Thursday, July 6, 2017

How we slayed the $8,000 credit card dragon!

When my partner and I first moved to New York City, I was the only one working.  Our situation remained this way for more than a year before she finally found part-time work, then eventually started a full-time teaching position as well.  During that span of time, things were really tight.  We had always been avoiding the trap of two incomes, but even so, moving had cost us a lot, and our newly established rental property had some unforeseen expenses.  At this point, we had acquired about $8,000 in credit card debt.  I know, a lot of people have started in much worse situations than that, but for me, this felt like the weight of the world hanging around my neck.

Despite our one income situation, I was determined to pay it off before the start of the next school year, and we did just that. Here is what we did, and how you can too:

Budget to Zero
We literally made a plan for every dollar.  Every dollar had a name and a job.  We didn't leave an extra fifty bucks sitting there because we know that when people do that, the money gets spent somewhere, and not usually in the most ideal place.  So, that means finding the starting point, and creating a budget. Once you've accounted for everything necessary, allocate everything else to the credit card debt!

Forget Dining Out
When you have eight grand in credit card debt, you have no business dining out!  You can't afford it!  I am sorry if that sounds harsh, but it's reality and probably time to face it.  We took great pleasure in ordering our cheap $10 pizza as a Friday night treat.  It was the cheapest pizza joint in the neighborhood, and we even used the coupons.  I'm not kidding.  Your dinner out will taste better when it's fully paid for, trust me, mine sure did!

Practice Saying "I can't afford that..."
I don't care how embarrassing it is; you get used to it.  It actually becomes relieving to be honest about your money.  No one cares about your credit card debt but you, and people will ask you to do things socially that you can't afford.  Either decline, or come up with a free or cheap alternative.  Until you are out of credit card debt, you can't afford the outing.

Throw ALL Bonuses at the Debt
This includes gifts, tax returns, bonuses, you name it.  The biggest bonus you will ever get is the bonus of zero credit card debt.

No Holiday Gifts
This one sounds crazy right?  During the holidays, we found a great pajama sale, and indulged in super cheap new pj's and some snacks for an at-home movie day.  It cost next to nothing, and is one of my favorite holidays yet.  I also avoided the holiday financial hang-over that many Americans face in January.  Nope, not me!

Scrap the Vacation
This one was rough as a teacher.  I had two months off, and friends going to Ghana, Brazil, Greece, South Korea, and a number of other amazing places.  It would have been really dishonest of me to do something like that with a giant visa bill staring at me.  I did need a vacation though, just to get out of town, so I went camping a couple of times...  Super cheap, and exactly what I needed.  I planned for the vacation I needed, not simply the one I wanted.

These strategies got me out of credit card debt about two years ago, and I've never looked back!  My partner and I threw every dollar possible at the credit card debt until we slayed that dragon once and for all.  Utilizing the strategies I mentioned above made us progress much faster than we might have otherwise, even on one income.

For further details on how to eliminate credit card debt, consider the following strategies:

Debt Snowball: Eliminating Credit Card Debt
Smallest Balance First Method:  Eliminating Credit Card Debt

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