is also great. Things are not perfect, as it is sometimes very stressful at work, but I am grateful to have an income.

By April, I’d paid down half of my credit card debt to $15,000. It was a proud moment for me, as the first half of the journey is the hardest. The balances are at their highest and payments appear to have the smallest impact. By April, I was at the midway point. I was finally gaining momentum. I was starting to see a life beyond this credit card debt. I was starting to dream of doing something that I’ve wanted to do for over a decade — take an international trip — once the credit card debt was gone. While most of the leaders in the personal finance blogosphere warn against such choices, as it could lead to a life of reckless and out of control behavior…

lolcatsdotcom29amvfrzg3cozo7y

…I got some good words of encouragement from you guys to help me keep things in perspective.

I’ve realized that travel is important to me, and that I don’t want to wait another 10 years before I can see the world. That is a prison sentence. I plan to take a trip in 2015 or 2016, depending on when I have the credit card debt gone for good and have cash saved up for the trip. So daydreaming of exotic locales also keeps me motivated these days.

In June, I found a new room to rent and was over the moon happy to spend $1,000 less on rent every month. Seriously the cost of living here is ridiculous. My new living arrangement with my three Craigslist roommates is far from perfect, but much better than what I had before. I’m having to put up with things that I ordinarily would not put up with, but that’s the price I have to pay for such reasonable rent. With that extra money going toward debt, I was able to pay down my credit card debt to $9000+ by August. Breaking that 4-digit mark was a great psychological boost. Now with 4-digits of debt, I could see the light at the end of the tunnel. It helped me to renew my resolve.  I continued to make my payments. My debt dropped slowly to $6,000+.

In the last few months of 2014, I feel like I’ve been on a debt carousel. I’ve stalled at the $6,000+ mark. Unexpected but necessary medical expenses, along with a poorly controlled food budget have slowed my payoff.

Spending confession: Holiday Hangover

One step forward…two steps back. Is that how the saying goes?

hangover

After reaching an all-time low credit card balance of $5,567 at the beginning of December, I now have $7,190.47 in credit card debt. Ugh! I want to strangle myself sometimes.  What the hell happened? What did I even spend it on?

I just looked at my statement and did some eyeball calculations. Numbers are approximate.

$285  Groceries & food
$100  Credit card interest  (My 0% transfer rate has now ended.)
$300  Holiday Gifts
$333  Handmade Bed Quilt
$100  Books (work-related)
$500  Clothes  (Half of which I will likely send back once they arrive.)

With my next paycheck I will pay some of this back down. All in all, however, it’s been a pretty good year financially — down from $22,770 to $7,190  $5,990 in CC debt.

Addendum:

Woot! I got my last 2014 direct deposit paycheck this morning and promptly put the bulk of it toward the credit card debt.
With only hours remaining in 2014, my ending credit card balance will now be $5,990.00

With more careful planning, it should have been zero, but I’ll take what I can get. Now that interest has kicked in on my credit card again, this really needs to die, and soon.

Thanks guys for reading along and sending kind words my way throughout the few years that I’ve been posting here.

two kittens - friendship love

Goodbye 2014!

.

“Debtor’s prison is real, and opportunity cost is a bitch.” (DDSW)