I had four credit cards with varying balances – some low, some high. Two were store cards and two were major credit cards; all with interest rates 20.00% APR or above. I was making the minimum payment each month, plus a little extra per card. Each month I’d look at my statement and feel frustrated that my payment was barely making a dent in the overall balance. I felt helpless. How was I ever going to pay them all off?
It was time to get real.
I grabbed a piece of paper and my stash of credit cards. I divided the paper into three columns. In the first column, I wrote down the name of the credit card. In the second column, the current balance. Finally, in the third column I wrote down the interest rate. Then I added the total. Nearly $5,000. Then I ate a piece of chocolate and counted to ten. Now that I knew exactly what I was working with, it was time to devise a plan.
My plan of attack was just that – MINE. Linn Area Credit Union is in no way endorsing my plan. I’m just sharing with you guys what worked for me at a time when I was tremendously overwhelmed. Hopefully you can start thinking how you can tackle any debt that you might have! (Need help? Give us a call and we can see how much money we can save for you!)
I borrowed from Dave Ramsey’s “snowball” idea and implemented it into my debt-free plan.
I arranged my credit cards from the lowest balance to the highest balance. The lowest one had about $250 on it. I decided that THAT card was the one I would conquer first.
I added up how much total I could afford to spend on paying off my credit cards in a month. For me, the minimum payments totaled to about $85 per month. I could afford to allot about $175 per month (my minimum payments plus about $90). Instead of dividing that number up equally between all four of the cards, I paid the minimum on three cards and used the rest of the money and put it ALL towards that fourth card.
That very first month, my credit card balance on that first card went from $250 down to about $150. WHAT?!?! And guess what? I had that sucker paid off within a couple months.
I was excited!!! I only had three cards to worry about now and I could now focus all my energy on the next troublesome card – but now with more money because there wasn’t a fourth card reaching into my pocket.
And another cool thing happened. I became PSYCHED about paying off my cards. I looked for other ways to cut back in order to put more money towards paying off my debt. It was psychologically uplifting to watch the numbers decrease – all because of ME! I was able to completely take care of my credit card debt in about a year.
I know some people shy away from using credit cards after dealing with past debt, but that’s not the case for me. I make sure that I have credit cards with the best rates (you can’t beat Linn Area’s – click here) and I pay charges off quickly. I also like cards that give me something back, like our Rewards Card.
You have to be diligent, committed and brutally honest with yourself, but I believe that you, too, can get yourself out of debt.
Sound off: Tell us in the comments below things that you have done to get out of debt!