I realized something today that I am really proud of. At this point, I can safely say that I will end the year without accruing any credit card interest at all. Not a cent. I've racked up several hundred dollars in rewards, especially since I use the card on all those curbside pickup orders I've done since March. It's a big change from most of the last decade or so, when I couldn't seem to get ahead for a significant amount of time, veering between minimum payments and dumping all I could into nearly getting free.
I wish I could say that it's because I'm clever and that you should follow me for more financial tips, but I guess I can share my system. It might be useful as far as it goes.
Liesl's Mostly Fool-Proof Method for Defeating Credit Card Debt!
1. Stop using the card until you can get free. I have, from time to time, hidden my credit card from myself for months at a time. My favorite trick in college was to leave it neatly placed in my top dresser drawer at home, five hundred miles away from my dorm room. If I got into a situation where I felt I needed the card, I would have to call my parents, which would lead to a conversation with my debt-averse mother. The very thought of having to have this conversation with my parents usually revealed how unnecessary the perceived need was, or inspired me to swallow my pride and simply request some assistance from them, especially if I called before late fees or rush shipping would make the problem desperately expensive.
2. Utilize any windfall that comes along. Tax refunds. Gifts. Extra projects or hours at work. Raises. If you have stopped digging as much as you can manage, the hole fills in a lot faster. Consider it part of securing your future as you decide against wants to open up cash for freedom from debt. Have a cash rewards card? Dump the cash reward back onto the balance and start beating them at their own game.
3. Consider a balance transfer or a home equity loan. This is only if you truly and honestly believe that you will not rack up the cards as soon as they are clear again. Really explore your attitude towards credit--is your credit limit something you avoid reaching at all costs, or free money as long as you can pay the minimum?
4. Budget your buns off. Look at any fat that can be trimmed. Consider doing cheaper meals and shopping at the thrift store. Embrace hand-me-downs. When we would go to dinner parties at my in-law's house, they would offer mountains of leftovers to us and to Fuzzy's brothers. We used to take a bowl of Fuzzy's favorite, but when things were really tight, I would also take a bowl of one of the meats, which I would then convert into a casserole that would last for the whole week. Fuzzy's father was thrilled to get the meat eaten, as it often went bad before being used up with all the other leftovers, and our grocery bills were smaller for it. Hit the library for books and movies, and borrow (and return!) tools from friends. Repair stuff to make it last longer. State your needs to your community, because they sometimes can hook you up. I know I've fished goodies out of the thrift store bag or the kitchen and handed them off, simply because I found out where they could be useful. Get creative.
5. Pay something every time you get paid. At this point, I make a payment every Friday, right after I confirm that Fuzzy's paycheck has landed in the checking account (alternating between the big pay for his main job and a smaller pay for his side job.). If possible, I then leave a small amount in the checking account for incidentals and put the rest of it into the other checking account to be distributed to the mortgage and savings. All of the other bills are put onto the credit card, which is now paid off weekly, in order to maximize reward points. Paying once a month feels like big, insurmountable amounts, while a bit here and a bit there is a lot easier to muster.
6. Be unbelievably lucky. Eye wateringly, confusingly, bizarrely lucky. We have been lucky in so many ways, from scoring a fabulous deal on our house to almost always being able to find some kind of work to having parents willing to help us on the big emergencies (We were too proud to ask for help unless we were pretty desperate.) to scholarships in college to an assistantship in grad school. We have somehow landed on our feet enough to keep the debt to a level that could be solved with taking extra work and tightening our belts and taking advantage of gifts.
To be honest, the rest of the steps aren't very effective if you don't have number six. There are a lot of people being told that they are in debt today because they are lazy or bad with money or foolish, when the fact of the matter is that they are being set back at every turn, though predatory lending practices, high housing costs, low paying jobs and plain bad luck, and these are things that cannot be changed by articles on the internet or specials on public television. That being said, do what you can to stop digging yourself deeper, and start figuring out ways to be clever, and I'm hopeful for things to turn around, at least a bit. Every little bit helps.
If you're in really deep, but you have a family member willing to make a loan or have a chance at a home equity loan or such, consider offering the credit card company a lump settlement. You might be able to get out for less than you owe, and start paying it back at a lower amount of interest. Otherwise, call to ask for a lowered interest rate or some kind of payment plan. Most companies are willing to work with you, especially right now, so that they can get something out of your account, rather than the paltry amount they would receive in a bankruptcy.
If you can get out of credit card debt and find ways to stay out of it, it's a pretty good feeling on the other side. It takes work and humility and a lot of grace, but it's possible. I believe in you.
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