How I paid off $11,000 in credit card debt

In a previous posting, I discussed how I managed to run up $11,000 in credit card debt while I was in grad school. Well, I wanted to say a few words about how I managed to pay off the debt.

1) Begging: I complained to my family and asked for help. My mom and other family members sent me $3,000 to help retire the debt. While it’s generally not a good idea to take handouts, at the time I was feeling down and out, so to be honest the help was welcome.

2) Manage the Processes: I owed on three different cards, and had a bank overdraft line that was maxed out and was charging 18%. I sorted the debt by interest rate and the amount owed. I opted to pay off the bank overdraft first, even though the interest rate on other debts was higher. The reason was that I owed only $500 and could pay it off relatively quickly. I knew the debt would take time and sacrifice to retire, so some early success was welcome.

3) Called To Reduce The Interest Rate: On each of the three cards I owed, I called the lender and requested that they reduce my rate. In most cases, this was successful. For example, I remember from one call I was able to reduce my rate from 21.99% to 18.99%. On the particular card I owed $4,000. The rate reduction translated to $120 in lower interest payments over a year. Not bad for 15 minutes of work.

4) Got a Job and Reduced My Expenses: When I got out of school I was able to get a salaried position. However, instead of immediately living the high life, I moved into a basement one bedroom apartment in a rough part of town. My roommate slept on the couch and I took the bedroom in exchange for a larger share of the rent. In retrospect this was helpful because having a job and few lifestyle expenses meant I was paying the cards off with big $400 and $500 dollar chunks.

While these tips don’t apply to everyone, they’ve worked for me and may work for you as well.

Best,

James