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How I Paid Off $10,000 in Credit Card Debt

Tuesday, September 30, 2014

After a couple months of dating, Sam and I started talking about our future together. I figured that this was the moment to tell him about the state of my fiances. I took a deep breath and just blurted it out, "I have credit card debt."
Sam asked me, "How much debt?"
"Umm, a lot?" I responded embarrassingly
"What's a lot?"
"$10,000."
I probably covered my hands over my face at this point because I had never admitted this to another person. Ever. I was mortified.

We talked for a few minutes about how I got into this situation (emotional shopping after my first engagement ended) and then Sam uttered the words that finally lit a fire under my mountain of debt, "I would feel better about moving forward with our future and getting engaged if you start paying off your debt."

So I did it. I paid off $10,000. Here's how I did it:


1. Get motivated. I had tried halfheartedly to pay off my debt before, but never had much success because I wasn't motivated. Getting engaged was a really significant motivation factor for me! Sam also pointed out to me that having debt would affect our ability to buy a house in the future. Figure out what your motivation is; maybe it's buying a house or starting a family. Always keep this goal in the forefront of your mind to help motivate you to keep going.

2. Write down your goal. I've read several times that people who write down their goals are more likely to achieve them. One study suggests that writing down your goals makes you 42% more likely to accomplish them. Another statistic claims an 80% success rate if you write down your goals.

3. Tell another person your goal. After Sam and I had the initial discussion, he was so encouraging and helpful. Sam introduced me to Mint.com, which really helped illuminate my spending problems (see Step #6)., and he helped me come up with a plan to pay off my debt. He would periodically ask me how I was doing me and encouraged me every month my debt shrunk.

4. Come up with a plan. You need to figure out a plan to throw money at your debt. Some people do really drastic things to get out of debt, like moving to a cheaper area, or taking on three jobs, or selling their belongings. My plan was very simple: stop spending.

5. Stop accruing more debt. Everyone gets into debt the same way: by borrowing money. You have to stop using the credit cards. Stop financing new furniture. Stop buying the latest cell phones. Stop buying things you can't afford. This part is really hard! Hello, that's how I got into debt in the first place! In order to dig myself out of this hole, I had to change my lifestyle. To accomplish this, I took my credit card out of my wallet and hid it in a box in my craft cabinet. From this point forward, I only used cash to pay for things.

6. Track your spending. Most people don't know where their money goes, so it's hard to spend less if you don't even know what you're spending money on. By simply tracking my expenses, I spent less. I can't really explain this phenomenon, but that's what happened with me. I read recently that 60% of American adults don't have budget! That was so shocking to me! I use Mint for my budgeting, but I've also heard great things about YNAB. By tracking my expenses, I was able to figure out what my triggers were and adjust my behavior.


7. Identify your triggers. For me it was buying clothes, home decor, and books. Once I realized what my weaknesses were, I stopped putting myself into situations where I would be tempted. I stopped going to my favorite clothing stores. I stopped buying books on Amazon. I stopped going to HomeGoods. Again, this is HARD! I think it helps to tell other people about your goals (Step #3) so they can encourage you. I told one of my co-workers that I was trying to stop buying clothes. She told me she was trying to stop buying shoes. Together we encouraged each other to stick with these goals.

8. Give yourself a timeline. It's not very realistic for the long term to just stop spending money, so I gave myself a timeline for my spending diet. I decided to go for three months without spending any money on extras. My plan was to only spend money on bills, groceries, and gas. After those three months I would occasionally buy a book or buy clothes at a consignment store, but I only spent cash (see Step 5).

9. Start paying it off. By this point you should have cut way back on your spending, and now you can apply this extra money towards your debt. My plan was to pay a minimum of $1000 a month toward my debt. I only had one source of debt and only one credit card, but I know other people have multiple cards. Dave Ramsey's snowball plan is a great method to use if you are trying to pay off multiple cards.

10. Stick with it. Whenever you feel like giving up, think about your motivation (Step #1), confide in a friend and ask for encouragement (Step #3), and DON'T GIVE UP! You can do it!

I'm so glad I paid off my debt before we got married! I feel like I entered marriage with a clean slate, and through this debt process I've actually become really good at budgeting and saving. Thankfully I have not fallen back into the cycle of credit card debt. I do occasionally use my credit card, but it gets paid off every month.  We were also able to have a beautiful wedding and European honeymoon without going into debt. Neither of us have car loans, so our only debt at the moment are my student loans, which will be paid off in December 2015 (4 years early).


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Linking up with That's Fresh Friday


16 Responses to “How I Paid Off $10,000 in Credit Card Debt”

  1. Rebecca, this is amazing! You know, I am a bit of a personal finance nerd, so I love reading posts like this. I use mint.com too, and it saves me month after month. You are so right about writing down goals too. People ask me all the time how we afford certain things on one income, like vacation. This is how. I haven't faced credit card debt, but I apply similar principles to saving. It takes discipline and it isn't easy, but it is achievable. Congrats on this major achievement!

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  2. This is so encouraging! Thankfully, the only debt my husband and I have had were student + car loans. We're down to only one car loan and that should be finished this year!

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  3. I know exactly what you are going through! I had credit card debit while in college and that multiplied after I graduated and my loans started. I'm happy to say I budgeted and came up with a plan to pay them all off. It's a long road but so worth it! xo

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  4. Thanks for sharing! I'm currently paying off about the same amount right now :-/ However I also have student loan debt so with that and the credit cards, I'm paying over $1,000 month. It's crazy. I should have 2 "smaller" cards paid off in 10 months but I have two others that are higher, so it's looking like 3 years and I pay more than the minimum. Ugh.

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  5. This is so helpful to see! I have student loans that I'm working on paying back, and I think my best strategy will be to not spend any money on unnecessary stuff. I'm also using mint and I find that it helps me a lot, because sometimes you have no idea where your money is going!

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  6. I had debt and paid it off before I bought my house. We have since accumulated debt together, but it felt SO good to pay off debt. I needed the help of my sister to accomplish my goals. I think I had more debt than you did, and I wrote a whole post about it as well. Getting out of debt is hard, but it's so worth it when you finally do!

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  7. I read your post recently, and it sounds like your sister was a huge help!

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  8. Kasi, this is so true! For me the easiest way to save money was to start being aware of where my money was going. It can be very eye opening!

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  9. It's so hard to pay down debt, but such a relief when you do it!

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  10. That's amazing! It sounds like y'all are doing great with paying down your debt!

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  11. Thank you Megan! Sam introduced me to Mint and he says that he created a budgeting/saving monster, which is kinda true! Ha! I've actually become a saver now, which is hard for me to believe because I like spending money!

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  12. I love this post. I'm curious, how long did it take you to to pay it off? I wish I would have got serious about this stuff before I had a child...

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  13. I think it took me about a year to pay off.

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  14. WOW! Go girl! That is super impressive. My husband and I have about $4000 and we are not doing the greatest at getting it paid off. We can't stop having babies. haha. Kind of kidding but seriously. Every year we say 'this is the year' and truly hopefully this year will be it.


    Stopping by your blog via your sponsorship on Oak and Oats! Now I'm off to read more of your posts!


    xo

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Comments make my day! You can also email me: RenovatingRebecca (at) gmail (dot) com