My Story on Getting to $0 Credit Card Debt and Staying There June 30, 2006
On my continued quest to the next income bracket, I am grateful for not having any more credit card balance. Since college I had a credit card balance in the thousands and got pretty good at managing the servicing of my debt by taking advantage of 0% balance transfers, limited time low balance offers, and credit card issued checks. I had up to 7 credit cards and at one time had $4,000 of credit card debt in college and $13,000 debt post-college. The interest rates on those cards were between 15% and 23%. I wasn’t financially saavy and didn’t consider negotiating rates, calling to ask to cancel that occassional late fee, or taking it seriously. It wasn’t easy, but it took some dedication, education, and a commitment to myself that I will change my lifestyle to erase that debt. Now, I only have 2 credit cards and $0 balance on both. It’s been more than a year that I’ve had a $0 balance, so like a successful diet, I’ve removed my debt and kept it off. Once you pay off debt, the race isn’t over. You still have to work hard at keeping it at $0. I’ve used the money I would have used to pay off the credit card and saved up for a home and put in $15,000 per year in my 401k retirement fund. There’s so much freedom in having the choice to direct your earned money to YOU.
For those of you who have credit card debt, you can achieve financial freedom. Read up on all those great PF blogs out there and take the debt and shove it out of your life. There’s so much collective wisdom that everyone has to offer from sites such as PFblogs.org (a great collective personal finance site, by the way), and I wish I had that back in college. Anything is possible if you decide that you don’t want to be a slave to money and work hard at keeping the debt out of your life. Once you get there, imagine your life with that extra money and the relieved feeling you’ll have. This is the best step you can take to improve your life and get to the next income bracket to give you choices.
PS: ING Direct Savings Account just increased their savings rate to 4.35% today. I’ve parked my money there since I don’t need to put all my extra money into Visa or Mastercard.
Comments»
Woohoo! Do you have any advice for a college student who has some credit card debt? I want to call and negotiate my rate, but I don’t know how to go about it!
Thanks for the encouragement,
I started watching PFblogs.org and learned to transfer balances and get the interest under control. I now have $9000 @3.9 for life and $7000 @ 0% for another year. I had been paying 14%. If it wasn’t for the blogs I would not have had the courage to take on new Credit cards just for the balance transfer options. I now have 3 cards just acting like loan accounts the cards have never been activated.
Question, with rising interest rates should you save or pay down the debt. I can now save at a higher rate than most of my loans except my Mortgage, does it make sense to pay extra or save the extra and make the extra interest.
Anonymous - college is tough since your ‘full-time’ job is to study and you might not have much income. My advice is to call your credit card TODAY and just ask them to lower your rate. There’s no special language. Then stop using it. The first step is the biggest hurdle. Then make changes to your life. Small adjustments make a big difference. Keep reading PF blogs and educate yourself. Good luck!
Carl - Those are great interest rates. The question of saving or paying down debt depends. For some, paying down debt is a more of a psychohlogical peace of mind even if you can save at a higher rate. For me, I’d rather pay down cc debt. Then I can put 100% of my money into savings. Best of luck to you!
Thanks for the mentions!
Thanks for the advice Kyle. I will call them today and start paying off!
[…] I used to be drowning in debt and paid hundreds and hundres of dollars (who knows, maybe a thousand?) a year on credit card interest rates. Until one day, it just dawned on me that unless I changed my lifestyle, I would not only be treading in debt but the credit cards would slowly pull me under, until one day, I’ll drown and not be able to come up to gasp for air. I’m not sure what it was, it was just a sudden decision to not spend anymore, not worry about what other people thought of me, not worry about labels on clothing. When you’re young (16-25), what matters to most is what other people think of you and being accepted…and I’m a pretty self confident guy. Now that I’m in my early 30s, I don’t think about how other people look on the surface, but who they are. I hate the idea of “keeping up with the Joneses” because that’s essentially what I was doing when I was young. I tried to keep up with the rich kids who had trust funds and bought expensive meals, went on weekend trips to Vegas, and had supposed high profile jobs. […]