Wednesday, August 20, 2014

How I Paid Off My Credit Cards...

It all started in high school....I was shopping at American Eagle (yep), I wanted an outfit, but I didn't have enough money to pay for it at the time. So what did my non-responsible self do? I decided to open a credit card. Want to know how much limit they gave a non-credit-having teen? $100. Ha. That was such a blessing in disguise. 

That was probably the start to my credit card addiction. 

Freshman year of college, I opened up an Express and Victoria's Secret card, almost simultaneously. I wanted to be fashionable and again, had no money. 

Senior year came the Best Buy card. I really wanted a digital camera and of course I had to have the picture printer to go along with it. Later, I went on to buy my ex-boyfriend a Xbox. #dumbass

After college came the Saks (David Yurman ring and bracelet? Yes please!), Pottery Barn (wedding gifts galore), and South Carolina Federal (my bank - so that I could charge whatever I wanted!). 

You know what all of that gets you? 
$7,000 in credit card debt and hardly anything to show for it. 

Back in August of 2010, when Cameron and I really started getting serious about our relationship, he created a balance sheet and income statement for me that I would fill out every month. It helped me see where my money was going and it was an easy way to watch the balances of my credit cards go down. I probably didn't start cracking down on my cards until last year when I had about $4,000 left to pay off. But in that short amount of time (roughly a year), I managed to pay the rest of it off with the method below. I would use my work bonuses, tax refunds, etc towards it. Anything I could! 

Here's what worked for me:
The Dave Ramsey Snowball Plan

-I took the credit card with the lowest balance and focused on that one first. I would pay the minimum payments on the rest of the cards, and use whatever extra money I had, plus the minimum payment, towards the card I was focusing on. Dave said it best when he said, "You need some quick wins in order to stay pumped enough to get out of debt completely." Each time I paid off another credit card, it felt awesome, and turned into more of a game for me to see how fast I could pay off the next one. 

-After I paid off a card, I would add that money that I normally paid towards it, towards the next one. My bank account didn't know the difference because I was paying the same amount each month towards the cards, but the card that I was focusing on, was getting 2, 3, or 4 times the amount of the of the minimum payment. 

It's as simple as that! 

I hope this short little post may help you in some way in paying off your credit card debt, if you are trying to!

By the way, I am in NO way promoting this kind of behavior. It was very stupid on my end and obviously I've spent years (and LOTS of interest) paying these cards off. 

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24 comments :

  1. I love this post. I'm taking a similar approach with my student loans. I obviously need to pay the minimum on each loan every month, but we're starting to target the loans with higher interest rates. It feels good to see the number drop quickly. Hoping to be 100% debt free in a less than a year!

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  2. Way to go! I know that is a good feeling.

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  3. This is fantastic! I only have 2,000, but I need to make paying it off more of a priority and stop sweating it! You go girl!

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  4. So proud of you! Smart financial choices should be more widely praised & applauded - it only fuels encouragement to others! Hi-5.

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  5. Congrats gal for paying those things off and for being so honest about it. Credit card debt is a nasty thing and so many of us have been in your same shoes.

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  6. good for you!! i have always been nervous about credit cards so i always pay them right after i make a purchase but i did a similar automatic payment plan from my checking right into my student loans and i was very happy to say goodbye to those a few years ago! xo jillian - cornflake dreams

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  7. That's a huge accomplishment and you are really lucky to learn the lesson now - and with **only** $7k in debt, because I've heard absolute horror stories. My dad has been on me from a VERY young age about credit cards/debt/carrying balances so since I've been 17 I've had like legit CC anxiety. I don't even like using them because they scare me so much.

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  8. You know I love this! Love the background...I feel like I was doing the same thing w/ different cards. But seriously, so thankful for your advice this past year on paying off my debt. I mean it when I say that everytime I pay a chunk off on my (last and final!) CC, I think of you. I've paid off about $5,000 this year. Down to $2k and so excited that it's almost gone! :) :)

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  9. Good for you!! Such a wonderful feeling, I'm sure! Congrats!

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  10. Thanks for sharing this - I had an AE, Victoria's Secret, Gap, Express, Capital One, Fingerhut, and Paypal credit card. All together I think I had less than $5,000 in debt, but I was only making around the minimum payment each month, so my balances weren't going doing much. Before we got married, my guy and I sat down and looked at all of our debt and worked out a way to pay off all of our credit cards AND cashflow our wedding by using the same Dave Ramsey tactics. The only thing wedding-related we ended up putting on a credit card was our 3 nights hotel stay at our venue, but we did that so we could accrue points :) Now I rarely use a credit card and it's so nice to not have to pay on those every month!

    Thanks for sharing your experience!

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  11. Damn debt. We're working to pay ours off but it's a process. Good tips, lady!

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  12. Good for you for getting out of that!! I went through a similar situation right after college and the snowball method worked for me too! Its such a great feeling! Now if I could only tackle my grad school loans as easily...

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  13. Woohoo!! I was in your same shoes a few years ago and it feels so good to get it all paid!

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  14. Doing the same thing right now. I have two small cards left then I am debt free. Dave Ramsey works it is such a good feeling to pay off cards its addictive. Now I would never think to charge anything debit or cash only! Yay for you!!

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  15. You go girl!! This is awesome!

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  16. that is SO awesome!! I have always limited myself from opening any up but I have come so close to doing it recently. I know I wont but it sure sounds nice in the moment. good for you!!

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  17. Congrats on paying off the debt!!!! People only think about what they want at that moment and not the long term. I had a bunch of credit card debt from college (the first time) and just finally finished paying it off. Now I only have my student loan debt, which I already started paying on while I am in school this time. I learned my lesson the hard way the first time around.

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  18. Thats some great advice that I really needed to hear! Thank you

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  19. That is awesome! I'm working on doing the same thing, though I started with the card with the highest interest rate...it really is a great feeling when a card gets paid off!

    Alissa

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  20. Thank you for sharing Megan. Such wonderful advice! You are not alone in the CC debt thing. It is so easy to do yet so hard to break the habit of whipping out that CC. I am currently working on paying off my CCs. This was very encouraging to read. :)

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  21. This is so awesome - congrats!! {I love Dave Ramsey, too!} Major props to you for writing this post and to your husband for his encouragement along the way!

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  22. You're absolutely the reason why I've decided to tackle my credit card debt. Thanks! :) xo

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  23. Financial security is almost hard to attain at your age. Aside from the debt you managed to collect over the years, I'm sure you had student loans to pay for. So keeping those things in mind, I can honestly say I'm proud of you for managing to pay off your debt in a span of two years. Dave Ramsey's Snowball Plan has worked for a lot of people who had their noses buried in debt. I'm really glad it worked well for you as well, Megan. Kudos to you! :)

    Tracy Frazier @ Sunnen Law

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