The Best Credit Card to Pay off Debt: How I paid off $12k in 12 months
Yikes! How did I get here? That's what I asked myself last year when I calculated up all of my credit card bills, a task I had been dreading for way too long. I've always given myself a pass when it came to my debt climbing (rapidly, I might add!): I just moved to an expensive city, a lot of other people have way more (like comparing student loans to my credit debt, not remotely the same), YOLO, FOMO. Seriously, I was queen of excuses. It's hard to look at your failures straight in the face, but when I finally did, I made some life changes that got me where I wanted to be- debt free!
1. Make a Commitment
I made a commitment to myself to stay on track, even when life threw me curve balls. As time goes on it is natural to give yourself leeway. You have to want it so bad you put your entire Christmas bonus towards credit card debt.
2. Make a Budget
This seems painfully obvious but I made a budget. Not a half-assed scribble on a piece of paper one, an I know I'm not going to like the outcome of this one. I wrote out income and expenses (even the little $10/month Spotify) and estimated OVER on things that fluctuate, like groceries. I literally saved my gas receipts for months so I could find a true average, and I didn't leave out weekends eating/drinking out, or shopping. It's not realistic to tell yourself you just won't shop online anymore, sorry.
3. Determine Your Savings Goal
Then I deducted how much I wanted to put in my savings account each month, I think a lot of people take what they have left over and say to themselves they don't have enough leftover for savings, but I think this needs to be a part of your budget from the beginning if it is within your goals to save money, which I'd assume that is a yes for everyone.
4. Determine Your Monthly Pay Off
Next was tackling the credit card, how much to put towards each month. I determined this by taking my total and dividing it by the goal I set. (ex. $9,000 in 18 months= $500/month)
5.Make a BIG Life Change
After this, I was either in the negative, or had little to no money left, and that's when I decided I needed to make some big life changes. And not like cutting out that Starbuck's latte every morning type change, but like getting a roommate to cut your rent in half, getting a new job, asking for that raise if you deserve it, or selling your car for a cheaper one. Those type.
6. Transfer Your Debt to an Interest-free Credit Card
I transferred all my debt to one pretty pink interest-free for 18 months credit card. This helped me a TON- A) because I was always feeling like I was taking one step forward two steps back with interest payments, and B), I could see one (big) figure of debt staring me in the face rather than a couple thousand on each card that didn't seem like "that much".
Yes, there is the initial transfer fee, but the interest-free benefits far outweigh that in the long run. I paid $135 to transfer 12k in debt, and was paying more than that per month in interest across my other cards. I couldn't recommend this card enough for those in my position (linked here).
I've had lots of different types of credit cards over the years, and this has been my favorite for many reasons. The cash back rewards are simple and easy to redeem, they also seemed to build up quickly now that I'm using this as a spending card. Also, the customer service is great, I use the online chat message feature and got answers from a real person who knew what they were talking about. No waiting on hold, no robots!
7. Set a Pay-off Goal
I set my pay-off goal. I chose 12 months, just to be aggressive. I'd been carrying this weight for a long time now and wanted it gone. I decided to apply $800-$1,200 a month towards the card depending on fluctuating expenses.
Back up a little bit, before I could decide the monthly payment to my card I had to do what I recommended above, that whole big life change thing *sigh*. So a year and a half ago I went out on a search for a place I could afford in San Diego.
That was a tall order based on my desire for location location location, and the entry level position I was at in my career. After months of searching I found a location I loved, but had to sacrifice having laundry, a dish washer, air conditioning, pretty much any amenity, and have to deal with the occasional cockroach. Okay I know it does not sound worth it, but I'm telling you it is/was. I also worked really hard for a promotion at work to put me in a better position to have less FOMO and more YOLO while paying off my debt.
Fast forward a year, I paid the last of my debt (as well as the last payment on my car, Patricia the Patriot), and truly feel lighter than ever. Even during this year of constant DOWNERS, I have this as my little victory, and that is something to celebrate.