If I Can Pay Off my Credit Card debt, So Can You

Enjoy this Guest Post by Nelly Good! You can check out her website at My Way of Viewing and connect with her on Facebook and Twitter.

– Kate

Yes, it’s possible to repay your credit card debt, no matter how difficult it seems to be. You just have to analyze your financial situation and choose either one or a combination of the right debt repayment strategies. 

Like many youngsters, I didn’t manage my credit cards carefully and always said a ‘yes’ whenever any store offered me a card. It became really difficult to remember payment due dates and so I often defaulted. The result was I became burdened with huge debt. 

However, I thought that it won’t help me to worry about it. Rather, it was high time I try to solve my debt problems. 

Here is my debt payoff story – how I figured out a strategy and have been successful in paying my credit card dues. 

Figured out my overall credit card debt

All total I was using 6 credit cards, out of which 2 were store credit cards. I assessed my credit card statements and found out the following:

  • The minimum payment on credit card A with $22,000 @ 16% was $440
  • The minimum payment on credit card B with $7,000 @ 9% was $130
  • The minimum payment on credit card C with $4,000 @ 11% was $90
  • The minimum payment on credit card D with $11,000 @ 12% was $198
  • The minimum payment on credit card E with $3,000 @ 8% was $62
  • The minimum payment on credit card F with $9,500 @ 14% was $282.50

So, the total outstanding balance was $56,500, which I needed to get rid of.  

Planned a realistic budget

Budgeting is the most important word in managing personal finance. Yes, you need to plan a realistic budget that you’ll be able to follow without much difficulty. 

I highly agree, budgeting gets a bad wrap, but truly it’s a huge central focus of getting out of debt and getting ahead of financially!

– Kate

So, I took into account my income and expenses. First of all, I listed how I had been spending until that time, and then I planned my expenses. It helped to reduce the not-so necessary expenses. 

I wasn’t able to plan the budget in the first go. It took me a few months to plan a suitable budget. However, after a few months of struggle, I could plan and follow a budget. 

Stopped incurring additional debt 

The first step to get out of debt was to stop incurring further debt. So, I went on a cash purchasing mode and stopped using credit cards for the time being. 

Cash is so great for this! It forces you to come to terms with what you have actually to spend vs. what mythical numbers rack up on a plastic card.

– Kate

I used to carry cash and it really helped me to cut down my expenses. When you deal with physical notes, to some extent it helps you to curb your expenses. You can give it a try!

Opted to consolidate and settle debts 

After assessing my savings and financial condition, I found out that I won’t be able to repay the outstanding balances in full and after consulting with my friend’s dad, Mr. Charles, who is a financial adviser, I decided to settle some of my debts. 

Mr. Charles gave me some ideas on how to negotiate for debt settlement. I first prepared myself to convince the creditors and became ready with the necessary documents to prove my financial condition. 

I selected credit cards A and D to settle since the outstanding balances were quite high. The outstanding amount got reduced to $11,000 and $6,000. The two cards were finally settled by paying $17,000. I used some of my savings and borrowed a significant amount from my friend, Lisa. 

However, I had to pay tax on the forgiven debt amount. 

Next was the turn to repay the remaining four cards. I decided to consolidate the cards. I chose a balance transfer card with a very low rate of interest. The introductory rate offer was valid for one year. 

Though I had to pay a percentage of the total debt amount as a balance transfer fee, yet it was easier for me to repay the outstanding balance. 

To tell you very honestly, I was a bit skeptical about consolidating debts at first. So, I analyzed the pros and cons of debt consolidation carefully and found it to be a good strategy if managed carefully. I chose the balance transfer method as I figured out that I could repay the entire balance within 12 months. 

I also calculated that paying about $2000 per month would help me pay back the entire balance of $23,500, on my balance transfer card, within a year. 

Nice work Nelly!

-Kate

Additional things I did to save more 

Some unused items in my house were in good condition. I gathered all of them and organized a garage sale on a weekend. 

It felt nice that along with earning a significant amount from the sale, others could buy stuff at low cost. I used that amount to make a bulk payment towards paying back the balance transfer amount. 

Along with that, I canceled my gym membership, as I visited rarely. I also stopped eating out for the time being. It also helped me to focus on healthy eating and started preparing my meals mostly at home. Once you get into the habit of eating home-cooked food, you won’t feel the urge to go to restaurants that frequently. 

And, gradually, I got rid of my credit card debts. After paying back the debts, I made it a point to pay back to Lisa as soon as possible. 

Falling into debt and solving it has a good aspect; it teaches you what you need to do to avoid debt. So, after paying back my debts, I started managing my finances responsibly. Most importantly, I made it a point to repay my credit cards at every billing cycle so that no interest is charged. But, I didn’t stop using my credit cards. Instead, now I shop with credit cards and as I said, pay the entire balance. I have selected the 5th day of every month to clear my outstanding payments. 

So, here is how I have been successful in paying back my credit card debts and started managing my finances responsibly! Thought of sharing as it might help you too!!

Thanks for sharing Nelly! That was a big chunk of change, but you decided not to ignore it and took action. Now, you’re able to be credit card debt free and manage your spending with reaping rewards from those credit cards!

Make sure to check out Nelly’s other writing on her website My Way of Viewing.

– Kate