discussion From Debt to Financial Freedom

[VerdantHue]

I hope you are all well today. I have been struggling to pay off credit card debt and was wondering if anyone here is in a similar position and what you are doing to pay it off. I applied for a balance transfer credit card but I wasn't approved for the amount I needed. I applied for a loan to consolidate my cc debt but if there any other resources that anyone can think of, please do share. I am embarrassed that I put myself in this position but I acknowledge my mistakes and would like to hear from others, if comfortable. Thanks.

 

 

[AmericanIdol]

To be honest it's just not spending more credit that what you are actually able to pay. Would love to tell you an uplifting story but it's as easy as that.

[Jormungand]

20 minutes ago, VerdantHue said:

I hope you are all well today. I have been struggling to pay off credit card debt and was wondering if anyone here is in a similar position and what you are doing to pay it off. I applied for a balance transfer credit card but I wasn't approved for the amount I needed. I applied for a loan to consolidate my cc debt but if there any other resources that anyone can think of, please do share. I am embarrassed that I put myself in this position but I acknowledge my mistakes and would like to hear from others, if comfortable. Thanks.

 

 

Definitely been there myself. I wish I could point you to some resources. I just did a lot of reading and hearing from people who went through similar situations. I'd say be careful with which company you consolidate your debt through, I know some can actually be predatory and your interest rates with them can be higher than CC interest.

 

Budgeting is a must, I know for some it's difficult, but there are softwares out there that can automate it for you. Cut any unnecessary spending, especially if you can't afford to put anything away at the end of the month. 

 

Don't just save for a rainy day, define what you're saving for. Maybe you're saving enough emergency funds for let's say you being out of work for 6 months. Maybe you're looking to get a house and need to save a down-payment. Perhaps save towards a business or an investment vehicle. 

 

Biggest advice is to just step your money up without stepping your expenses up. People start earning more money and they fall into the trap of spending more money as well. For now focus on looking for ways you can make some more money and try to pay your debt down as fast as possible while keeping expenses down. It's ok to treat yourself, but limit that to every 3 or 6 months. 

 

Good luck OP! 

 

Edited September 28, 2023 by Jormungand

[VerdantHue]

9 minutes ago, Jormungand said:

Definitely been there myself. I wish I could point you to some resources. I just did a lot of reading and hearing from people who went through similar situations. I'd say be careful with which company you consolidate your debt through, I know some can actually be predatory and your interest rates with them can be higher than CC interest.

 

Budgeting is a must, I know for some it's difficult, but there are softwares out there that can automate it for you. Cut any unnecessary spending, especially if you can't afford to put anything away at the end of the month. 

 

Don't just save for a rainy day, define what you're saving for. Maybe you're saving enough emergency funds for let's say you being out of work for 6 months. Maybe you're looking to get a house and need to save a down-payment. Perhaps save towards a business or an investment vehicle. 

 

Biggest advice is to just step your money up without stepping your expenses up. People start earning more money and they fall into the trap of spending more money as well. For now focus on looking for ways you can make some more money and try to pay your debt down as fast as possible while keeping expenses down. It's ok to treat yourself, but limit that to every 3 or 6 months. 

 

Good luck OP! 

 

Thank you for your response. Talking about it and having feedback makes me feel better and gives me hope. 

[VerdantHue]

20 minutes ago, AmericanIdol said:

To be honest it's just not spending more credit that what you are actually able to pay. Would love to tell you an uplifting story but it's as easy as that.

Yeah, that's definitely how I got myself in this situation - overspending.

[getBusy]

Credit cards are your worst enemy. Start using your debit card and HAVE A BUDGET FOR LITERALLY EVERYTHING and stick to it. 
 

It’s hard and it takes a lot of self control, but you can do this 

[AmericanIdol]

10 minutes ago, VerdantHue said:

Yeah, that's definitely how I got myself in this situation - overspending.

To be honest I have never payed any credit interest in my life, I always pay on time, but what I have done when I have been in red numbers on my monthly balances (spending more that what I earn for that specific month) is cut all extra expenses & I agree with what @Jormungand said regarding spending more the more your income is  I cannot believe I used to live with like 1/4th of what I earn now and I'm still not able to save much, so yeah, making a list of your fixed basic costs per month will give you an idea where you're at, if your current income doesn't even fully cover that then you need to change your lifestyle (rent too high and need to look for something cheaper, memberships/subscriptions need to be cut, do not order food and instead cook yourself, etc).

 

I would still encourage you to use your credit card though, when well managed it can actually help a lot, you can even get free stuff/discounts depending on your credit card benefits so look into it. Most of the times all those promos need to be activated via App and are not automatic.

Edited September 28, 2023 by AmericanIdol

[KFC]

I'm not an expert but I would say absolutely DO NOT take any more loans or extra credit in an attempt to clear your debt. These organisations are literally the devil

 

Talk to your CC company and see if you can work out a payment plan and then stick to that plan. Get a second job if you have to. Starve if you have to. But make those monthly payments by any means necessary (without taking out more credit). 

 

[javieraloud]

One tip, first pay off the debt is causing you more interest. Once you cleared that, it'll be easy to catch up with the others

[tili33]

cancel ALL subscriptions, do an inventory of everything you don't use/need, and try to sell, also make a plan and put it on paper so you can visualize your goals of paying this much by this time... and don't forget to be kind to yourself...

[sweetblindness]

Pay off the highest interest card first, then work down from there. Budget and cut all unnecessary expenses. Live reasonably, but modestly, for a while. Try to not eat out, cancel any subscriptions you don't 100% need, buy cheap bulk groceries and eat meals you might not necessarily enjoy, but that will let you survive while you pay down your debt. You can go out, but try to favor cheap or free options. Sell anything you don't use/need. Look at EVERY aspect of your life and evaluate where your money is going so you can determine what areas to cut down in to redirect funds towards your CCs.

 

I used to be a terribly impulsive spender, and after a terrible break-up, I spiraled and accumulated an unfortunate amount of CC debt. Now, I work at a job that pays well and for every paycheck I receive, I have a very specific (probably too specific) budget made in Google Docs that I stick to. I think "budget" is a scary word for people, but it's unbelievably simple, and it doesn't have to be complicated or scary. It can be a bit hard to motivate yourself - I know it was for me, the idea of budgeting when I had a massive amount of debt just felt pointless - but it is an amazing baby step to getting your finances in order. Set aside enough for utilities and rent every month, and maybe a little for "fun money" so you aren't completely miserable, but prioritize paying your debt so you can be free of this burden and reach a point in life where you can more easily save and enjoy yourself!

[khalyan]

1 hour ago, AmericanIdol said:

To be honest it's just not spending more credit that what you are actually able to pay. Would love to tell you an uplifting story but it's as easy as that.

I don’t think this is necessary and is honestly rather insensitive. It’s not just “over spending” some people do not make enough to pay for the cost of living, or have emergencies that their paycheck cannot cover.  

[VerdantHue]

I could cry from all the current responses. Thank you! <3

[khalyan]

I have a few grand of credit card debt myself that have piled up after I lost a job unexpectedly and a few emergency vet bills. 
 

Look through your credit card statements, a lot of time they provide what you have to pay to get through the debt easier. If I make the minimum payment, I won’t be out of debt for 29 years due to interest.  If I make $100 more than the minimum payment, I’ll be out of debt in 2.5 years.  A huge difference and try your best to stick to that plan (or more). 

[fememeist]

Pay those credit cards every month, and a trick I’ve seen some people do is cut up their credit cards or to not have it on ease so you don’t feel the need to spend, but once you’re able to take these baby steps and see the long term goal you’ve set for your finances, it would make you feel even better! 

[Attitude]

I'd try to see if you can do a balance transfer from one card to another. Some credit cards have promotions that let you transfer the balance from one card to another for 0 APR for a certain amount of months. That way it's easier to have one consolidated payment and easier than taking out a loan. I ended up taking a personal loan to consolidate my credit cards and I pay $600 a month. Will hopefully be done paying it by March of next year. 

 

Also, lock your cards and/or remove them from your phone. I kept using mine because they were easily accessible. 

[Likingstars]

You save before you spend. Some people soend their paycheck first and save whatever left. But i save first and spend whatever left while trying to save some extra every month. Its tough but you’ll get used to it

[Mark!]

Really good advices here, but for future reference (not sure if this is allowed), there's a sub-reddit for you r/personalfinance that is a community designed to help you navigate yourself with finance struggles! Lots of good stories there and I do hope you reach financial freedom!

[VerdantHue]

Again, everyone's responses are appreciated. Thank you for taking the time to share.

[katykater]

If you are paying 20% interest on credit card debt, it is really urgent to get rid of it.

 

 

100 dollar debt would become 120 dollar debt in a year time or 100 dollar of borrowed money is costing you 20 dollar interests a year. This is what they mean with expensive money.

 

If you have loans with an interest rate way lower than inflation, keep the cheap money as long the bank is losing more value than the interest you are paying them.

 

 

 

For the solution you can look at the Dutch. In the first half of 20th century Dutch housewives started keeping track of expenses to save money for big luxury purchases. Nowadays there are spreadsheets and applications for budgeting:

 

 

List your monthly income, fixed expenses and variable expenses.

 

The purpose is having all the numbers in front of you and you have to face facts. When you know that certain expenses are incoming, you can reserve/budget money for that.

 

Where is the money leaking away? An once in a long time big expense isn't usually the problem. It's usually the small amounts leaking away every month, week or day.

 

Compare your utility bills/contracts to what they are offering nowadays. There can be welcome discounts for people switch to another electricity supplier (depends on the country/market), Internet and mobile phone plans can offer more and more for the same price (update to a recent contract to get more for the same money or downgrade to a lower rate that is offering enough for you),...

 

At work everyone is ordering sandwiches or other takeout/delivery food. I'm old school, make my lunch and take it to work. The amount I save per lunch is between 5 and 15 euro per lunch depending on the location and which pay grade the colleagues are. Multiplied by 200 working days is 1k to 3k euro per year and that's like a good budget for concert tickets, music festivals and even vacations. If something went wrong, the money saved for concerts, festivals or vacations can be used for an emergency instead of having to borrow money at a high interest rate.

 

If you are ordering/buying too much stuff that is clogging up the place where you live, you can sell the stuff you aren't using to free up space and money. Be more critical about what you buy and you can wait, the urge to buy something will go away over time.

 

The lower you can push the fixed expenses down, the more money you have for paying down debt, saving or spending on variable expenses.

 

Once you are out of debt, you save money for building a cash buffer for emergencies. It is usually advised to have 3 to 6 months of income or spending as your cash buffer.