This 32-year-old man paid off $7,000 in credit card debt in 7 months
This 32-year-old man paid off ,000 in credit card debt in 7 months

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A’shira Nelson has spent most of her adult life in credit card debt, carrying a credit card balance of $7,000 before she accrued interest.

It all started when she got her first credit card in college. The card had a $5,000 limit and Nelson, now 32, fell into the all-too-common risk of relying on it to meet her monthly expenses, such as groceries and utilities. Throughout college, she made minimum payments each month to get by. Eventually, she maxed the card out and only paid the balance in full once a year when she received her tax refund.

“What caused my credit card debt was becoming too dependent on my credit card,” Nelson explains. “I would max out the card, refund it with my refund, then max out the card again.”

After graduating, the cycle of debt was too deep to get out of. Nelson, Ohio-based CPA and founder of the personal finance blog Money savvy girl, had a stable income after college. But her tax returns – which she relied on to pay off her debt – became much smaller and she no longer prioritized paying off the maximum card balance she had accumulated. In fact, she began racking up more debt, eventually hitting another $2,000 limit on a retail credit card.

It’s a story that’s all too familiar to many Americans. According to latest Experian data.

For years, Nelson continued to make only minimum payments on his credit card balances each month. But at 28, she realized she was able to pay off all her debts, including student loans, credit card debt and a car loan, after a conversation with a colleague.

“He was telling me how his girlfriend managed to pay off her student loans,” she said. “Just hearing the idea of ​​someone taking over their debt, I remember coming home and thinking, ‘Well, why can’t I do this? “”

Nelson decided to pay off his student loan balance first, which was $25,000 and took two years. Then, nearly a decade after she began carrying high-interest credit card debt — and racking up more interest charges over that time — she focused on her credit card balance. $7,000.

In the end, she paid off her card balances in just seven months. Here’s a step-by-step guide on how she did it, and Nelson’s advice for anyone else who might be in a similar situation:

Step 1: Review your budget and create a plan

Nelson knew she had to make a plan and get organized if she wanted to eliminate her credit card debt, starting with a budget. She created a budget spreadsheet, noted her monthly income and expenses, and had all of her financial information in front of her. This allowed her to see where she needed to cut back.

“During the budgeting process, I found ways to eliminate my expenses,” she says. “I didn’t even realize I had money for the craziest things, like three beauty subscription boxes.” Car insurance was another easy way to save. She cut the cost of her policy by nearly half — from $175 to $85 a month — by switching to another company.

But there were more difficult sacrifices that Nelson says she had to make too. “I decided on my journey to go au natural, which a lot of African Americans or minorities understand,” she says. “That meant embracing my natural curls, not going to the hair salon, and using that money to pay off my credit card debt.”

To stay on track, Nelson hung his new budget on the wall as a reminder and used Mint, the budgeting mobile app, to track spending. That way, she could regularly assess each category and see where she had room to spend and where she needed to cut back. Based on her budget, she calculated her monthly payments and made a plan to pay off her credit card debt with her remaining monthly income.

“Budgeting showed me that I had $1,000 that I could spend just on my credit card debt,” Nelson explains. “I didn’t even realize I had that $1,000 until I wrote my budget and plan.”

Step 2: Choose a debt repayment strategy

Once Nelson worked out her spending plan, she had to figure out how best to use the extra payments.

“I used the avalanche method,” she says. “I decided to pay off the credit card with the highest interest rate, which turned out to be the credit card with the lowest balance.”

The avalanche method is a common debt repayment strategy because it helps you save money by eliminating higher-interest debt first. You make all your additional payments to the account with the highest APR or interest rate, while making minimum payments on all others. Once the card with the highest APR is paid off, you move on to the next account with the highest interest rate. The cycle continues until you are debt free.

A common alternative is the snowball method, in which you instead make higher payments on the account with the lowest balance while paying the minimum on your other accounts. Then you’ll roll those payments over to the next lowest balance, and so on. You may end up paying a little more interest over time, but this strategy has the psychological benefit of clearing some balances faster.

Although Nelson hasn’t used a balance transfer credit card to pay off his debt, it can be another useful tool for paying off high-interest debt. A balance transfer card allows you to transfer your debt from one card to another and pay off your primary balance without accruing interest over an introductory period of 0% APR.

Pro tip

A balance transfer card can be a strategic way to pay off debt, but make sure you have a plan in place to pay off your balance in full before the introductory period ends. Without one, you might be tempted to spend even more.

Due to the better terms, it allows you to catch up on your payments and pay off your debt, with no accrued interest for a period of time. NextAdvisor’s top picks for balance transfer cards include the U.S. Bank Visa® Platinum Card, Citi Simplicity® Card, and BankAmericard® Credit Card, among others.

There is no “right” or “wrong” debt repayment strategy; the key is to pick the one that works best for you and stick with it.

Step 3: Review your plan and adjust as needed

Once Nelson began her debt repayment journey, she followed her plan to ensure it continued to work for her lifestyle and adjusted as needed.

For Nelson, that meant watching her budget closely to make sure she didn’t exceed certain expense categories. “Once I had my plan in place, I really had to work on controlling my spending categories in my budget. There were some categories that I struggled with at first, like dining out and grocery shopping,” she says.

Nelson had no unexpected expenses during the seven months she actively paid off her credit card debt. But emergencies can strike at any time and set back your progress, so it’s important to have a well-stocked emergency fund.

If you don’t already have an emergency fund, consider contributing to your savings even while you’re paying off your current debt, so you don’t get caught in another cycle of debt from an unexpected expense. after payment of your balances. Once you have no more debts, you can direct the money that was intended for the repayment of your debts towards the constitution of your savings. Aim for at least three to six months of expenses and simplify the process with automatic transfers. Even if you can only add a few dollars per week or per month, it will increase over time.

Step 4: Be consistent and find ways to stay motivated

Paying off debt doesn’t happen overnight, so while you follow your plan, keep an eye on your successes as well.

Staying consistent and motivated while paying off debt looks different for everyone. For Nelson, the motivation to pay off credit card debt came after successfully paying off $25,000 in student loans. She says social media helped her connect with other people who were also trying to get out of debt. And by sharing her struggles and successes on her blog, Savvy Girl Money, she built a community of people who kept her motivating and on track.

But while consistency is key, you should also expect setbacks and challenges along the way.

“I had to learn to say ‘no’ to my family and friends,” Nelson says. “I come from a really big family and we always do things together, but during that time I had to stay dedicated and disciplined.”

Nelson says staying focused and determined, and leaning on her like-minded community, has helped her along the way.

“I remember making my last credit card payment in the middle of the night — it was probably 4 a.m.,” she says. “I knew it was the day. I was so excited to do it, and I just put it away.

Step 5: Use credit cards as a tool, not a crutch

Paying off debt is one thing, but staying debt free can be just as difficult. Credit cards can be a powerful tool or a crushing financial burden on your shoulders – it ultimately depends on how you use them.

Nelson has long used credit cards as a crutch. Now that she has no credit card debt, she no longer relies on credit to cover essential bills and instead uses her credit cards as a financial tool to build credit and earn rewards.

“I always use my credit cards; I just make sure to pay my balance in full each month and show a zero balance,” she says.

Nelson was able to find a plan that worked for her, and in seven months paid off a credit card balance she had been carrying for nearly a decade. If you’re trying to pay off credit card debt, the best thing to do is make a plan and get started.

“It was a huge sacrifice, but it was worth it. I would do it again,” Nelson says. I now use the $1,000 I used to spend on extra credit card payments to build wealth and invest. the experience helped me so much.

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