Climbing Out of Credit Card Debt

After retiring my credit card, I was finally living within my means, i.e. not spending more than my income. It was a major victory, but there were still thousands of dollars in credit card debt looming in the background, adding on interest each month I paid only the minimum payment. My next step toward a debt-free life was to attempt to live below my means (to spend way less than my income) so that I could make much larger payments on the credit card. That meant a major budget cut.

I know, I know, budget cuts are buzz-kills. They mean less of the “fun stuff” that cost you money. They are also our mercy when we want to get a handle on our finances.

Budgeting doesn’t change much if we aren’t willing to make sacrifices and stick with them. Some sacrifices feel more painful than others, and the ones we’re willing to make are impacted by our values, priorities, and relationships. Some sacrifices you make won’t make my list of consideration, and visa versa. I refused to move back home after college, but you may have refused to give up your car. And maybe both of us have very good reasons for the sacrifices we didn’t make.

The important thing when we’re under the thumb of credit card debt, is to sacrifice something. And the bigger the sacrifice now, the faster we become free. Just remember not to sacrifice your health or your most important relationships in the pursuit of getting debt-free. The balance is sometimes hard to find.

Here are two ways to figure out what to cut:

ONE: Evaluate your biggest expenses. Mine was rent. I knew I could save at least $500 if I moved to a less-expensive apartment. Every month that I paid rent at the overpriced apartment made me feel like I was burning $500, and that waste made me sad and angry. The sacrifice in moving was the quality and comfort of the expensive apartment, and although I didn’t like the smaller, crappier housing, I was willing to make the sacrifice so I could burn less money and make my way out of debt faster.

TWO: Evaluate repetitive small expenses. Little things add up over time, especially if it’s the same things over and over. My household’s most-repetitive small purchases that added up quickly were meat, cheese, coffee, milk, soda, paper towels, toilet paper, and a few other things. Some of them we cut out completely for a while, others we just put stricter limits on. Some, like toilet paper, we didn’t feel like we could ration as drastically, but we tried to buy in bulk because it was cheaper per roll that way. We started using coupon apps on our phone and shopping at cheaper, more crowded stores.

Once I made Sacrifice #1 (the apartment), I had a much greater lump sum available to put toward my credit card debt each month. But take caution: once you’ve made Sacrifice #1, it will be very easy to spend it on the things you were trying to limit in Sacrifice #2, or even on extra special treats you didn’t have money for when you were just “living within your means”. To circumvent that temptation, set a minimum payment amount for your credit card that includes the amount from Sacrifice #1, and pay it when you pay your monthly rent or other monthly bills. Get it out of the way so it’s not even a temptation, and live off whatever is left over.

If you aren’t able to make Sacrifice #1 quite yet, then you may have to be more strict with Sacrifice #2 to make significant progress with your debt. I’d suggest making an itemized budget. That is, list every item you purchase regularly, its cost, and how many of said item you will limit yourself to purchase during each pay period, in accordance with how much money you want to save to get out of credit card debt. Some people utilize a cash system to help with this, which means once you run out of the cash for it, you cannot spend any more until you’re paid again and replenish that cash envelope.

Figure out what works for you, but above all, do something. Sacrifice something now for the sake of your future financial freedom. And do it for the sake of your current self who benefits from the strength, determination, and resourcefulness that is developing daily as a result.

Treat yourself to that.