Are you struggling with credit card debt? Are you getting tired of paying off your minimum payments?
Do the payments of credit cards quickly take away your peace of mind? Don’t worry!
I was in your shoes 6 months ago, But today my credit card debt is NIL. Here is the proof in the below image!
This blog post is about how I paid off my credit card debt in six months. I am not saying my debt paid-off story is the best story available on the internet, but I’m sure this post can give you different perspectives or ways to pay down credit card debt of yours.
Note: Don’t get confused with the Name, the card includes my Surname too.
How to get cash on credit card is a hook:
Have you ever seen a successful person running to get cash on credit card or reward points? They don’t care about it!
Do you know anyone who became a millionaire by rewards points offered by credit card companies?
In my 30 years of life on this planet earth, I haven’t come across such a person. If you had come across someone like that, I would be glad to die myself.
Credit card companies have done a brilliant job by making the mass population focus on cashback but reaped billions & billions as interest money as profits.
This is an exemplary example of ” Penny wise, Pound foolish”
When we are busy accumulating to get cash on credit cards, we forget our spending patterns.
Banks use cash /rewards as hooks to put credit cards in our pockets.
Criteria to get credit card easy or tough in recent times?
Gone are the days, you have to go through a cumbersome process to get a credit card.
Due to advancements in technology, it’s easy for banks or financial institutions to reach their ideal prospective clients.
If you are young and getting a decent salary, getting a credit card is easy, No big deal!
It’s far easy to get a loan than help! (My belief)
My Story:
I was also lured by the 5% cash back points for Purchasing on the Amazon India website. Initially, getting cash back on my amazon pay account was exciting.
Due to convivence & indiscipline behaviors, I ended up overspending. My spending pattern didn’t change overnight.
As far as I know myself, I am an avid saver (25% percent of income), respect money, and have very few wants.
Having access to a credit card made me spend on things when I don’t have the money to pay for them. I was thinking to pay off on my next billing cycle. But you know life, it doesn’t go as per our plan.
I started accumulating small interest payments on my card, But I was making the minimum payments.
After 8 months of usage, I can see I’m using my credit card for paying groceries, ordering food, buying stuff on Amazon, and even buying stuff for friends on Amazon.
Soon, I realized the credit companies charging 3.3 to 3.7 APR as interest. I was shocked but delayed realization.
Because I was maxed out on my card (INR 90000), luckily I had only one credit card. For which I am grateful to God.
If had 2 or 3 credit cards, I am sure I wouldn’t be in this place to write this article.
How I paid off my credit card debt?
To shave off INR 90000 (principal only) in 6 months, I was forced to take some strong decisions. I can rather call it “sacrifices”
Click Here: You can see my monthly payments on credit card.
Paused My Investments:
After getting to know how much I am charged on monthly interest payments, I was terrified at first. I calm myself down and started to think, I concluded it’s better to pay off interest than invest money in the stock market.
I was overthinking to pause my investments, But math helped me.
” I am sure I will be paying more than 40% as interest will be paid by me in the next 12 months for credit card firms, but getting 40% return from the stock market is almost NIL”
This got me so mad! I didn’t like to lose my hard-earned money. I stopped all my investments and committed to cleaning up this mess.
Save, Save, Save:
I usually save about 25% percent of my income. I have a Job, can’t afford to take a side hustle because of the paucity of time.
The moment the salary hits my bank account, I did my credit card payment. All the money allocated for savings and investing went to credit card payments.
I didn’t wait for the due date, etc. I was so restless about how I was being looted for my foolishness.
I could have sold my investments and cleared them once, but I wasn’t comfortable doing it and paying more taxes.
Ditched Minimum Payments:
I never cared about minimum payments. All I cared about is get out of credit cards quickly.
If I am paying only the minimum payments, I would be paying my credit card debt for the next 24 to 36 months.
I usually paid 3X or 3.5X of my minimum payments. Once you reduce your credit card debt to 30 percent or 40 percent, it is so satisfying to see how the minimum payments are getting reduced month on month basis.
Read more: How to Payoff debt quickly using Debt avalanche calculator
Travel Less:
My job requires me to work from home, so I don’t need to spend money for commuting to work.
Even on the weekends, I restricted myself from going out. If I am going out, it should not cost money like walking in the park, etc.
In this way, my travel expenses for our family were less than 2.5% of my income.
Frequent Stealing:
I practice stealing money!
Yes, I do steal money from other items when I spent less on it. E.g. I need to spend INR 1800 on dairy items, but I spent only INR 1550. The remaining 250 rupees will go to paying the credit card debt.
This practice helped me to pay multiple times in a month apart from my actual debt payment.
No outside food:
I might have spent about Rs 800 to 1000 together in these six months for food.
I love eating outside but being peaceful is more important to me. This move led me to save more & pay the payments on credit cards quickly.
Focus:
Focusing on paying one debt helped me clear this faster.
Though I have a couple of other debts (one has no interest, other is against Gold)
My interest against Gold remains fixed (10%p.a), You can renew it multiple times, But the value of Gold appreciate like crazy, Now it’s at 2.5X in value of my initial loan amount.
No interest loan is from my friend, which I will clear it shortly.
Will I use a credit card further?
No! I am going to block the card.
I will spend If I have money, else shut up and be content. Also, I am not worried about 5% cash back.
People think cashback is something like returns, but it’s a trick to spend more. If I need to earn 5% returns, I prefer to invest in high-quality dividend stocks. But not through spending 100rs, to earn 5rs.
I would be a fool to do that.
Final Conclusion:
Many influencers may earn so much cash or reward points by using their card. But I am personally not comfortable to own credit cards further.
Am I missing some potential money? Not at all, I don’t want to be entangled in FOMO.
Trust me after getting rid of credit card debt, My heart feels light and the peace I have is invaluable. I can’t sacrifice that for mere cashback points.
The financial situation of every individual varies, it won’t be similar. Because the goals, needs, and income level of each person differs widely.
But I hope this article will give you hope & alternative ways to pay down credit card debt.
Thank you for reading!
