Hello,
Been struggling with credit card debt for basically all of my adult life. Up until now it has really blown out of control. Im over $40k in credit card debt. This isn’t including any other type of debt like car payments, mortgage etc. I always seem to have more expenses come my way than I can afford even though I make a decent salary. I just finished paying for daycare and now starting an MBA program to help advance my career so that’s adding in another expense. I want to be able to do things while paying down debt but don’t think I exactly go overboard either with buying things or eating out. I have tried budgeting apps, excel spreadsheets, automatic savings but something isn’t clicking to make me fully commit to paying down this debt.
I’m curious what the final “ah ha” moment was that gave you just the right kick in the ass to finally get serious about paying down this debt.
Hoping to get some insight from this sub. Thanks!
What was the motivation that finally made you pay down your credit card debt?
byu/Capital-Wrangler-709 inpersonalfinance
Posted by Capital-Wrangler-709
21 Comments
Well you are starting a new program when you are already deep in bad debt. Until you’re ready to cut back and budget, no one can help you.
For me it was realizing the interest alone was eating up more than my rent every year. basically paying thousands for nothing. That “screw this” moment flipped the switch and made me get aggressive about debt payoff.
Honestly I had to take a look my the broader lifestyle issues that were causing my debt, rather than look at it as a willpower issue. For me it was alcoholism. I kicked the drinking and had the debt completely paid off in two years with very little additional effort.
Look up David Ramsey, Ramit Sethi, or The Money Guy Show on youtube. Find which philsophy works for you… future you deserves better.
Realizing that my parents weren’t going to “save me” anymore or ever again (despite them saying they would help if I ever needed it). And when help is offered, there are usually strings attached, it’s not really help, it’s just another bill. I’m not where I want to be yet but I’m getting there!
Do the math on the interest rates you are paying for the year. The cheapest CC I know of is 7% from my CU that would be 2,800 a year you are just giving to your bank in interest. For the highest interest CC is around 28% which is $11,200 in interest a year. That is money you could be investing and making money on.
Make a basic budget and start bulk cooking. Pay down that debt. A little pain can give you lots of financial gain in the future
Not really sure what “ah ha” moment you need beyond realizing you’re in debt for eternity at the moment.
You need to increase your income it sounds like. You can’t open 0% cards forever eventually they’ll start denying you.
when i didn’t want to be a slave to money and die working. now, retiring early at 55 (in 5yrs) is very likely and the stress relief is amazing without having any debt hanging over my head.
Watching my parents go poor and be bitter about it, almost ruining their marriage
For me it’s looking at the credit card statement where it says
“If you pay xx extra amount you’ll pay this off in 5 years with a total of $2000 interest! ☺️
If you pay the minimum payment you’ll pay this off in 20 years with a total of $500000 interest 😈”
As soon as you get a paycheck, take a HUGE chunk and start paying it down. No you won’t be able to afford to buy things whenever, eat out whenever, but you’ll pay off the debt and then never get back into debt because you’ll hate being broke all the time, you’ll love putting that huge chunk into high yield savings and investing it, and you’ll watch your credit go up and have more options for the future.
Also, if you’re paying for daycare, you can’t afford to not have savings for emergencies. The debt is as much or more a problem for your kid as it is for you.
I only had a small credit card debt compared to you, it was a yr out of college, it hovered around $1200-1500. The “ah-ha” moment was in my year end cc statement which showed I paid about $300 in interest thru December for the year. I was shocked, I knew the interest was high but when I saw the actual dollars I was loosing …, I paid it off within 2 paychecks and have never paid a penny of interest since, and that was over 30yrs ago.
I never got into credit card debt in the first place because I was fortunate enough to be educated on interest and spent 10 minutes plugging numbers into a calculator. It was jawdropping how expensive credit card debt in your 20s is compounded over decades.
Be glad you are having the ah-ha moment now… although you have to actually cut spending. This means an actual step back in your quality of life. Some people can adapt to it pretty easily and realize that spending $2000/month on lawn care and door dash and a new car actually didn’t give them very much happiness.
Many people never get it.
The aggressive stress of trying to keep up with interest payments
I never spend more than my means and always pay off my statement balance before or on the due date. Watching friends and family juggle debt made me vow to never
You are conciously destroying your life. Bordering on masochism. Truly.
You want the hard truth? You quit school, get 2 more jobs, eat rice and beans. Zero travel or eating out or whatever. Sell the car and all the stupid junk you’ve aquired. Period.
That you even mention you don’t think you go overboard with eating out and buying stuff is ludicrous. You are in deep denial.
Advance your career? At this point you need to learn basic, very basic personal finance. You are paying 10k/yr in just stupid interest.
I know this is harsh…but you are seeking more fantasy instead of understanding reality.
My ex and I got divorced and I discovered he had 250K hidden debt. That was in 1993 dollars. We had to file bankruptcy. That did it for me. I never charge unless I can pay it off by the end of the month.
My only debt is my mortgage.
Getting married and being held accountable for my spending.
I wanted to buy a house and that meant getting my financial… uh, house in order.
It worked!
For me it was seeing how much money I was burning on interest every month and realizing none of it was actually lowering the balance. That was the kick in the ass that made me change. With 40k in debt minimums and spreadsheets aren’t gonna cut it long term. If you can’t make real progress on your own then looking at something like accredited or freedom debt relief might be worth it since they roll it into one plan and negotiate the balances down. It will hit your credit while you’re in the program but it can finally get you moving in the right direction.
I made a spreadsheet to calculate my gains over time from investing contributions to see if it made sense to do that vs pay down student loans faster.
Then I was like, “oh I should add a row to compare this to my losses from credit interest, too”. Huge mistake. Couldn’t unsee how bad those compounding losses are.
I put all my stock money towards paying that down as well as part of my emergency fund, then paid down the rest over 5 months. Absolutely worth it. Emergency fund is back and I’m spending 450 less a month on credit interest and can instead invest that money for much smaller guaranteed returns, but I’m ok with that.