Paying Off My First Credit Card & Steps You Can Take In Your Financial Life

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Dave Ramsey’s Financial Peace University classes were in full swing in February. Every Thursday, I would grab a smoothie from Robeks (because remember, I was transitioning to healthier choices!) and head to class.

One of the first assignments was to go through everything and total up all of our debt. We would write in on a piece of paper and give it to the facilitators and they added up everyone’s debt. Then they wrote the overall debt for the whole class on the board.

I had visited my car loan, student loans, and five credit cards and had my total down to the cent. I was just a couple hundred dollars shy of $40,000. * gulp * My 24 year old soul was feeling the pressure of that number crushing it.

I don’t think it was out of the ordinary for me to internally freak out and start to question everything irrationally like… Why the hell did I go to college?! Why did it cost so much?! Why in the world did I get a new car?! Why did you want credit cards so bad?! Why did you think that was a good idea?!

And then the why’s turned into how’s… How in the world am I going to pay all this off?! That’s more than I make in a year!!! 

Luckily, I was going to this class every week and learning how to cope, handle my money, and given a game plan to tackle this.

The first step is to put $1,000 in savings. It’s also recommended to have 3-6 months worth of pay in savings in case of emergencies. Next, is using the snowball method to pay off debt.

List your debt in order, smallest to largest. First, you will only focus on paying off your smallest debt while paying the minimums on the others. Once you pay off your first debt, you will contribute whatever that minimum was to the minimum of the next debt.

Example: My smallest debt was my Discover credit card. The minimum was $30 a month. Every month, I was already planning on paying at least that $30 minimum. So I would just continue to budget out that $30 and put it toward my next debt, which was my Victoria’s Secret credit card. The Victoria’s Secret credit card minimum was $25 a month. So now I would have $25 + $30 (my Discover minimum I don’t have anymore that I can use) = $55 to put toward my Victoria’s Secret card to make paying it off go faster. You would keep doing this. So for my next debt, I would have an extra $55 a month to put toward it and so forth. After each debt, the snowball would become larger and make payments bigger.

Then there are ways you can find extra money to help chip away your debt even more. Here are a few steps I took to help pay off my first couple debts so far:

  1. Sell stuff

The facilitators talked about how they sell stuff on eBay for extra money. I thought about using eBay, but didn’t want to deal with shipping costs, having to take time to ship the items, etc. So I was recommended to use “Swap n’ Shop” groups. Facebook has a ton of these groups. So I joined a couple in my area and started going through my closet and finding things around my apartment that I didn’t use or need anymore. This was also kind of nice to get rid of things that took up space and collected dust!

I took pictures of the items on my phone, started a Dropbox folder, and uploaded the pictures to that folder so they were instantly on my computer. Then I would get on my laptop and start posting in the groups.

I chose to have the meeting place be the Starbucks right off the highway and about 30 seconds from my apartment. It was also in a strip mall area with lots of people around. I would also have my roommate join me when I would meet the person.

This actually gave me about $100 that went straight to paying off credit cards!

  1. Mary Kay

For a short time, I attempted to sell Mary Kay for extra money. I found out that I didn’t have the time, drive, and patience to try to make the most of the opportunity. I did make a few sales and put it toward savings and debt. If you have the time and talent to take on something like this, it could help in your financial goals.

  1. Tax returns and bonuses

I actually got money back from taxes and divided it up between savings and paying off debt. I also got a little bonus from the job I had at the time and did the same thing.

Other steps I took to manage and save money:

  1. Pay bills right away on pay day

I had found that when I had money just sitting in my bank account, I was more prone to thinking I had money to spend however I wanted or I could afford this or that. With the job I had then, I was paid every Wednesday. I started getting into a groove of sitting down on Wednesdays and paying whatever bills I would have between then and that next Wednesday and sometimes would even work ahead and make payments toward future bills. Any extra I had went to savings or debt.

That way the bills were checked off and that money would be accounted for and soon out of my account so I wouldn’t accidentally overspend.

  1. Watch money tip type videos on YouTube

On one of the podcasts I had listened to, she interviewed a woman named Kate Northrup and she has short videos like this that go over financial habits, tips, etc. Some mornings, I would eat breakfast while watching one of these to keep me learning and motivated. I am sure there are a ton of others that have videos that go over finances that you can find. I just happened to stumble upon her and watched a few during that time!

  1. Continue to not eat out or get Starbucks

This was also tied to my health adventure so it was a win-win situation to keep on track!

  1. Use my Target Red Debit Card, Cartwheel app, and coupons

I love my Target Red debit card because I save 5% every time I shop and this was where I was grocery shopping when I lived in Overland Park during this time. I also took using the Cartwheel app seriously. There were so many items I was already going to buy that I was now saving 5-25% on. Multiple times I would leave Target having saved over $15.00! The money I was saving felt like extra money I could put toward debt! *I was not paid to advertise this.

  1. Stopped shopping for myself

No more trips to the mall, no more new clothes, and other extra things. I put personal shopping for myself on hold! Putting the money toward debt felt more important.

My goal before ending the Financial Peace University course was to achieve having at least $1,000 in savings and pay off my first credit card. I accomplished that (which felt like by the hairs of my chinny-chin-chin).

On March 26, it felt amazing cutting my Discover card! I still have it for inspiration. 🙂 *hair flip emoji*

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From March 26. Cutting my first credit card!

With sprinkles on top,

Rachel

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