Simply stated, there is no “magic bullet” formula for paying off debt. What this post boils down to is a recipe for success found through hard work and determination.
While reviewing my budget spreadsheet (I’ve kept a detailed account of all income, savings, debt payoff, net worth, and spending in Excel for the past 4 years), I seemingly re-lived my debt payoff journey. With each click of a different page in my workbook, I reviewed the multitude of income-generating positions held (at one point I was working SIX different jobs!), and I found myself truly appreciating the sacrifices made to get to where I am today.
As far as the details, I simply had an epiphany one day while charging yet another needless item at a store where I had no business shopping. As the post-spending exhilaration faded, I finally came to terms with my need to get my financial life on track. While I had a great full-time job that provided me with excellent benefits, salary, and constant challenge, I realized there was something missing.
Whatever that missing piece was, I finally understood that it couldn’t be replaced with shopping, vacations, or other living-beyond-my-means behaviors. With this realization came the beginning of many things: my graduate studies, a move to Boston (with $14,000 of credit card debt in tow), a career change, and a commitment to debt payoff.
Never stop working hard
Moving to an expensive city necessitated a change in attitude towards spending, savings, and income. While I was interviewing for full-time work, I stumbled upon an advertisement for a part-time job in a residential assistance home. The posting seemed too good to be true: live in Boston for free, work only ~10 hours a week, and be guaranteed the position for at least 2 years?! Sign me up!
Enter the phase of my life I endearingly refer to as Insanity: full-time work, full-time grad school, a part-time gig to “pay the rent,” and a plethora of odd jobs to bump up my bottom line.
However, “pay the rent” is exactly what I did: I paid to my credit card bills the equivalent of the standard rent I would have had to pay in a comparable setting (room fee, utilities, and food). I sent at least $1,300 per month to my cards. I chose only one card to use (sparingly) during this payoff period; one that provided cash-back and that was paid off in full every month.
Over a span of 10 months, I watched the balances dwindle and my financial freedom begin to take root.
In August of 2008, I made my final payment, $1,277.25, became credit-card debt free, and have remained so ever since.
Photo credit: Andres Rueda