I got a credit card with a 300 dollar limit when I was about 18 years old and going off to college. This credit card was actually connected to my Mom’s account, and every few months she would pay it off. I think she did this with the best intentions, but it did not help prepare me for the responsibilities that come with having a credit card.
When I was 20 I went into the bank one day with questions about setting up a savings account, and the bank teller decided to tell me that I was eligible for a student credit card. She said it had a very low interest rate and didn’t cost any money to set up. I was sold. A week later I received a shiny card in the mail that had a 1,000 dollar limit, and I was smitten.
At this point in my life I didn’t quite understand that my actions in the present could really affect my future. Everyone around me binge drank at parties, easily able to forget about the hangover that would hit them the next morning. Just like drinking, it was easy for me to spend 200 dollars in the moment, and forget about the debt I would still owe a week later. I remember one of the first purchases I made on that new shiny piece of plastic was a $180 order from Madewell.com on clothes that were cute but that I did not really need. I placed that order because I had a free morning and was feeling a little insecure that day.
For most people debt grows gradually. It’s not like I went out and spontaneously bought a $900 jacket. My debt racked up over stupid things that I thought I would pay off when I got my next paycheck but never quite did. It was $50 dollars during a night out. It was a $30 dinner out with a friend. It was a $150 dollar hair cut. I made small payments every month towards my debt, and never once missed a payment, but the amount I carried on my credit card was growing faster than it was shrinking.
Eventually I was carrying a balance of about $900. I was very close to maxing out the card, and I was starting to feel stressed. I knew I had to pay it off, but every time I got my paycheck I would not put as much of it towards my balance as I could have. Naturally, right around this time my bank decided to increase the limit on the card… so now I had a $1,900 limit. Although I promised myself I would not let my debt grow, it slowly continued. By age 22 I had maxed out that credit card, and also had gone through a breakup and had started to be honest with myself about my irresponsible tendencies. I don’t think it is a coincidence that right around the time I started eating healthier, partying less, and paying more attention to my emotions is when I decided to pay off my credit card. Right after I graduated college in December of 2015 I made a pact to myself that I would pay it off as soon as possible… and I did it. I did it by May 2016 and this is how. (Note, I do not have a well paying job yet. I work at a little about a minimum wage salary, and paying off 1900 dollars was a challenge).
1.) I Bought a Daruma Doll for 14 Dollars.
Daruma Dolls are from Japan and are seen as a sign of perseverance and good luck. My Mom always had one of these in the kitchen growing up. The idea is that for each Daruma Doll you have you are to set a goal and color in only one of the dolls eyes. You can not color in the other eye until your goal is met. I set my Doll on top of my bed frame and colored in one of its eyes. The goal was to pay off my debt. As silly as it sounds, having this symbol of my goal visible to me every single day, did not let me forget about my intentions. Yes, you could probably pay off your debt without this doll, but having it in my sights everyday did not let me take my eyes off my goal.
2.) I Used My Tax Return Towards My Debt
Although I did not receive a huge tax return because I only worked part time during college, what I did receive I put towards my credit card. It was about 400 dollars but it put a big dent into the total sum and motivated me to keep going forward.
3.) I lived with my parents for a minute.
After graduating college I moved to a new city. I had a two month period during this time where I lived with my parents. I was making an income during this time and put most of it towards my debt. This helped me get rid of another 600 dollars that I had racked up on my balance. I am very grateful that I had this as an option because if I had not it would have taken me much longer to pay off the debt.
4.) I sold my car.
I sold my car before I moved to the city. I don’t need a car in this new city, and it would have made no sense to leave my car rusting in my parents garage so I sold it for a smallish sum to a college kid (the car was over 20 years old and not worth a lot). Although most of the money went towards moving expenses, I was able to put about 300 dollars towards my debt.
5.) Living Simply For A Bit
With about 700 dollars left on the balance, I spent the next two months living very modestly. As I said, I’m not generating a huge income so 700 dollars actually took a push to pay off in two months. I could have waited until I had a bigger salary (which will hopefully be in a year or two), but I got kind of addicted to paying off my debt and wanted the stress of it to go away. I did not shop at all for those two months for anything I did not need. I rarely went out, and if I did I would get one drink. I basically did not buy almost anything I did not truly need, and was able to put most of my paychecks towards my rent, food, and the debt. In May 2016 I made that final payment. Drawing in the second eye on my Daruma doll was such a satisfying moment.
Now that I’m debt free I am by no means making perfect and smart decisions with my money. I will write a future post one day about life after paying off your debt. It’s a strange transition and provides lots of learning experience that I am going through right now. Finances are a work in progress for myself and many others. I am very proud of myself for taking action on my debt when it was at $1900 because I know it could have grown to be much higher. I’m thankful to have caught my debt early, and hope this article helps you if you are struggling at all with credit cards!