How I Cleared My $10,000 Credit Card Debt in a Year

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June 26th, 2011

Like many Americans, I had a ton of debt that seemed to pile on month after month.
Between credit cards, car payments and suchlike, my debt situation was hopeless. One Visa card had a $1,250 balance and another $5,000. I had a MasterCard with a $1,250 balance and a Discover Card with about $2,500. Enough! I decided to take steps to eliminate my debt without having to make more money. All it needs is a little sacrifice and discipline. Here’s what I did to all but eliminate my debt within one year.

What Is Necessary
I cut the coffee shops in the morning and made my own cuppa. The saving, to my amazement: about $4 per day or $28 per week, for a total of $1,456 a year. I used this to pay off the $1,250 balance on my Visa and even had a couple of bucks to spare. I could have saved that amount by brown-bagging as well.

Downgrading
We went from a two-car family to a one-car family. We sold the car that had payments and kept the one that was paid off. As our car payment was $450 per month that meant we saved an astounding $5,400 in one year. Include the money we saved on insurance at $70 per month or $840 per year, plus what we saved on gasoline at $25 per week or $1,300 per year. In total our downgrade saved us $7,540 for the year. Goodbye Visa Card No. 2 and Discover Card! It was inconvenient, sure, but it saved us tremendous amounts of money each month that we could apply to our debt. We are now back to two cars again, both paid for.

Cash Is King
My new motto is, “If I don’t have enough cash to get something I want, then I don’t need it.” This can be hard as credit cards allow you to make purchases that you otherwise couldn’t. However, they catch up with you, and bring debt.

Top of the Line
You don’t always have to have the best of the best. My cell phone is nice, but not too nice. I also ended my long-term contract with a major cell carrier and now use a prepay service. While my phone doesn’t do all the latest and greatest things, it still makes calls and texts, which is really all I use it for anyway. Besides, not having the “newest and greatest” cell phone is saving me over $80 per month or $960 per year. Nearly enough to pay off my MasterCard.

What’s important
When cutting debt you need to decide what is important. With a little sacrifice and discipline, I have been able to get rid of almost all my debt in one year’s time and sock away a few bucks. At the end of the year I paid off $9,956 of debt. Now, I use my credit cards only to secure a hotel room or a car rental, and I’ve learned the value of what is important over what is wanted. What’s more, I did this without making any additional money; actually it feels like I make more since I actually get to keep some of it now.

Since I’ve cleared my debt I’ve started a new business with a little help from a business incubator.

This entry was posted on Sunday, June 26th, 2011 at 10:10 am and is filed under Credit Cards, Economy, Employment, Finance, Money, Personal / Internet. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

How I Cleared My $10,000 Credit Card Debt in a Year

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