When I finished business school, I felt accomplished, inspired and ready to take on the world. Despite all of these glorious feelings, there was one lingering feeling, I was in credit card debt and didn’t have a strategy to pay it off.
Business school was grueling in many ways intellectually, emotionally but it was tough on my pockets too. When I confronted the fact that I was owing $3000 of credit card debt, I knew I needed to get myself out of this situation and fast.
Let me walk you through how I paid off $3000 in credit card debt in three months.
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I created a Budget
I had a basic budget while I was in school but it was not as strict as there was just so much on my plate and it was tough balancing everything with a demanding schedule. When I finished school, I knew I needed to create a budget right away to get a good and clear picture of my total finances.
I used a very simple approach: the pen and paper style. I created two columns, one column with all my expenses and monthly commitments while the other column had my income. I also wrote down the time of the month when all my bills were due.
This exercise was quite insightful because it helped me see where most of my expenses were and how much I needed to adjust my lifestyle in order to pay off my debt. I had just started my new job and I needed to know what my new monthly income and expenses would look like especially when you consider other factors like taxes, insurance etc.
Once my budget was created, I knew how much money was left over each month and knew the amount that I needed to allocate toward paying off the credit card.
I planned all my meals and reduced my eating out budget
Another way in which I paid off my credit card debt was focused on reducing how much I was dining out. I was on a very strict budget plan and quickly realized that I spent a lot of money on dining out at restaurants. This was a very active part of my social life but was financially draining, so I needed to make a change.
I started to plan all my meals (breakfast, lunch and dinner) and created a shopping list that I used when I went shopping at the grocery store. I also bought the store brand version of the items on my list as they were cheaper and some of them had great flavors I enjoyed.
I also politely declined any requests from friends to go to restaurants (especially pricey ones) as I was on a mission to pay down this debt. I also packed my lunch and brought it to work to save on buying lunch which sometimes could get very expensive.
I stopped using my credit card
I was already in credit card debt, I figured it would make better sense to stop using the card if I wanted to bring that debt down to zero. Instead, I chose to use my debit card and cash for my expenses.
This ensured that I was not charging more debt to the card and forced me to spend within the limits of the cash I had. This meant sacrificing a lot – this was hard but once again, I was on a mission to pay off my credit card and I needed to be disciplined. If I don’t have the cash, I don’t buy it was the principle I applied.
I assigned a role to every dollar and used the remaining cash to pay off the credit card
This was a meticulous task but after seeing my budget, I assigned a role to every dollar I had. Each dollar was assigned a specific function whether it was to pay a bill or savings.
This meant that after paying all my bills and other expenses, whatever cash was left would be allocated to the credit card debt.
This was tough as I reduced the amount of money I was saving at this point. I wanted to be in a place where I could get rid of this credit card debt and stop paying interest so I reduced how much I was saving and put that money toward the credit card payments.
This helped to get rid of the balance much quicker.
Once the debt was paid off, I re-allocated those funds toward my savings.
I stopped buying clothes and other discretionary items
One of the motivators that kept me on my journey is knowing that after my credit card bills were paid off, I could treat myself to something nice. So I made the decision to stop buying clothes and other unnecessary items that had put a damper on my expenses until after I was debt-free.
Some of the credit card debt was related to schooling expenses, but there were a few unnecessary items that I had to stop buying. This included clothes and other items. It was hard to not go to the mall and walk around (which is one of my hobbies!) but I had to practice some restraint.
I Had a Side Hustle
Some of the payments towards the debt came from my side hustle as an English Teacher with iTutorGroup.
With this side hustle, I was able to make a few extra hundred dollars per month and allocate this money toward the credit card payments.
Working extra hours was tough as my clientele was based in China so I had to get up extra early to teach but it provided me with great experience in teaching and the opportunity to meet amazing people.
Paying Off the Debt Felt like a Huge Weight Had Lifted Off Shoulders
Once I made the final payment, I literally felt the weight come off my shoulders.
Seeing the $0.00 in my credit card account was one of the best feelings I have ever had even though this happened a few years ago.
Along this journey, I was inspired by a few books that made me take this very seriously. They include 7 Steps to Get Out of Debt and Build Wealth by Adeola Omole and The Debt Free Graduate by Murray Baker, a book my sister generously gifted me as a graduation present.
Paying for an MBA was one of the biggest expenses I have had in my life and it required a lot of discipline and insane money management (with course fees, books, rent etc.) especially as a full-time student. But even though it was rough, I was able to use my newly minted finance skills to pay down my credit card and start from scratch.
Money management is not easy, in fact it is a skill that can have an emotional toll, but with confidence, determination and grit, you can do it.
Also, these were my approaches to the situation, every person’s approach is different, but these were the steps I took to pay off this debt and it strengthened my resolve to aim to always be mindful of my credit card usage and to be wiser in my spending.
From this experience, I have learned to manage money in a way that promotes dignity and wisdom and I pass on this information and experience in my Grow Your Abundance Coaching Program. If you are interested in learning more about this program, apply for coaching program here.
Tell me, have you been a similar situation? What steps did you take?
Let me know in the comments below.
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