By getting the privilege of dealing with and solving personal finance problems, I am fortunate to come across several personal debt stories. I have witnessed some of these real-life success stories myself as I’ve helped them overcome their debt crisis.
One such getting out debt success stories is my friend Emily’s, who has been successful in paying off her high-interest credit card debt.
Like many others, Emily had the habit of splurging from her college days.
Both of us used to work in a store and as you can understand, there were lucrative offers every now and then. Though I could avoid some, Emily couldn’t restrict herself and often used her credit cards and went on building debt which she couldn’t manage.
Let’s have a look at her credit card debt story.
The total number of credit cards with the outstanding balance:
- Credit Card A – $15,000: Minimum payment $200
- Credit Card B – $5,000: Minimum payment $75
- Credit Card C – $7,000: Minimum payment $140
In total, she had to pay $27,000.
The minimum payment was $415.
When she decided to repay her credit card debt, I briefed her some options and she picked debt snowball method as she wanted to repay a credit card debt as fast as she could.
So, Emily decided to shell out $900 towards debt payments every month. It took her about 9 months to clear credit card B.
When it was paid off, she got a lump sum amount to repay her next credit card balance, the credit card C and she cleared it off in another 10-11 months.
Finally, she paid remaining credit card debt balance in less than 2 years.
She was not much keen to opt for consolidation, and she wanted to pay all by herself, and see her credit cards balances getting paid off, one by one.
When she was paying off debts, often we discussed options to save more and how to manage finances better.
Here are a few tips that worked for her:
Following a budget strictly
Owing to my experiences in the personal finance field, I advised Emily to plan a budget which she’ll be able to follow with ease. We discussed and became successful in the fourth month. We also discussed and altered the budget every month as per requirement.
Use extra payments to wipe out debt
Whenever you get extra payments like a bonus or tax refund, use that to repay debt fast. This way, you can save on interest payments.
Find out a safe amount to spend
Keep an amount in your checking account and know that’s your limit. You’re not allowed to spend more. However, do not spend that amount forcefully any month, if one month you find that you have nothing to spend on.
Avoid debt at any cost
Say ‘NO’ to added debt. Yes, I mean it. No more extra debt until you repay the existing ones. If you’ve paid off a credit card debt and want to swipe it, make sure you repay the balance before the due date. Spend just that much you can afford.
Discuss with someone you trust
It is always helpful when you discuss your financial moves with someone trustworthy. It can be your friend, your parent, financial adviser, your spouse, and so on. Discussing helps you find loopholes and discuss the merits and demerits of the plans you want to follow.
What I feel the most important thing is the promise you make to yourself. You have to hate your debt to get rid of it as soon as possible. You’ll have to tell yourself that you’ll be successful come what may.
Every day is a good day to make a financial resolution. You don’t have to wait for the beginning of a year to make the resolution. Always know “Today is the best day”. Even if it’s the middle of the month, do not wait for 15 days to start off with your debt repayment resolution.
Start managing your finances better – Today is the best day!
Do you have any total money makeover success stories? We’ll be happy to read…