I wrote a post to celebrate the day my credit card debt went from $11,000 to ZERO. It was a long journey and took me 4,500 words to share it before I edited and cleaned it all up. So I broke it into parts. You can start at the beginning in Part 1: Undergrad. On Monday, I shared Part 2: Law School and the time I spent practicing in Nevada. And today you’re at the conclusion, Part 3: After I moved to Washington. I recognize that this post is still 3,000 words but it didn’t make sense to split this story into four parts. That’s just absurd! So let’s get started.
When I Hit My Lowest Point of Drowning in Debt
As it turned out, God had amazing plans for my life here in WA. I am happier and more at home than I have ever been. I took the WA bar exam and was able to pay cash for the BarBri prep course with the haphazard savings I managed to pull together. Then I learned how much it would cost to ship all of my belongings from Nevada to Washington, and I didn’t have enough savings for that. I also had to switch from a NV only bank to a WA bank. That bank, BIG SURPRISE, offered a credit card in exchange for an account perk. Have you lost track? I have. Credit Card #7 was born with a $1,500 limit.
After another year of living paycheck to paycheck, my life became living paycheck to paycheck — to maxed out card to maxed out card. And Folgers – a lot of Folgers, which I actually like so it wasn’t horrible but I missed White Chocolate Mochas. My lowest point was when AT&T double billed me one month and I had to call my dad and ask for $100. I was 26 and a lawyer! This wasn’t supposed to happen to me! I had been trying to pay down debt, and a lot of times it felt like two steps forward and one step back. This was one of those times where it felt like 1 step forward and 1,000 steps back with no hope in sight of ever catching back up.
By the way, this is why when some of you comment about how quickly I pay things off and hard it is to pay off debt, I tell you to keep going. It’s worth it! I so appreciate the progress I made then, even if it was baby steps. It was so much better than just ignoring it all!
After that call to my dad, I really focused on increasing my income. I did this a few different ways both in my current job and with side hustles like grading bar exam prep essays and blogging. The most drastic change I made was finding a different job. This job came with a salary increase, finally. It was still less than I made at my first job, but it was more than I’d made in the years prior, and it was closer to home so I was saving quite a bit of money on gas. I finally had some breathing room!
So I kept going, and found “extra money” with my new salary to made a decent snowball payment. And then two months after starting that job, the government decided I had unexpectedly gotten rich and upped my income based repayment plan by THREE HUNDRED DOLLARS. My raise was not enough to cover that kind of difference. Despite my valiant efforts to convince them they were out of their minds to think I could afford that payment, the government didn’t budge. I took a temporary forbearance to get things under control and reevaluated my budget. Based on the numbers, with significant cut backs, I found a way to make those payments and increase my snowball by about $50 a month, from $25. Another one step forward, two steps back. I also resigned myself to the fact that I’d be paying those student loans for my whole life and they’d haunt me forever.
Prep for my April goal of not spending money for half the days of April: meat sauce with added onions, garlic and red bell peppers to make a plethora of pasta for dinner and lunches. . . . #frugalliving #daveramsey #debtrepayment #debtfree #americandream #goalsetter #goaldigger #selfimprovement #studentloanlife #lawyering #instabossmob #inmykitchen #mealprep #amcooking #noexcuses
While I was at this job I didn’t buy any new clothing except shoes when they wore down because of the substantial amount of walking my job entailed. Once, I was wearing one of my favorite cardigans and a co-worker noticed a hole in it and jokingly asked if he needed to take me shopping because I was too poor to buy new cardigans. Talk about mortified. But for the first time since becoming a lawyer 4 years prior, I LOVED my job and I looked forward to going to work today. I didn’t mind my extra $50 each month going toward credit card debt instead of finding a favorite-cardigan-replacement.
Then, in November 2014, I got a job offer that I wasn’t expecting. It was a substantial increase compared to the last few years. It was more in line with a new lawyer’s salary (rather than one with 4 years of experience), but it also came with benefits! I no longer needed to be on the “cross your fingers” health insurance plan! It was an organization I was really passionate about, for people I really enjoyed working with. It was a hard decision because I actually liked the job I was in. But after a lot of prayer and discussion with friends and family, I accepted the position. I am so glad I did!
On the first day of that job, I had $11,000 in credit card debt and owed a little less than $10,000 on my car. Before I got my first pay check, I made a plan. I let myself buy something fun with the first check (a flight home to see my family) and new shoes (remember all of the walking I told you about in my last job?). After Paycheck #1 I hit the ground running.
My first snowball payments were $300 a paycheck. No, not a month. A paycheck. I took my plan and transferred all of the information into my bank’s bill pay system.
For the last year and 8 months I have had a large chunk of money come automatically out of my bank account the day after payday. Not two days after payday. Not after I remember to pay it. Not when I feel like paying it. Not once a month. Every payday, 24 hours after I deposit my check, a payment was made to debt. I wasn’t messing around this time. Clearly, I couldn’t be trusted with financial decisions. This was going straight out of my hands and into the hands of the little internet bank robots.
Within 6 weeks (or 3 paychecks, or December 2014), Credit card #7 was paid off. PAID OFF! I couldn’t believe it! So I moved onto my next lowest balance. Unfortunately, thanks to Credit Card #1 and #2’s race to see who could give me the highest credit card limit, the balances were large and pretty similar. I focused on Credit Card #1 first. I took my snowball payments and added the minimum payment from Credit Card #7, and kept going. That meant that one snowball was $340, and the next was $300.
It took a long time to pay off Credit Card #1. But I did it in August of 2015. The final payment was the money I made grading bar prep essays during the summer. I got the check, deposited it into the ATM, and before I even left the bank parking lot I scheduled the payment for the very next day.
My Priorities Changed & I Bought a House
After paying off Credit Card #1, I focused on Credit Card #2. At this point, I was down to only one card! It was a hefty balance, but it seemed manageable. My snowball payments became minimum balance #7 + minimum balance #2 + snowball. One paycheck’s snowball was $410 and the next was $400.
Then I got the crazy idea to buy a house. The idea was based on a lot of advice from many people, including my dad and my financial planner. As it turns out, being single, childless and a renter doesn’t make you a friend of the IRS. I planned to wait until after my cards were paid off to buy a house, but then my amazing real estate team got me a downpayment grant and found me the perfect house. So… I bought a house! I wasn’t totally prepared for this. I thought it would take awhile to find *my* house, so I was still throwing all of my extra cash toward my credit card instead of into savings. This was a big mistake. I fell in love with the second house I looked at and it was magically priced below my budget. I had to make an offer.
Because of the fast track I had unexpectedly jumped on, I had to both stop paying money onto the card, take money out of savings for the Ernest Deposit, AND charge the inspections (About $700 for the home and site sewer inspections). At some point, watching the balances go down became addicting. I loved seeing those numbers decrease! Now I was watching them stay stagnant, and increase!
As you can probably tell if you took the time to do the math, there were occasions over the last year and 8 months where I would make new charges onto my credit cards. Sometimes I would overestimate my frugality, or would forget about a payment I had to make somewhere else. So those expenses would end up on the card. I often ignored Dave Ramsey’s advice to keep at least $1,000 in savings, which was probably bad, but luckily was never disastrous, even though it was quite inconvenient during the home buying process.
Once I closed on the house I had some more expenses to get settled. At this point, I looked at my overall debt, and realized I owed less on my car than on my credit cards. Paying off the car would open up a significant amount of flexibility into my budget. It seemed smarter to have the extra money if I needed it, so in December I changed my focus from my credit card to my car.
I took all of my “extra money” + Christmas bonus + snowball + Christmas gift-money, and put it toward that car. About one month and $3,000 later, it was paid off! I couldn’t believe it! The flexibility of having $500 freed up from a car payment really did give peace of mind about things going wrong with the house or receiving an unexpectedly large utility bill. Now, I still had to face the credit card. The debt that wouldn’t die!
My snowball was now much bigger than it had been before. One paycheck was about $500 and the other was over $900. I thought about evening out my expenses by changing due dates of other bills so I had a similar amount of money left over each paycheck, but decided against it. Back I went to excel to create a new spreadsheet for my homeowner budget. After I figured out my true financial situation, I signed onto my bank and auto-scheduled out the appropriate payments all set to withdrawal 24 hours after my paycheck. Thanks, little internet bank robots!
And Then Debt Repayment Felt Like the Song that Does Not End
I have to admit, I got incredibly discouraged about a month after this moment. I felt like it was a never-ending journey. Like I’d always be in debt. Like I could never do fun things. Like I was the only person in the world who made stupid choices as a young adult and I’d be paying the price for them forever. And don’t even get me started on my student loans!
You know what happens when you get discouraged after a long journey of debt repayment or dieting or any other self-control-required task? You binge! I didn’t do anything super crazy, just flights home for J and I to go see my parents. But that was a lot of money. I graded essays in the winter and used that money to pay for a new MacBook instead of making a debt payment. That was a true need, though. My old computer was painfully slow using word, which slowed down my progress grading. And it was getting impossible to use for blogging. So that won’t work, obviously. But still, it was an opportunity for progress when instead I got a new toy and debt-stagnation. That’s how I got into this mess!
All in all, I was frustrated. To make matters worse, I was seeing my friends buy cute new spring lawyer clothes and I was jealous. Jealous + Frustrated is a terrible combination. I made very little progress on my debt during this time. Instead, buying items with the justification that my snowball would cover them anyway. Spoiler Alert: That mindset doesn’t result in debt-payoff-progress.
Anyway, by late April I had my wits about me again, revamped my snowball, added a little more money to my discretionary budget for my own sanity, and started putting some money into savings rather than throwing every single penny to the credit card. I have a house now! I need a savings account! I got a roommate. I got control over the desire to go to Home Goods every weekend and buy cute nick knacks for my house. I took a few deep breaths. And I started tithing again.
It’s been an incredibly productive Sunday, including grading a ton of bar prep essays, a workout, an episode of OITNB, and prepping breakfast and 1/2 my lunch for the week. Breakfast = make ahead sausage and egg sandwiches and yogurt. Lunch = enough salad for every day + whatever I bring for an actual lunch. And powerades so I don’t drink soda. I keep things like croutons and salad dressing at the office to make packing lunch easier.
At some point after buying my house I had stopped tithing. I have seen a true correlation between my financial situation and my financial faithfulness to God’s house, even on the weeks I could only give $10. As it turns out, seeing my savings account increase provides a happy feeling as well. It’s not the same addictive feeling of watching debt go down, but it’s still joy-inducing. I was able to get a little more peace of mind about my financial situation throughout all of this restructuring, even though it meant the balance on my cards would decrease at a slightly slower pace.
A couple of months ago, I got a new credit card offer that I couldn’t turn down. It was 0% interest AND a 0% balance transfer fee. A few 0% interest cards had tempted me in the past, but if I stayed on my payment plan, it didn’t make sense to pay the transfer fees. This card had sent me a few offers that I ignored before they sent this too-good-to-turn-down offer. I don’t know if that’s a marketing tactic or what, but I’m really glad I waited! I signed up for Credit Card #8 and transferred the balance over.
I refocused, and Spent Some 0% Interest Money
After I received this new card I bought some things that I had been putting off, and a brand new DSLR camera (on sale), because at 0% interest, why not? I also signed up for a larger Barre package that saved me quite a bit of money from my monthly payment plan. Oh, and I bought new tires for my car all by myself! The last time I needed new tires was during law school and I had to call my great grandma and ask for help because 4wd cars require all four be replaced at the same time. It was an incredible feeling of freedom to be able to purchase what I need without fretting over how I would afford it!
*Remember, 0% interest is NOT a good deal if you can’t actually pay it off in the near future! It WILL catch up to you!
I made those extra purchases with the awareness that it would delay my payoff by about a month and a half, if not two. It felt worth it. I am glad I did those things, even though it meant a delay that sometimes bummed me out. If I’ve learned anything during this process it’s that it is really important to enjoy life while you’re accomplishing your goals, when you’re where your soul belongs. We cannot sustain our motion if we aren’t taking care of ourselves.
In June there finally seemed to be light at the the end of the tunnel! I did the math and realized that if I skimped on some things, I could pay them off before Labor Day! I still had a partial check coming from essay grading, and I could cut back in a few ways to accommodate for the money I knew I would spend camping and at Watershed.
I refocused my lunch planning and got better at bringing lunch again.
I added things to my Amazon wish list instead of my Amazon cart.
When I felt the urge to spend money that I knew I didn’t need to spend, I played with my new camera, or watched the bachelorette instead.
And it worked! It really worked!
I lost my debit card a couple of weeks ago, and of course found it 48 hours after I reported it lost. When I checked my app that holds all of my credit card balances on Wednesday, I noticed that a few auto-payments that go through my debit card had charged onto my backup cards (back-ups are a good idea in cases like this). WHAT?! No! So I made payments of under $20 on Credit Card #1 and Credit Card #7, and changed that account information to the new debit card so that doesn’t happen again. (This is a really good example of why you should keep an eye on all of your accounts, even the ones with $0 balances. An app or site that keeps them all together for you is really helpful for this purpose.)
As it turns out, losing my debit card saved me a lot of money. I didn’t spend nearly as much as I normally do in that time frame. So I made a payment for what I spent while my card was lost, and a couple hundred dollars more. Then I did the math on my final payments. I only had my standard snowball payment for today + the amount that will be covered when I receive my last check from summer essays scheduled for payment. And then just a smidge more than that would be a zero dollar balance.
I Ended Up Paying them Off a Paycheck Early!
After that point, I made the decision to take a loan from myself. I could pay off the card in two weeks when I got paid again, or I could pay them off now. (Funny thing: Even though I’ve only had ONE card to pay off for quite awhile, I still say “credit cards” when I talk about it. I’m sure there’s some psychology behind that.) I decided to go for now. So I also scheduled a payment for the amount that would be owed after my snowball. I opted to use some of the cash back rewards I had earned. I was letting the rewards accrue, but if it’s going to be paid off, there’s no reason to leave that sitting there! So roughly $26 of free money (remember this was also a no-interest credit card) went toward the balance.
Yesterday, I woke up to a remaining balance of $851. Total. The maximum amount of money that I owed on any consumer debt was eight hundred and fifty one dollars. I couldn’t believe it! For the first time since I was 19 I owed less than $1,000 to a credit card company. It amazed me all day. Then, last night, the cash-back credit posted to the account. So it was an even $825.00 balance. Exactly what I had scheduled for the very next morning.
What a BIZARRE FEELING!
I walked around most of the day shocked by it. I refreshed my accounts several times, just to see it. I texted Alicia and shared excitement about it. And then I waited and waited until Friday to see the balance drop to a beautiful, bizarre, unbelievable, AMAZING, zero dollars.
Today*, I woke up and saw a $0.00 balance of every line of my debt tracking app. I don’t even know what to say about that.
*It really was “today” when I wrote this, before I realized I had to separate this giant post into chunks. Since that day I’ve showed that beautiful $0 column to J several times because I’m just so excited!!
And that, my friends, is how I paid off $11,000 (+ the couple thousand more I charged ONTO the cards once I started this journey, and the thousand+ I paid in interest) in 1 year and 9 months.
It was not easy. It was not always fun.
But OMG is it fun now!
I’d like to take this time to share the quote that has kept my eye on the prize this entire time. I saw it on Pinterest 3 years ago and it comes to my mind every time I’m looking at my debt and wondering how I’ll ever manage it. I hope that if you’ve been there, or if you’re there right now, this will help you through as well:
By the way, I had to read through basically that whole board to find this quote. There are some great quotes in there if you’re a quote lover like me!
And so that’s it. It’s the end of the journey. The end of an era, if you will. I broke up with my credit card debt today, and I don’t think I’ll miss it at all. Although Credit Card #8 might get some monthly use thanks to the great rewards, but it will be disappointed to learn that I will pay every balance off every month. No more interest for this girl!
Well, unless you count student loan interest. But let’s celebrate today’s achievements today and let tomorrow worry about itself. For now.