In April 2009, I had $37,000 in credit card debt. Now, the total is under $7,000 and will be paid off by the year-end. I know you are thinking, Danielle, you’re amazing, how did you do it? One thing that I’ve done is make the biggest possible payments to my credit cards, but I think that is pretty generic advice. This list is about the little things. The life changes and commandments that anyone can implement to crush your credit card debt, no matter how big or small.
1. Make Deals with the Devil
Go to the source: your creditors. For me, due to the size of my balances and my mortgage, my creditors laughed in my face. When I couldn’t broker a deal, I consulted a middle man, CCCS. Since I went on a debt management plan, my interest rates were lowered and I make one payment each month. My credit score also went up significantly. (Some people hate CCCS; I, as someone who uses them, love them.)
Make deals and get any high interest rates lowered.
2. Be Like Dexter – Carefully Plan Your Kills
Pick your victim and KILL IT. I’m not into the Dave Ramsey method of attacking the lowest balance. It makes no sense to me because it could end up costing more in interest charges. KILL the highest interest rate first. My first kill was Citibank. I recommend doing something negative to your card when you are done. I recently KILLED DISCOVER. I’m holding a viking funeral, which I will vlog.
Once you determine your target, attack and KILL. The victory is so sweet.
3. Spend More Money
When I realized that I was a financial hot mess, I needed to make an investment in me. I hired a money coach, Dr. Dean and he whipped me into shape. Even if you don’t need long-term individual coaching, a webinar or a single counseling session with a money therapist could be a huge help so that you don’t continue down the same paths of destructive behavior. Debtors Anonymous is also a low cost option. (They survive on donations.) If you are in a really bad situation, don’t think that you can change the world by yourself. Seek help.
Sometimes, it is necessary to spend a little bit of money to get to the root of the problem.
4. Buy it when it’s cheap.
This is the first part of a maxim that my father taught me. One of the reasons I accumulated so much credit card debt was due to compulsive shopping addiction. As I had less available credit, I was more inclined to make designer purchases.
Designer tastes on a Marshall’s budget? Get over the designer obsessions or learn how to get your fix through less expensive means. Read sites like The Recessionista and learn about bargain shopping. I did it and you can too. I still buy Kate Spade purses (only at the outlet if they are already on sale and I have a friends and family coupon for 30% off).
You have to learn to live like you are poor, even if that means giving up a new Prada bag each season.
5. Take it when it’s free.
This is the other half of my dad’s maxim.
Use the library and internet. When I first decided to tackle my debt, I read every book in the personal finance section of the library. Which is how I discovered that I don’t like Dave Ramsey and I do like David Bach. Soak up as much knowledge as you can and see what works for you. If you’ve gotten into a financial mess, you need help. Have I mentioned Dr. Dean? You should read his book. It was and is one of my financial bibles. (And I’m not a nurse.) Also, read personal finance blogs.
There are tons of FREE financial resources available to help you get out of debt.
6. Know your frenemy.
Are there stores that you can’t enter without getting sucked into some sort of black hole of spending? I have an evil trinity: West Elm, Whole Foods and Target. I simply don’t go into West Elm now. (Fortunately Las Vegas doesn’t have an Ikea so I don’t have to face its siren song.) For a while, I had to avoid Whole Foods and Target. Now, I can go into both and stick to a list and get the things I need. If you have a frenemy that sucks away your money, you have to learn how to balance that relationship. More importantly, you have to get control.
Avoid your financial frenemies until you have the willpower to say no.
7. Kermit was wrong. It is easy being green.
How much money do you spend on cleaning products and paper towels? How much of your monthly budget is it? I spent at least $15-20 per month before. Then my friend Robin showed me the way. I could make my own cleaners for about $.50. Screw paper towels. I switched to rags and cloth napkins.
Saving money and the planet.
8. Spring cleaning all year round.
Got stuff you don’t use? Sell it. All of those designer shoes that I bought? Sold. Jewelry? Sold. Books? Sold. If you aren’t using it and you won’t miss it, why are you hanging on to it? De-clutter your life and make some money in the process. Then put it all toward your debt.
Don’t let extra money gather dust when it can fight finance charges from accruing!
9. Learn to DIY.
I’m talking about stupid stuff that you should be able to do yourself that you are paying money for.
Why should I pay someone to thread my eyebrows on a regular basis when I am capable of keeping them shaped for a relatively lengthy period? Why should I pay Whole Foods to chop my organic produce ($7.99/lbs.) when I can make a salad at home and take it to work? Why am I going out to lunch at work anyway? It is much cheaper to make it myself and spend my lunch hour reading the news. Can you make coffee? Why are you going to Starbucks everyday if you have a pile of debt? Get a French press and make it at home and take it to work in a reusable mug.
Don’t take shortcuts when they are costing you money, regardless of whether or not it seems like an insignificant amount. All of those little things add up and could go directly to your debt.
10. Go to confession.
Be honest about your debt. I use this blog as my platform to talk about my debt. You hold me accountable. Be transparent. Talk about it. Don’t try to keep up with the Joneses. If you have friends who push you to overspend, you have to confess your debt. It’s hard, but you can’t put yourself into situations that will jeopardize your progress.
Good luck and good riddance to your debt!