It’s story time guys.
Here is the $0 credit card balance I woke up to on Mint.com last week.
The two or three mouse clicks it took to send that final payment were, admittedly, a little anti-climactic. But this, after starting the year with $35,000 in credit card debt — the majority of it at interest rates above 20% — I can’t begin to describe how surreal this looks.
Yes, this is somewhat of a brag post, but I also hope others can learn from the lessons I learned.
I started with the right attitude
More than contacting my lenders, more than crunching the numbers, more than anything else, the best decision I made was to get in the right frame of mind.
I stopped making excuses for how I got into debt and stopped comparing both my lifestyle and my finances to that of other people.
More importantly I stopped wasting energy on being miserable about it and started using that energy to take control of my debt.
I set a realistic end goal, and used a plan and intermediate goals to get there
Back in January, I set a long-term goal of paying off all this credit card debt in two years.
A big part of that plan was giving myself a big baseline by setting up automatic payments straight from my paycheck, as well as sending any big lump sums straight to debt pay-down before I even had a chance to think of doing something foolish with that money.
But even beyond that, instead of tackling it like one big mountain, I challenged myself by setting monthly goals to pay just a tiny bit more. Maybe it didn’t feel like I was doing much at the time, but it helped me slowly scrape away at the debt.
And true, at times, I did feel like I was digging at that mountain of debt with nothing more than a spoon.
But if a spoon is all I have, then hell yes am I going to make the most of it.
I wasn’t afraid of making lifestyle changes, and I used a budget to make sure I focused on meaningful cuts
There was no shortage of temptations that could have thrown me off course and I don’t know how many times I’ve heard these sort of things from friends (and let’s be honest, from my own subconscious):
Instead of this, I worked to get rid of any feeling that there was a certain life I was “entitled” to. I committed myself to living like a poor person because — and this is something many people with debt don’t understand — that’s exactly what I am.
But I also didn’t kill myself to cut corners everywhere. I don’t cry myself to sleep because I spend 30 cents more once a year to get the better box of Q-tips. I don’t re-use toilet paper or eat roadkill or do any of the ridiculous things that you’ll see on TV shows like Extreme Cheapskates (Which I don’t even respect enough to link to here).
So what crazy thing did I do to save this much money and pay off debt?
I tracked my spending, made a budget, and found the places that really made a big difference in how much money I had at the end of the month — money that I could then use to pay off debt.
For me, this was housing, food, and entertainment.
I took the extreme, crazy steps of sharing an apartment with roommates, planning ahead and eating most of my meals at home, and living a modest life where the fun I have isn’t dictated by how much money I spend on it.
I wonder when TLC is going to make a show about me.
I never stopped learning and I never stopped working
Yes, there is still student loan debt to pay, retirement to save for, and other financial goals to meet.
But tonight, I’m celebrating.
Then tomorrow, it’s back on the grind learning about what other options I have, where else I can save money, and readjusting my goals to make the best use of those big monthly payments I used to be sending to credit card debt.
Stop making excuses and get started
I imagine many of you have gotten this far in hopes of explicit tips. I think budgeting is a much more important starting point than you think, but here are a few others for your trouble:
- Ask yourself if you really need a smartphone
- Pack your lunches in bulk
- Don’t buy a house
- Ignore food expiration dates
- Be smart about credit card balance transfers
That said, I also imagine a number of you have made it this far to figure out what is different about you and me that you could then use to make excuses about why you also couldn’t make these sort of gains.
I suggest not making excuses (either to yourself or in the comments), and instead getting committed, making a budget, and making the lifestyle changes needed to reach your financial goals.
I’d love to hear about them and hope you’ll follow along here as I continue to stumble forward.
Because this isn’t the end of my story; it’s the beginning.