When I was finishing my last year of college, I raked up some hefty credit card debt. Between paying for classes, textbooks, and living expenses, unexpected car maintenance, along with more frivolous spending like travel and excursions, I saw myself buried under $9,000 in debt that was accruing interest monthly and I wanted to pay off my credit card debt fast.
Before I started actively trying to pay off debt, I was earning about enough money to cover my living expenses and just slightly over the minimum payments on my credit cards. I really was not keeping my spending in check, so I would buy random things here and there, meaning that I was adding more to my debt and working in the wrong direction.
It is so easy to get into credit card debt. Just a few swipes and your spending can start outpacing your earnings quickly, especially with interest added on top. I realized I needed to make a shift to get out of the mountain of debt I was slowly being buried under, and with a few changes, I was fortunate enough to pay my debt off by the time I graduated.
Why I wanted to pay off my credit card debt fast:
I accrued my credit card debt while I was in college, and I knew I wanted to graduate debt-free. I had student debt from my first few years of college that had a $100 dollar monthly payment that ended a few months before I finished school (I ended up paying $150 a month to pay it off faster). I had also put some of my payments for classes on my credit cards which I needed to pay off, along with credit card debt just from living. I knew I had about eight months to fully pay off my credit cards in order to graduate debt-free, which was an important timeline because I knew when I finished school I would need some savings to open my food truck which had already been my goal for years.
I ended up paying off my debt by the time I graduated, and even saved enough to open my food truck within six months (although- I did have to take out a lot more debt to buy it).
Below are some of the strategies I employed in order to get out of credit card debt quickly so I could set myself up for a better future.
1. Restructured my debt
One of the first things that I did while paying off my debt, was looking into balance transfer credit cards with zero APR for 12-18 months. A balance transfer credit card essentially allows the user to transfer some of their other credit card debt onto the balance transfer card for a small fee (often 3%). A balance transfer card can be a great way to move your credit card debt onto a new card with a lower interest rate, meaning that you can spend more of your money paying off the card balance, rather than just paying off more of the accrued interest.
There are a lot of cards out there now that offer balance transfers and then an introductory period with 0% APR, meaning that you won’t pay any interest on that debt for a set amount of time, allowing you to pay it down as much as possible. Keep in mind, a balance transfer card may be hard to get approval for depending on your credit score and history. I also wouldn’t recommend a balance transfer card to anyone who thinks they can’t make a dent in their debt by the time the 0% APR period ends, as you’ll likely end up paying more between the transfer fee and then interest that starts accruing after. You may be better off looking for a personal loan with a low interest rate, or by just paying off your existing credit cards.
I wasn’t able to transfer all of my debt to a new card, but I did open a credit card with 0% APR for 12 months so that I could spend money on necessities and put more of my earnings towards paying off my debt.
2. Increased my earnings
It seems like the obvious answer- earn more to pay off more debt. But that is easier said than done in most cases between existing work and life obligations. At the time, I was working a few part-time jobs while I was finishing school. One was contracting work, and the other job I was doing was driving for DoorDash. I knew that my best opportunity to pay off my debt faster was to earn more, and I mainly did that by doing a bit more delivery driving since my contracting job was fairly consistent in terms of hours and pay.
Usually, I would make a goal to DoorDash 4 days a week and to make $100 each day so that by the end of the week I would have made $400. If there was a day that I earned more, I wouldn’t worry about reaching $100 the next day. I quickly realized that that would not be enough to help pay off my debt quickly, so I changed my strategy. My new goal was to Dash five days a week, with a goal of making $110 each day. If one night went well and I earned more, I would still have to reach or exceed $110 each of the next days per week. Sometimes I broke up my days into two sessions with a break for lunch and homework in the middle, then I would go back out and drive during dinnertime when pay was usually better.
By adding a day of work, plus making the normal days a little bit longer, I could end up earning over $150 extra each week, which was over $600 a month I could allocate towards paying off my credit card debt.
- If you are interested in trying delivery driving as a side hustle, check out this blog on my top tips to maximize your DoorDash earnings to make over $20 an hour.
In order to keep myself motivated, I downloaded an app on my phone called Loot, which is like a virtual piggybank. I didn’t have any real money in the app, but each time I finished a session of Dashing I would enter how much money I had earned and it would add a visual of money adding up. I liked that app because you can set a goal with a weekly savings amount and get reminders to help keep you on track.
3. Decreased my spending
I know, another obvious answer. At the end of the day, how long it takes to pay off debt is just an equation. The more money you can allocate to paying it off, the faster it will become. As a college student with a busy personal life, I had to take a look in the mirror and address where I was and wasn’t willing to make sacrifices.
Food Spending:
One major area I cut back on was food expenses. My work has always been in the food industry, and food is a huge passion of mine, so I was spending a lot on eating out and on ingredients to use at home. I didn’t want to totally sacrifice my social life (this is a privileged perspective, I know), but I wanted to be smarter and more conscious about my choices so that I could spend less money and allocate more to paying off my credit card debt.
To reduce spending while eating out I:
- Limited times I ate out and made sure it was a place I was actually interested in trying
- Ordered fewer drinks, and cheaper ones if I was going to get one
- Split an appetizer an entree with a friend, I still got variety but spent less
- Choose less expensive places like food trucks rather than fancy sit-downs
- Started making coffee at home
To reduce spending on cooking at home I:
- Bought bulk when it made sense to (not if I was going to waste it)
- Used recipes with budget-friendly ingredients
- Checked out what was on sale at my grocery store online
- Repurposed perishable ingredients into multiple things throughout the week
- Ate less meat
- Did my best to reduce food waste (food waste is money down the drain)
By doing my best to spend less money on eating out, as well as spend less on the food I was making at home, I saved about $125 per week on average – it adds up fast when you aren’t spending $25+ each time you eat out (which I was).
Subscriptions:
Another area where I reduced my spending was subscriptions. I had multiple health-related subscriptions, Amazon subscriptions for things like vitamins, and subscriptions for streaming services. I went through all my subscriptions and decided which ones were actually worth it to keep (most weren’t) and adjusted the delivery schedule for some of the ones I kept so I didn’t have excess piling up. I likely saved $45 a month by reducing my subscriptions.
Gas:
Aside from driving more for DoorDash which I won’t count since that was to earn money, I was driving less during this period because I wasn’t traveling to eat out as much. It wasn’t a huge amount, but less driving meant I was saving $5-10 a week on gas.
Total Savings:
Between spending less on food, subscriptions, and gas, I saved between $700 and $750 a month, meaning I could use those savings to pay off my credit card debt.
Monthly Payoff Amount:
Between increasing my earnings and reducing my spending I would be able to allot between $1,200 and $1,300 extra towards paying off my credit cards every single month. I will say though, that I was not perfect the entire time. I went on a few weekend road trips and had additional expenses like oil changes and gifts for friends and family. In the end, I usually allocated an additional $1000 to paying off my credit cards compared to before I actively started trying.
Choose a Debt Payoff Method:
To maximize the money I was using to pay off credit card debt, I decided to look into different debt payoff methods. I wanted to choose an effective strategy to help me pay off my debt faster while reducing the interest that would accrue.
People usually choose between two major debt payoff methods: the debt snowball method and the debt avalanche method.
The debt snowball method focuses on paying off your credit card with the lowest balance first while still paying the minimum payments for your other cards. Once that smallest debt is paid off you move on to the card with the next smallest amount. As you pay off the small debt, you gain momentum and you’re able to allocate more and more to the next payments, meaning that your payments snowball and become increasingly larger, until you are able to pay off the biggest amount of debt.
The debt avalanche method is where you pay off the balance with the highest interest rate first as you still make minimum payments on the other debt. This method allows you to pay less interest over time as you eliminate debt with the highest interest rates first, so less interest can accrue. You’ll organize your debt by interest rate and allocate extra towards always paying off the debt with the highest interest while still paying the minimum payments on the other debt until all of the debt is paid off.
It is thought that the debt snowball method is the most motivating to pay off credit card debt because you can have faster wins as you eliminate your smallest debts quickly. On the other hand, the debt avalanche method is the approach where you end up paying the least amount by the end since there is less interest accruing.
There is also a third common strategy to pay off debt – debt consolidation. Debt consolidation is when a person takes out a loan (usually one specified for debt consolidation) so rather than having a handful of credit card payments, they will just have one loan payment with a lower interest rate. I did not end up choosing this method because at the time the loan interest rates were equal if not higher to the interest rates on my credit cards.
Ultimately, I chose the debt avalanche method because I knew that to pay off my debt in the timeline I was hoping that I would need to reduce the interest accruing as much as possible. This also worked because my credit card balances were similar sizes, but one had a fairly high interest rate so it was best for me to prioritize that first.
Using the debt avalanche method, paired with the increased amount I could allocate towards payments, I was able to pay off $9,000 (plus the interest that was accruing monthly) in 8 months.
The bottom line:
Paying off credit card debt can be so challenging. The second that you feel like you are making progress, you get hit with monthly interest. It is a two-step forward, one-step-back kind of process, and the only way to see results quickly is to do your best to take more steps forward.
For me, I was able to speed up the process by cutting my spending and increasing my earnings, which we all know is easier said than done. Making progress when it comes to debt requires a mindset shift and a commitment to yourself that you are going to keep doing the work to make your situation better. Using a earnings tracker helped me stay on track.
In an overwhelming world, it can be hard to stay motivated when working towards paying off debt. I had to take it one day at a time and know that some days would be easier than others.
