How I Got Out of Debt - Part 1: Credit Card
Jeremy's Debt Blog
- Posted:
10/29/2007
In the previous post I mentioned how I managed to go from no debt, to about $110,000 in debt in under two years. It was a huge struggle to make it to the next check each month and this was a real turning point for me. I became determined to get rid of ALL our debt.
I knew that the majority of my payments each month were going toward interest, so my goal was to begin eliminating the interest as fast as possible. Paying less interest each month would allow a greater portion of my payments to go towards the principle which would reduce the amount of interest I pay even more.
In order to get this snowball effect started, I knew the best path was to focus entirely on the debt with the highest interest rate. In my case it was my credit card at 12%. My wife and I put ever extra dollar I could towards this card, while making the minimum payment of the rest of our debt.
If I knew then what I knew now, I would have tried to transfer the balance on that credit card to one with a lower rate, or one that offers 0% interest for an intro period. Having 12-15 months to pay off a credit card without any interest at all allows you to make incredible progress towards paying off that debt when you can only afford to pay a little over the minimum payments anyways. If you're looking for a balance transfer credit card be sure to shop around. That link I provided is to another website I operate which provides an easy way to compare rates and other features when choosing a credit card.
However, we did not know this at the time and had the mindset of "the last thing we want is another credit card" so we just continued to pay as much towards the card as we could each month. I received a couple of bonuses from my job which really helped accelerate the process, and in a little over a year we had the credit card paid off. I can not begin to tell you how great that felt! Plus now we had a couple hundred 'extra' dollars each month to use towards paying off other debt.
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