I felt guilty I had thrown away everything my parents taught me and embarrassed I let our credit card debt go to such an extreme. After my initial panic subsided, I knew this was a step in the right direction. I could now see the full picture of the problem, and we both got on board with making every effort we could to pay off the debt.
Step two: Pay off highest interest rate credit cards first
I organized the spreadsheet by highest interest rate credit card to lowest. We’d start at the top, pay those off first, and make our way down the list. It began with smaller goals at a time. If we could pay off $10,000, I’d feel better knowing we were making progress. Then it was on to the next $10,000.
Step three: Make some changes in our spending
We completely re-evaluated our spending habits. Any additional income—a bonus at work, a tax return, extra money in one of our checking accounts—went toward the higher interest credit cards. We also became pretty comfortable with hanging at home. We didn’t go out to eat. We didn’t buy unnecessary gifts. Vacations were put on hold. We didn’t go to the movies or concerts. We didn’t buy clothes. We lived a boring life, but we stuck to our plan and it was worth it in the end. In just a little under two and a half years’ time, we paid it all off. I felt strong and empowered watching the number shrink week by week, and pleasantly surprised at how quickly we ditched our debt completely.
To this day, I still use the same spreadsheet. We don’t allow ourselves to have credit card debt anymore and the only thing we pay interest on is our mortgage. Saving is the priority. We automatically deduct a certain amount each month to put in our high-yield savings account and in JR’s IRA. Additionally, each year when I get a raise, I increase my 401k contribution.
Confronting your debt can be scary and overwhelming, but if you make a strategic plan and stick to it, you’ll come out stronger on the other end. I don’t regret my debt. Paying it off was a lesson that completely changed how I approach my finances—and think about my future.