A Personal Experience In Paying Off Credit Card Debt

When I added up the total debt on my credit cards in the spring of ’95, I was shocked. Over six years my credit card debt gradually accumulated and I found myself $7,700.00 in debt, and I felt hopeless.

Hopelessness very quickly gave way to a fierce sense of purpose; I was going to find a way to eliminate the debt. The first thing I decided to do was work more so I could make more money to pay on the cards.

My full time job paid well enough, but there was no overtime. I determined then that I would do some part time work and also work through temporary agencies to fill in the gaps. Much of the part time and temporary work I found was in the hospitality industry, specifically as a banquet waiter.

It wasn’t long before I was working 50-70 hours per week, a pace that I kept up for the next three and a half years. The financial reward for this varied, but was anywhere from a 25% to 40% increase in income.

Once I got rolling I took at look at how I could cut back on all outgoing money. First I made some cuts on my discretionary spending. For example, I took my lunch to work at least 3 times a week. On the days I ate out for lunch it was always something inexpensive and relatively healthy like a Subway vegetable sub. When going out after work I drastically cut my spending on alcohol. It’s amazing how much a drink can add to a restaurant tab.

I also cut back on legitimate monthly expenses. Living in Florida usually means using air conditioning 7-8 months a year, but I was quite acclimated to the heat, so I used the air conditioning only five months out of the year. I cut my use back even more by leaving the air off during the day when I was at work and leaving windows open. My cat liked it, and even though it was pretty hot in my apartment when I got home, I found that once I turned on the air and closed the windows my place was plenty cool enough for me to sleep later in the evening.

The only downside to leaving the air off as I did is that it puts a strain on the AC unit when it has to work hard to cool the apartment down all at once. Had I known this at the time, I would have kept the windows open and left the AC on with the thermostat set at 90 degrees.

Since I didn’t watch much TV I was satisfied with basic cable. The simplest thing I did to cut monthly expenses was to keep my hot water heater off during the day. This move took $6-$7 off my monthly electric bill.

Once or twice a week I reevaluated my finances. I compared anticipated income to anticipated bills, expenses and spending. Then I calculated how much more work I needed to schedule over the remainder of the month.

Another factor that helped me bring my debt down was the stream of offers I received from credit card companies for transferring card balances. These offers became commonplace for me as I consistently paid on time with my cards and as my creditors saw the amount of my revolving debt decreasing. I was becoming a better credit risk for card companies.

I switched my card balances to lower interest cards frequently during these three years. Whenever I switched I took note of the end date for each introductory low interest offer. As I got near an end date I switched the remaining balance to another card offering a similarly low rate.

Though now I’m aware that transferring card balances to other cards for the lower interest rates has a negative effect on my credit rating, I would still do the same today. The negative effect is short term; if I continue to pay my cards down my credit rating works its way back up.

After more than a year of working hard and cutting back on outgoing money I saw my debt drop to well below $6,000.00. Things looked so good that the closer my debt got to $5,000.00 the more complacent I became.

I began to allow myself a few things that I hadn’t the year before. For example, my most extravagant expense was a weeklong trip out west. It was a well-deserved and relaxing vacation, but almost a thousand dollars went on credit cards for expenses like air tickets, car rental and eating out.

As I got to the end of ’97 my debt was sinking below the $4,000.00 mark, but in that same year I was encountering a challenge that slowed down the pace of my success.

My car was getting older and required more frequent visits to the mechanic. It was a good make, an ’88 Sunbird, but time was finally catching up to it. It became necessary for me to keep $300-$400 aside in savings to ensure I could cover my repairs with cash. Sometimes I had to use a credit card for repairs anyway.

This situation is what kept me from eliminating my debt. By March ‘98 I had less than $3,500.00 in card debt, but car repair bills were becoming higher and more regular. Before the end of the year I had to purchase another vehicle. The car was well cared for by the previous owner, but it cost me $5,000.00 that I didn’t have. Up went my debt.

Over the next few years I found that I couldn’t work enough to bring my debt down, start a business and get married all at the same time. For the time being I had to scale back my work and let my debt accumulate.

I’ve looked back on this experience many times and have concluded that what I set out to do was achievable. Here is a summary of the things I did to eliminate my debt:

1) Worked a lot.

2) Cut back on discretionary spending.

3) Cut back on expenses where possible.

4) Paid as much as possible monthly on my credit cards.

5) Switched card balances to lower interest cards.

6) Allowed myself time away from work.

7) Avoided using my cards.

Clearly I fell down in one of these areas: I used my cards for a trip and for car repairs.

Taking time off from work is regenerative. Even in the midst of working on such a goal as getting rid of debt there’s no reason to eliminate vacation time. I erred by becoming complacent as I saw my debt decreasing and opted to take an expensive trip. I readily could have stayed home or much closer to home and spent less money.

My car repair bills could have been cut short. The best move for me to make as the car got older was to sell it for whatever I could get and pick up another inexpensive used car. This would have bought me some time by at least lowering what I spent for car repairs.

I know now that a great place to get a reliable used car for under $2,500.00 is from my mechanic. If my mechanic doesn’t have any cars for sale he can recommend someone who does.

These are things I think about now as my wife and I put into effect a plan to eliminate the $19,000.00 in debt we had as of November 30^th, 2008. Our goal is to virtually wipe it out by December 2009. Is this possible? Yep. Will we succeed? You’ll know; at some point I’ll share with you what we’ve done and how we’ve done it.

If you have card debt, get involved in the process of eliminating it now. Don’t bet on the economy to improve; we don’t know what’s coming. In this process you’ll find, just as I did, that as your debt goes down you begin to feel a sense of freedom. When you see the progress, keep things in perspective and resist the temptation to become complacent.

The debt's not gone until it's gone, so persist at your plan and expect challenges. Be tenacious. When you’ve eliminated your card debt you’ll be glad you took care of it no matter how the economy looks.