After my husband lost his full-time job of 10 years due to budget cuts, our family got into some credit card debt. We had a young child who wasn’t yet in school, a newborn, and no childcare options that fit our budget, so I was home with the kids. My husband took on substitute teaching work as he looked for a full-time job, but as you can imagine, money was tight. For the first time in our lives, we began to accrue some credit card debt.
It was super-duper stressful
By the end of that year, our credit card balance was about $6,000, which probably doesn’t sound like a lot to many people. But the minimum balance we needed to pay to avoid interest was too high, and so the interest began to accrue. Suddenly, that $6,000 was quickly growing to numbers that were giving my heart palpitations.
Thankfully, my husband had found a new job, and I was starting to work part-time. Still, the credit card debt seemed insurmountable, and I knew that if we didn’t do something soon, it was going to be a big problem.
Someone at the bank suggested that we roll our credit card balance onto an interest-free credit card as we pay it off. At first, that sounded crazy to me, because while the credit card was interest-free for 18 months, after that, the interest rate shot up incredibly high.
What if we weren’t able to pay the balance down fast enough?
Still, having that type of deadline in mind seemed smart, because it meant that we’d be motivated to get the balance down, STAT. So, we rolled our balance onto that card, which meant that it was no longer growing (phew!). And then I decided that I needed to set some goals for how to pay it off.
So I did two things. First, I downloaded a budget app to my phone. There are lots of different types of budgeting apps. The one we used was a “zero sum” budgeting app, where you list the total income you expect to bring in for a particular month, and then list your estimated expenses, ensuring that these two numbers match.
Then, you record every single purchase you make or bill you pay. Yes, as in that $5 Starbucks drink, and that $7 library fine. Nothing goes unrecorded, and you are accountable to only spend what your income covers.
Doing this was eye-opening, to say the least
The second thing I did was to take the amount of debt we had on the credit card and divide it by 18 (for the 18 months we had to pay it off). I wrote that number down, and made sure to pay it monthly. It became part of our zero sum budget, and we made sure to pay it off every single month without fail.
None of this was easy
I lost sleep over it all. I began to hate my budget app and the fact that I had to pay attention to every dime I spent. But 18 months later, we paid off our debt, and it was the most amazing feeling ever. It was as if a literal weight had been lifted off my shoulders.
To this day, I still use that budgeting app (I don’t hate it nearly as much) and track all our spending. Even with other financial scares that have cropped up over the years, we haven’t gotten into credit card debt again, and I’m so, so grateful.
