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The following is an inspiring story of how Good Nelly, of the My Way of Viewing blog, paid off almost $50,000 in debt! Enjoy…
Do you think that financial experts can always manage their credit cards smartly? If so, then you’re dead wrong.
Here’s my story to clear your misconception.
There was a time when I didn’t manage my credit cards and finances carefully. To make the matter worse, I got a job after completing my studies. It gave me an opportunity to spend even more and incur debt. Now, when I look back, I realize that I wouldn’t have incurred debt if there was no job.
I didn’t have a clear idea about the total amount of debt incurred on my multiple credit cards. I paid back my creditors irregularly. My priority was having fun with my friends. And, I was least bothered about my financial affairs.
However, I realized my mistake for the first time when I got a call from a collection agency. And, I didn’t have to wait much to get calls from other creditors, too.
I had also taken out 2 payday loans to meet up the standards of my friends’ lifestyle. So, I was completely screwed.
How Much Debt I Incurred
All total, I had 4 credit cards and the minimum payment on:
- Credit card with $15,000 @ 17% was $375
- Credit card with $8,000 @ 11% was $160
- Credit card with $1,000 @ 10% was $20
- Credit card with $9,000 @ 12% was $247.50
So, I had to pay a minimum of $802.50 towards my credit card bills, and the outstanding balance was $33,000.
It wasn’t my total outstanding balance since I had about $15,000 on 2 payday loans.
Frequent collection calls forced me to wake up from my slumber. I vowed to resolve debt problems and attain financial freedom within a few months.
I called my best friend, Anna and asked for her opinion. Today, I’m glad that I made that call. She gave me incredible tips to get out of debt.
How I Got Out of Debt
Planned a budget that I could follow. First of all, we planned a budget to curtail my unnecessary expenses. I reduced eating out to once a week and shifted to healthy eating. Apart from saving money, it also helped me reduce weight, uplift my mood and stay motivated to get out of debt.
Opted for credit card consolidation and pdl settlement. I had a credit card with a huge credit limit and relatively lower rate of interest. Fortunately, I was able to transfer the balances from the remaining 3 cards to the 4th card.
Before opting for the balance transfer method, I had to pay a minimum of $802.50 on 4 credit card bills. After transferring my balance, my minimum monthly payment got reduced to $660. However, I decided to pay at least $1000 per month towards my credit card bill. It helped me to wipe off my credit card debt within three years. Had I continued with the minimum payment plan, I would have been still in debt.
Negotiated for payday loan settlement. As Anna suggested, settlement was the best option to get rid of payday loan debt and achieve financial freedom. Luckily, creditors understood my situation and agreed to reduce payday loan debt by about 47 percent. So, I had to pay only about $7950. I started saving money and was able to repay the pdls within 1 and ½ years.
Took a part-time job. I took a part-time job during the weekends, which helped me to earn extra dollars.
What I Learned Along the Way
I stopped swiping my credit cards till I could pay off my outstanding debt. Even after getting out of debt, I swiped my credit cards for the amount, which I could repay at the end of the billing cycle. I also started building an emergency fund to tackle financial emergencies.
My journey taught me a good financial lesson. It taught me to stay calm and solve problems slowly. So, I would say that if you’re in debt, don’t panic. Just look for a suitable solution and work towards it. You’ll solve your debt problems one day. But, it’s always better to stay away from debts. If required, consult a financial adviser to master the art of managing money smartly.