I am really excited to share this story with everyone, and I hope our success can inspire some of you to follow our lead and escape the clutches of credit card debt. I was like many Americans. I have multiple credit cards and have been led to believe that having a little bit of credit card debt is a good thing. To make monthly payments and keep your balances low gives you a great credit score. Here is a eye-opening link about the average credit card debt per household, that my best friends Enrique sent to me. Evdience of our biggest problem:
We just can’t stop using our plastic!
In the past few years as we have lived and traveled abroad, I have been pretty good about keeping my credit cards low and paying more than the minimum balance every month. There is only one problem with that though… Since we are both from different countries and live in a third, we spent a lot of money on flights to see family and to travel. Trust me, I live on many websites when it comes time to buy tickets. I always feel like I have found the best price and we get to visit for as long as possible, but recently there have been some additional circumstances that put Catherine and I into a hole that I thought we were never going to get out of! As all of you know February of 2013, we got married in Cape Town South Africa. But let’s look at how we got there.
First, we lived in the United States from July-December of 2012. I was taking some classes, i.e. not working, and we were just enjoying time with family. Then we went to South Korea, where I worked at a winter English camp and Catherine also worked part-time. Then we flew to Cape Town, South Africa to get married. After the wedding and a wonderful 3 month stay, we headed back to Asia. First South Korea, then to China. At this point we were in quite a tough position. After 10 months of little to no work and a wedding, we had amassed $17,000 in credit card debt.
Here are snapshots of our credit card statements for proof:
Here is a picture from one of my accounts. It breaks down exactly how demoralizing making minimum payments can be. WOW. It would take 23 years, and cost an extra $8,000, just to pay this one credit card off if I only paid the minimum payments.
From May to October last year, we were only able to make minimum payments on our two credit cards as we were also paying my students loans at the same time. Money was super tight for those 5 months, but Catherine and I just had to stick it out for a little bit. In October, our credit card debt was at about $15,000. This would be our starting point to become debt free.
The real motivation for our success and determination in paying off the credit cards was reading a book called, The Total Money Makeover by Dave Ramsey. He not only encourages people to escape debt, but gives them a plan to do so. The most quotable phrase from his book is:
“You have to live like no one else, to live like no one else…”
This means that while you are paying off your debt, you have to be willing to live with what you can afford. If you want to buy more things, get another job to supplement your income. Don’t try to keep up with everyone else. Don’t worry about what everyone is doing or what fancy trips they are going on. Don’t worry about what “things” they have or the expensive cars they are driving. Live with less now and erase your debt, so that you can live with more later!!
This is exactly what we did. In September and October we both worked a lot. For me it was something crazy like 45 days in a row. We developed a plan and decided to reach our goal, we needed to work hard and spend less. From September of last year till the first week of July (only till May for Catherine because she was pregnant),we have worked every Saturday. It seems crazy to most people that after you finish a long 5 day work week, that you would work Saturday morning voluntarily. But that’s what we did, with the goal of paying off our debt in mind. We just kept saying, “Live like no one else, Live like no one else”. Put your future ahead of you present.
We were able to pay off all of the debt in 8 MONTHS. Not only did we pay off $15,000 in credit card debt but we also saved for these things in those 8 months:
A month-long trip to Thailand $4,000
A new DSLR camera $1,250
Our first child, overall costs $4,000
Full year’s rent for this year + $6,500
For a grand total of: $ 30,750
None of that would have been possible without the amount of effort and work that Catherine and I both put in over the course of the last 8 months. Working all day, then teaching students in the evening 5 nights a week. We knew what we wanted and we wouldn’t rest until we met our goal.
We won’t have the same possibilities this year, since Catherine will stay home with our son, but we will always have enough and will be provided for. Dave Ramsey’s book gave us a much needed spark that has changed our lives, and the life of our new son. When he came into the world, his parents had one less thing to worry about, DEBT.
And so can you…