Editor’s note: The information provided below is not intended to serve as financial advice of any kind.
Five years ago, my family’s financial life took a dark turn when my husband lost his job of 10 years due to budget cuts. We had a 5-year-old at the time, and I was pregnant with our second son. As the primary caretaker, I only worked part-time outside the home, so we were strapped for cash.
The plan was for my husband to find a new job as a teacher, a career he’d been working toward for the past few years. But with the city school system in a hiring freeze, and other teaching jobs hard to come by, that was proving much more difficult than planned, and he ended up being out of work for almost two years.
During that time, we made it work. We lived on unemployment, part-time work we both found, public assistance, some minimal help from our families, our quickly depleting savings accounts … oh, and our credit cards. The good thing was, after years of having a steady income, we had really good credit. So we were able to use the credit cards without feeling too guilty or worried.
After all, whatever we accrued on those cards could be paid off … right? (LOL.)
Well, as we all (now) know, that’s how they “get you.” Interest accrues faster than you can keep track and if you aren’t bringing in enough money to pay more than you owe on the cards, you are pretty much doomed to a never-ending cycle of debt. Adding to all of that nonsense, we had to sell our co-op apartment and move — and let’s just say that the whole moving with kids thing cost much more than we bargained for, and those expenses were slapped right on the credit card, too.
Eventually, my husband got a full-time teaching job, and as my kids got older, I was able to take on more freelance work, and bring in a steady income as well. We were finally staying afloat financially, which was great; but when we came up for air and took a hard look at our financial picture, it became pretty clear that we were looking at several thousand dollars of credit card debt. Well, $6,000 to be exact.
I realize that to some, $6,000 is not even that bad. But to others, like us, it’s a whole lot. And if we didn’t act soon, that debt was just going get more out of control. As it was, we were already paying several hundred dollars a month in interest alone, which made it impossible to save money or bring our balance down.
But we were determined to pay it off. After all, our kids were getting older, and would have more and more financial needs as the years went on (orthodontia, extracurricular activities, college tuition … OMG), and we weren’t getting any younger. So, even though we were still basically living paycheck-to-paycheck, I decided it was now or never, and hatched a plan to pay off the debt.
Much to my surprise, once we got started, it was a whole lot easier than I expected. And even more surprising was how very quickly it all happened. What worked for us might not work for you, but I’ll share with you how we did it.
1. We transferred our debt into a 0% APR credit card account.
We were really unsure about doing this, because we were wary about opening yet another credit card. But a 0% APR credit card meant that we would not be accruing interest on the card, and that was HUGE. And we found a card that would allow us to transfer almost all of our debt onto it. The card would be APR-free for 18 months (before it was set to start charging us boat-loads of interest!), so that helped us set a goal of paying it off in that time-frame.
2. We downloaded a budgeting app for our phones and stuck to it.
There are tons budgeting apps out there, but we fell in love with the EveryDollar app, because it transfers info from your bank account right onto the app and all you have to do is place the amounts in different spending categories. (I swear, I’m not being paid by the app, I just really like it!) It was honestly life-changing — and terrifying — to have to track every single purchase we made, but it forced us to make informed decisions about where our money went.
3. We decided on a strict monthly amount that we would put aside to pay off our debt.
We knew we had 18 months before the 0% APR credit card would accrue debt, so we took our total debt and divided it by 18 months. At first, the idea of putting aside a little more than $300 a month sounded like a lot. So we started small, setting aside $100 a month toward our goal, and building that up as the months went on. The main thing was that we made monthly pay-off goals and stuck to them. We treated them like an expense, in much the same way that groceries and rent are.
4. We set goals, stuck to them, and were able to accelerate the timeline once we saw how easy it all was.
Pretty quickly, we found that we were able to increase the amount that we put toward paying off our credit cards. And what we’d find is that some months — like months we were given monetary gifts, or bonuses at work — we were able to pay off larger chunks of the debt at once.
When all was said and done, the whole thing only took about nine months, which was half the time that I had allocated for us. Going in, I didn’t realize how crucial it would be to pay attention to even the most minute details of our budget — I was often able to put aside just a little extra here and there by making more prudent and informed spending choices. If I hadn’t seen it laid out for me every month, I don’t think I would have gotten there.
Most of all, it was about making a choice to focus squarely and unapologetically on our debt — to come to terms with the fact that it was at a place where action was needed before things spiraled out of control; to learn to be more savvy with our budget overall; and to keep our eyes on the goals no matter what.
Now that I’m on the other side of it, I can honestly say that getting of debt is truly freeing. It’s a weight that is lifted off you — one you didn’t even realize had been so crippling. I know not every family is in a position to pay off their debt, but if you think there’s any chance you can do it, even if you just chip away at it little by little, I urge you to give it a go in whatever way you can. Your financial and emotional health will be better off in the end — trust me, I’m living proof.