Credit Card Debt
I fell in love. Hard. I can still see it in my mind and often tell the story of the first time I saw the girl I eventually married. By the way, she proposed to me. But that’s a story for another time. This is a story about credit card debt and paying it off fast.
When you get married, you each bring things to the relationship. Some of those things are good, some are mostly benign, and others are, let’s say, not so good. This fact holds true for emotional things, spiritual things, natural things… all kinds of areas, including financial ones. Since this blog focuses on finance, I’ll skip some of the other topics and focus on that one. Please give me some grace as I work through the math which is very straightforward. Math doesn’t care how you feel. And we felt in love, still do.
As we got started in our marriage, we both brought financial assets to the relationship. That fact is one I grew to appreciate more and more. There was one big difference between us, however. It was debt, namely credit card debt.
I hated debt, still do. It just makes my skin crawl. I get it, and I leverage it. Nevertheless, I hate it. Her, not so much. She is a very in the moment person. I love that about her. It balances out my futuristic approach to life. Pretty much everything I do today is for a pay off tomorrow.
Her in the moment focus, however, led her to build up a significant amount of credit card debt. $15,0000 worth of it. Of anything that even seemed like an argument throughout our dating relationship, this credit card thing was the closest. To her defense, she just hadn’t grown up with any financial mentors who taught her any differently. You don’t have to be the same. I’ll happily be your mentor.
We all build our credit card debt in different ways. My story is likely different than yours, but the balance at the end doesn’t really care. And because it doesn’t really care about you, it needs to go.
Concerning Things About Credit Card Debt
The thing about this credit card debt that was most concerning was that it wasn’t really leveraged toward any type of equity. I’m not a fan of car loans, but at least you have an asset. It’s one that depreciate wildly, but it’s an asset. It’s also functional. Your vehicle helps you make money in most cases. Of course you could ride a bike, walk or take public transportation if it’s available in your area, but you understand my very generalized point. This credit card debt had no big pile of equity anywhere. There was no asset sitting that could be sold for even one tenth of the total debt.
The second most concerning thing about the debt was that she was mostly paying minimum payments when we met. Never. Ever. Ever. Pay. The. Minimum. Balance. On. Credit Card Debt! I won’t go into why here, but I will in another post. Information is abundant about minimum payments. Read it if you don’t know why you shouldn’t. We worked on the minimum payment thing while we were dating, and she started knocking off some debt.
The third most concerning thing about the credit card debt while we were dating is that she kept charging non-essential purchases. I had a tricky time trying to talk about how she spent her money while we were dating. But we needed to talk about it. If we were going to have a serious relationship and had even the slightest notion that we would ever get married, financial openness and partnership was crucial. Most of the problems in marriages boil down to money. You are better off figuring this stuff out before you get married.
In the end, she brought $15,000 of credit card debt to our marriage with no assets from it to liquidate to use to pay it off. So what did we do?
Steps To Take To Pay Off Credit Card Debt Fast
First, I had some savings. Believe it or not, after all the expenses of a diamond ring, a wedding ceremony, a wedding dress, a rehearsal dinner, flowers, minister, location rental, reception, honeymoon, etc, I still had some savings that extended beyond any retirement savings like IRAs. I put it all toward the debt.
Let me tell you, that was painful for me. But the interest rate was brutal, and I knew it was the best thing to do. So I did it.
Next we transferred the balance to a lower interest card. During that time credit cards were offering six months to a year of 0% interest for transfers. Cha-ching! Making a transfer like that with the genuine intention of paying it all off as quickly as possible saved us around $2,000 in the process. You may not have such an offer available according to when you might work on paying down your credit card debt, but you should shop around to see what is available. Transferring the debt to a lower rate loan will pay off.
Most people might do the two things I’ve described so far. While painful or inconvenient, they really don’t deal much with the grind of a true lifestyle change. Those two steps are grand gestures, but the rubber hits the road for next step.
The Biggest Step In Paying Off Credit Card Debt Fast
Finally, we cut back on everything so we could put ever penny we could find toward paying off the rest of the debt. I mean everything. You have to decide what you really want. It’s key. We wanted to crush our credit card debt so we could be more free to build the life we wanted.
Together, we made just over $60,000 a year. We had a mortgage, two car payments (mine was almost paid off), we got pregnant, health insurance, and all the typical bills any newly wed couple would have. So we had to cut back on eating out, buying new shoes or clothes, cookies and other extras in the grocery budget, travel, cable TV, cell phone plans… anything we could think of. If we could renegotiate, we renegotiated. If we could cancel it, we canceled it. I’m serious. You have to be as well.
The interesting part of all “less” we put ourselves through, was that it actually drew us closer together. We weren’t distracted by the stuff. We were digging out of debt instead of adding to its crushing weight on our relationship.
Another really nice unexpected result we discovered was that we realized we didn’t need those things to be happy. We could do without. We could do really well without.
So in about a year we carried a credit card balance of zero on that account. The 0% rate jumped up to its typically ridiculous level and we closed it. Our credit history gave us the ability to find offers for crazy low-interest rates on cards, but that didn’t even matter because we never carried a balance from one month to the next ever again. Ever again. Now the credit card companies pay us to use their cards through points or cash back.
$15,000 in credit card debt gone in one year. It can be done. So do it.
Then, don’t ever have to do it again.