When I was a college student, I was far too young and uneducated to take on the responsibility of credit card ownership – but that didn’t stop me.
Because of some very bad spending habits, I managed to amass an insane amount of debt in just a little over two years. Once my last credit card was closed due to non-payment, I finally realized some extreme changes to my financial life were in order. I did a ton of research, made some difficult sacrifices, and in just over four years I climbed out of the hole I’d dug for myself. It was a long and difficult journey, but I did it; and if you’ve managed to rack up significant credit card debt, you can do it too.
You can’t succeed in paying off a lot of debt without setting financial goals, especially in the beginning when progress is slow to come. It’s important at this stage to simply put that total balance out of your mind and focus only on milestones along the way. In my case, I broke down each of my credit cards and established individual benchmarks. It gave me something to celebrate periodically even though I wasn’t putting any major dents in my total money owed at that point.
Create a Budget
Your next step is to take full control of your finances. Take a sheet of paper and list your income on one side and all your expenses on the other, down to the penny. If you’re spending more than you’re making, that’s why you’re still in debt. Once your personal budget is complete, it’s time to look for ways to bring that spending down below your income.
Slash Personal Spending
When I say slash, I mean slash. I eliminated all convenience store purchases including lottery tickets, sodas, snacks, and newspapers. I also managed to drop cigarettes and beer from my purchases. If your vices lie elsewhere, such as clothes or restaurants, cut them off until you’re closer to being financially fit.
Save On All Monthly Bills
Scale back your TV package and find a cheaper cell phone plan. If you have a smartphone, ditch it. Adjust your thermostat up or down by just three degrees to reduce your utility bill by as much as 20%. If you have ceiling fans, run them in the proper direction to keep your AC unit working efficiently. And start clipping coupons and buying in bulk to save significant cash on groceries.
If you don’t allow yourself the ability to relax and enjoy life, you may lash back against your efforts and ditch them completely. So, don’t eliminate entertainment, just scale it back a bit. Take yourself to movies and go on low-cost weekend day trips, saving more expensive activities like concerts and sporting events for when you accomplish those significant goals.
The best way to stay on track is to reward yourself along the way. Once you reach a goal, celebrate it. Although this may seem counterintuitive since you’re trying to conserve money, it can be essential in keeping you motivated to persevere through your self-imposed austerity.
Once you reach your final goal and pay that last bill, commit to never carrying a credit card balance again. Make the nuts and bolts saving techniques that helped you get out of debt a part of your everyday life going forward. Always look for ways to save, and whenever you approach a purchase you may not be able to pay off right away, remind yourself of the difficult path you had to take to get out of debt. The journey to financial freedom is long, but enlightening. Begin yours today.
Any other success stories out there regarding credit card debt?
After racking up more than $15k in credit card debt with reckless spending during his college years, Barbara Mcgarity has now cleaned up her act and shows others how they can do the same on the popular personal finance blog, Peak Personal Finance.