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Plan Well, Retire Well

Saving and investing your money

Freedom from Credit Card Debt!


Back in December of 2014, I wrote a blog post called "2014 Financial Goal Challenge: All About that Debt" describing how my husband and I had been trying to pay off all of our debt, especially our credit card debt. Well avid readers, I can tell you that we accomplished that goal in August 2016! We paid off $12,500 worth of credit card debt and boy, does it feel good! Below find out how we did it!

Examined our debt

One of the first things we did once we decided to tackle this debt monster was to examine what kind of spending was amassing the debt. Were they mostly food purchased? Frivolous items or outings? Travel expenses? Or were they necessities? Once we examined what we were putting on our credit card, then we could either reallocate our funds or eliminate/reduce that spending. This was probably the hardest part of this process, taking a hard look at our purchases and realizing that we hadn't been spending our money in a way that was financially healthy – which is why we had debt in the first place!

Refinancing – It's not for everyone**

In our case, after we examined our debt and saw how much we owed, we knew we were paying wayyyyyy too much interest! One credit card we had the APR was 30 percent! We realized that by having high APR's on some of our cards, that it would take forever to pay it off. So, we started looking into refinancing. We knew we wanted to have a lower rate, that way we could make significant payments that wouldn't be eaten away by the interest. In the end, we refinanced the whole $12,500 amount and we got a great rate at less than 9 percent! Finally it felt like we were able to start making some real dents at this debt.

Another option instead of refinancing is to ask your credit card to lower your rate. It never hurts to ask and the worst they can say is no. Credit card companies want to keep you as a customer; they'll pull a lot of strings to keep you happy and with their card. Especially if you've been with them for a long time!

**Refinancing may not be for everyone. When you refinance the financing institution will pull your credit history and score. If you have a lower score, you'll have a higher APR. This is why it's so important to check your credit on a regular basis. Everyone's situation is different, but this option worked best for me and my family.

PowerPay that Debt Away

Thanks to Utah State University Extension, they have provided this free website to "help debtors become savers". Once I knew what the initial payment would be for our newly refinanced debt, I wanted to play with the numbers to see what we could do to make the initial 3 year repayment go by faster. There are three options for repayment; highest interest first, lowest balance first, and shortest term first. You can play around on their website and see what is best for you.(This also works on debt that isn't refinanced too!) After playing around with the numbers and seeing what we could pay from our budget we ended up doubling our payment to decrease our payment time. What would have taken us 3 years, only took a year and a half!

This way may not work for everyone. For some of us it's difficult to get out of that debt cycle. It takes determination as well discipline to hunker down to get rid of the debt. It's hard to examine our spending habits and realize they may not be as healthy for us financially as we may had thought. While refinancing may not be for everyone, it never hurts to see if you can lower your APR. If you're unable to refinance or just looking to see how long it will take to pay off your debt, check out PowerPay. Being credit card debt free is a wonderful feeling – now on to those student loans!



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