PT Money

by PT |  Print |

My Story with Credit Card Debt

First off, let me add that I have carried my share of credit card debt. I signed up for my first two credit cards in college (you know, to get the free t-shirt). By the time I left college I had a decent amount of debt and two worn out t-shirts. I wasn’t paying this off every month and so I was paying 20% or more in interest charges. Looking back, it’s hard to believe I left college with this debt considering I graduated with an advanced degree in accounting and was preparing for the CPA exam. I guess I was living for the future, thinking that first big pay day would bail me out.

After college, I got a few retail credit cards (you know, to save 10% on more t-shirts). All this eventually added up to late charges, credit dings, and a bunch of high interest, stupid debt. Bottom line, I let the credit card companies dictate when I applied for a credit card and I wasn’t being disciplined in the use of those cards. Well, there comes a time when we need to take this control back and be intentional about your finances (aka, grow up). Well, if your in this boat, there’s never a better time than now to do this.

Why I Paid Off My Debt?

I paid off my debt for the following reasons:

1. After creating the tool to track my regular expenses, of which one was credit card payments, I realized I was sick of paying for something that I had long since used (dinners out, movies, vacations, etc…)
2. I realized how much money I was throwing away on high-interest charges
3. I wanted to feel in control and in charge of my personal finances and not have this burden hanging over my head.

How I Paid Off My Debt?

I paid my debt off as quick as possible. The first thing I did was look for a 0% credit card balance transfer offer so I would eliminate the high-interest charges. I didn’t do this, but I think there are offers without a transfer fee. These deals usually run around 12 months before more interest kicks in. Here’s a nice listing of 0% cards.

Next, I simply divided my balance by the number of months left on the deal and planned to make that payment each month. For example, if the balance is $2,500 and it’s a 0% interest deal for 12 months, the monthly payment would be around $210 ($2500/12). That was considerably more than my minimum payment, but I was ready to make a change.

Getting out of this debt was going to hurt a little. If the monthly payment had been too high, say in the thousands, I would have considered doing a second transfer to stretch the 0% to 24 months. If the credit card companies wouldn’t extend me the 0% offer, I would have listed my credit cards out, highest interest first, and planned to pay as much as possible each month on the highest one until it was paid off. Then I would move to the next highest interest card.

Extreme Measures

The next thing I did was a little extreme, but it was what I needed. I cut up my old cards and the new card (I had transferred to) so I couldn’t add anymore credit card debt to my life. This was hard to do, but I was really excited about taking back control and I wasn’t going to let anything get in my way.

Do you have an inspiring get out of debt story you could share? Feel free to comment below…

The Rest of the Series…

Photo: by Ian Broyles

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