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How We Paid Off $30,000 in Credit Card Debt

November was a truly happy month in our household. After a year and a half  of hard work, we paid off the last of our credit card debt. We learned some new things about ourselves and our needs and wants along the way. It isn’t rocket science, but here’s how we did it.

Background

The reason we ended up with this debt was pure and simple lifestyle inflation. We were doing pretty well until we built our house in 2004. It took most of our savings, and by itself, was not a toxic debt. The mortgage is affordable. We have good equity. You have to live somewhere. What got us was the need for stuff to fill it up. We left a couple of rooms unfinished, but filled the others up with new furniture, curtains, rugs, a new washer. I could go on and on. We also bought tons of lawn equipment, new bikes, and skis, whatever we wanted. Before our daughter was born, we decided to finish the spaces we had left, so that was a big bill on the Home Depot card. All the while, we were trading in cars every three or four years, which insured a continuing car payment. It was fun to get into debt. It’s fun until you turn into an insomniac because of the two ton elephant that is sitting on your chest waiting for his payment at the first of the month.

Turning Point

I was the one who initiated the debt conversation in June 2011. It wasn’t pretty. No one wants to admit there is a problem, but after watching our in-laws lose their house to foreclosure, it makes you re-evaluate your position. After some hard discussions, my husband and I sat down and wrote out all of our debts and their respected interest rates, ranging from 0% to 18.99%. It came to just over $30,000! That is almost a year’s salary for my husband.

Then we got angry. That debt was holding us back from financial independence. I carried a ton of mommy guilt. I wanted to be a better Mom and role model for our daughter. That’s hard to do when she is in day care all the time while I work to pay for this crap that we just didn’t need.

We started by paying off the lowest balance, which also had the highest interest rate. Every payoff was like a victory against the elephant. We sold tons of stuff that we had accumulated over the years. My husband joined as many paying committees at work as he could. I took on a contract job that had me working more in the short term, but it was for the goal of being debt free. We looked at every option, including selling our house, but we love it, and decided it was best to stay put.  When we got half the debt paid off, we transferred the remaining $15,000 to a 0% interest card.

At this point, we ventured from the gazelle strategy. You may not agree, but it’s easy to burn out. We took a vacation using reward points, which could have been applied toward the debt, but we needed that break. After much soul searching, I decided I didn’t want to own my practice anymore.  I made plans to sell. Due to my extra job, we also were able to purchase a rental property, very cheaply with 25% down, to create some passive income. We had until August 2013 to pay off the rest of the credit card debt, but when I got a big paycheck last month, we decided to go ahead and kill that elephant.

What Being Free of Credit Card Debt Means

We learned many things on our journey out of credit card debt.

  • We never again want to take on debt that doesn’t produce income for us.
  • We have learned to let our values dictate what purchases we make. We love travel, the outdoors,  and family time. Things that don’t directly contribute to those things aren’t that important (and yes, my husband feels ESPN and the History Channel contribute to our family happiness). 
  • We now have a budget and evaluate all spending in case any elephants try to join the circus again. 
  • Paying off debt feels darn good. We’ve decided to keep on this path for our remaining debts. The student loans should be gone with the down payment from the sale of my practice, and then we will start aggressively paying off our rental and home mortgages. After that, we will be light as air with no debt and tons of possibilities.  
Anyone, regardless of income, can get into debt. It’s much harder to look at the behaviors that caused the problem and make positive changes. Our journey from credit card debt has empowered us in many ways. We now look forward to a wonderful future instead of dreading the first of the month.
Disclaimer: No actual elephants were harmed during this journey. I actually enjoy real elephants in controlled environments. If you can’t get enough, go read my guest post today at The Debt Myth.  What is your greatest debt payoff?

About Kim Parr

Kim Parr is a private practice optometrist, freelance writer, and personal financial blogger. You can follow her journey to 20/20 financial vision at Eyes on the Dollar.

118 comments

  1. What an inspiring post and so well written! Great story Kim – you guys should be proud of yourselves. PS I am behind you on the vacation mid-way!! :D
    Savvy Scot recently posted..Change Your Life – Step 8 Become Better with MoneyMy Profile

  2. Almost exactly 1 year ago we extended our HELOC out to $38K in order to buy an empty lot. We spent the first 6 months building up our cash cushion, and since June have been paying it down like mad. Its balance is now at $8K and we are hoping to have it fully paid off in January.

    Even though it’s not consumer debt in the traditional sense, it was still a weight on my shoulders to see the minimum interest payment of ~ $190 go out the door each month at first without decreasing the principal at all. I will be so glad when it’s gone. =)
    Mrs. Pop @ Planting Our Pennies recently posted..Duplex Valuation – A DCF ExampleMy Profile

  3. Great post, Kim. I love hearing stories of people paying down large credit card balances, because to me having $30k in credit card debt sounds like it would end in bankruptcy more often than not. So happy for you guys getting rid of that debt and I hope it inspires others!
    DC @ Young Adult Money recently posted..Kill your debt faster: How to make extra money while working a full-time jobMy Profile

  4. It is good that you were able to communicate about the problem and work together in resolving it. So many times I see couples having different ideas on how they should spend money, I often wonder how long these couples will stay together considering the extra amount of stress it must place on the relationship.

    The other thing to remember is to remain firm in keeping up those saving habits even when the debt is gone. Otherwise you will find that lifestyle inflation will return.
    Glen @ Monster Piggy Bank recently posted..Tattoos at work – Does it impact on your employment opportunities?My Profile

    • There is no way we will go back. We both check each other and debate over purchases instead of just buying. That type of debt creates unbelievable strain in a relationship, and I can see how money issues lead to divorce in many cases. If this had been 5 years ago, I don’t know that we would have been ready to change, but it was finally time.

  5. Mandy @ MoneyMasterMom

    I totally support a vacation half way through your debt pay off. Financial discipline like that is hard work. You need a little breather now and again, or you’ll burn out, fall off the wagon, and start buying on credit again. Way to go, killing that debt was something to be thankful for I’m sure.
    Mandy @ MoneyMasterMom recently posted..Are your Finances an Amazing Race?My Profile

  6. Great story Kim and congrats on paying off your debt! I had roughly $20-25K in credit card debt and am so glad to be out from under it now. I agree that the harder part is to look at the behaviors that caused it. For me, it was being unhappy with what I had and using cards as a way to provide the things I wanted.
    John S @ Frugal Rules recently posted..Giveaway: Win an iPad 3 For Yourself This Christmas!My Profile

  7. Totally in agreement with Mandy about the break. You can only go hard and fast for so long without it affecting you negatively. Everyone needs to take a breather now and again to refresh and refocus. The important thing is that you found what works for you and are on your way to reaching your desired goals.
    Eric J. Nisall – DollarVersity recently posted..Fact of Life (And Business): You Get What You Pay ForMy Profile

  8. The realization had to be the toughest part and that’s always the turning point, when you accept it 100% as a problem. If you don’t, you end up justifying it or not really fixing the problem. Sounds like you had your 100% moment and it really paid off. Good work.
    Money Beagle recently posted..The One That Thankfully Got AwayMy Profile

    • It was a problem, and it took lots of teamwork to stop it and fix it. One person can’t do it. If you aren’t both on board, it doesn’t work.

  9. What a great story! You guys have made really quick work of turning your finances around – congratulations! I love that you emphasize spending in line with your values and generating passive income.
    Emily @ evolvingPF recently posted..Ways to Monetarily Invest in Your MarriageMy Profile

  10. Good job, Kim! You did awesome! Isn’t it a freeing feeling now that you paid it all off?
    Holly@ClubThrifty recently posted..Enter Our iPad3 Giveaway!!!My Profile

  11. Woohoo! Awesome story! It certainly is easy to get into debt and you can accumulate it a lot more quickly than you can pay it off. I’m with you on the gazelle intensity: I was only able to make it about 1 1/2 years on a bare-bones budget before I burnt out. I then (quickly) adjusted my budget to have a more balanced life.
    WorkSaveLive recently posted..Want to Win an iPad 3? Luckily for You, We’re Giving One Away…My Profile

    • It’s like going on a strict diet. You are much more at risk of having a relapse and eating a giant bag of chips or something. Moderation is important sometimes.

  12. This is a great story Kim. I know exactly how it feels to initiate the “debt” talk, but once you take the bull by the horns you can actually start dealing with it. Congrats on getting out from under the credit card debt!
    Grayson @ Debt Roundup recently posted..Save For Retirement or Pay Off Debt?My Profile

  13. That is a lot of hard work. Congratulations on paying it all off and buying a rental property at the same time.
    Tackling Our Debt recently posted..Blog Planner – An Effective Way to Organize and Manage Your BlogMy Profile

  14. Congrats on the debt pay-off! We are still trying to pay off our consumer debt; your story inspires me to work that much harder to get rid of it!
    Mackenzie recently posted..Caramel Apple CookiesMy Profile

  15. Congratulations! That is one hell of an elephant! I don’t repay my debt because I am taking the risky path and choosing to invest, my biggest payoff is about $5K last summer, that I wish I’d kept to pay the works on my new house! I never bought anything on credit that is depreciating but I imagine it hurts to pay it back, like a wrecked car that you still have payments on.
    Pauline recently posted..Little house in Guatemala, week 6My Profile

  16. That’s fantastic! Are you enjoying having the freed up money this month? Congratulations!!
    Anne @ Unique Gifter recently posted..Stupid Stuff on AmazonMy Profile

  17. Congratulations! Lessons learned through experience are invaluable.
    krantcents recently posted..Nearly Half of all Americans Die Broke in Retirement!My Profile

  18. That’s so great, Kim — congratulations!
    Kathleen, Frugal Portland recently posted..Review of my 20 ThingsMy Profile

  19. So happy for you. Congratulations on getting out of the hole !!! I’m sure it feels amazing.
    Gillian @ Money After Graduation recently posted..The Financial Perks of Being Childless by ChoiceMy Profile

  20. That’s great Kim. I’m so glad that you were able to get rid of your debt. Sometimes you do need a momentary break from paying off debt at full force. I’m not saying stop fully and go back to your original lifestyle, but a vacation at the halfway point I see it as being okay.Keep on your path.
    Justin@TheFrugalPath recently posted..Finding Your Path To Financial IndependenceMy Profile

  21. Congrats KIM, that’s great news! Funny how we can look back after making all the right moves and wonder why we got ourselves into that mess in the first place. Like you said it’s behaviours and no matter how much money you make debt can pull you down. Cheers mate!
    Canadianbudgetbinder recently posted..How to Earn Optimum Points Fast at Shoppers Drug MartMy Profile

  22. Congrats. The scary thing about debt is all that money is going towards paying it and you are left with very little breathing room if something else comes up.
    Edward Antrobus recently posted..3 Frugal Tips for Preparing Your Home for a ShowingMy Profile

  23. Thanks for sharing that experience.

    I like the fact that you took the vacation. I too am a believer in rewarding yourself after accomplishing a big milestone.
    Terry recently posted..10 Most Frequent Problems Found by House InspectorsMy Profile

  24. That’s fantastic – and I like the part about “it’s fun getting into debt”. It’s like gaining weight – so much more fun than losing it, and easier too!
    Cat recently posted..Smart financial moves to take before New Year’s!My Profile

  25. Great story, congrats to you and your husband. I remember that amazing feeling of paying off our last amount of debt, a very euphoric felling. I totally agree when you say you now have possibilities, that is a great way explaining it. Living with debt limits your possibilities in so many MAJOR ways.
    Kyle @ Rather-Be-Shopping.com recently posted..Frugal Hack #1: The “Secret” Dish Network Programming PackageMy Profile

  26. I l.o.v.e.d. getting my student loans paid off. For some reason, having that college debt completely off my back was a huge win.
    AverageJoe recently posted..The Worst Gifts Ever: Crystal Frogs, Re-gifted Candy and More Bad Holiday “Fun”My Profile

  27. That’s awesome! My biggest debt payoff was about $10k in consumer credit card debt that I had accumulated shortly after starting college. Felt great when it was gone. ;)
    CF recently posted..Apple iPad 32GB Wifi GiveawayMy Profile

  28. Wow, you guys really went to the far reaches of debt hell and back. But unlike how some people would just simply whine about it, you guys picked yourselves up from the depths and made a come back. I bet the rental property endeavors will have you guys making more side income than you can imagine before you know it!
    My Money Design recently posted..Retirement Saving Starts Now! Where to BeginMy Profile

  29. Congrats Kim!
    You did an amazing job. I repaid back $10k in debt, and I thought that was accomplishment. Never the less, I know the feeling!!
    Eddie recently posted..Responsible Holiday Party HostingMy Profile

  30. Congratulations! Paying off credit card certainly feels good. But I’m with you about using reward points to reward yourself. We still use cards but pay them off every month, and I LOVE using rewards for plane tickets or even getting something we need for free from Amazon.
    shanendoah@the dog ate my wallet recently posted..Becoming a Better Boss, Now That I Don’t Have Anyone to Boss AroundMy Profile

  31. Wow, what an awesome accomplishment Kim! At the beginning of this year I too paid off all my debt and am now living debt-free. I had to sacrifice a lot in the short term and work a ton, but now it’s totally worth it. I’m glad you and your husband had “the money talk” and are now on your way to financial freedom. Such an inspiring story!
    Carrie Smith recently posted..How to Actually Look Forward to Filing Your TaxesMy Profile

    • I read your story from Ben’s ebook that he is putting together. I’m not totally debt free, but at least no more consumer debt!

      • I know this is an old post, but I like that you talked about your higher earning capacity adding to your ability to tackle the debt. I’m considering taking on a higher paying job (probably more stress) to reduce the debt faster. I’m nervous about it but know that simply cutting out cable, etc won’t do the trick.

        • Thanks for commenting. Yes, I agree that when you have a ton of debt, cutting things doesn’t always get that far, and there is only so much you can cut. However, making more money is an infinite possibility. If you can sacrifice some of your time and sanity in the short term to pay off the debt, it will pay off many times over down the road. I think the key is to give yourself small rewards at every milestone so you don’t get burned out. Best of luck!

  32. Wow that is awesome on the debt repayment. We have about 12k left in CC debt that we are trying to pay off by april. We like you took most of our debt around and preparing for baby 1.

    Great story!

  33. Holy moly CONGRATS! I’m with you on the vacation half way through, too. You need to keep your sanity, and I love how you point out that it’s okay to spend on the things that contribute to the family’s happiness.
    femmefrugality recently posted..Linguaphile Library Love: Free On-Line Language LearningMy Profile

  34. Congratulations! This is inspiring and a monument to what can be done if we just set our heart and mind to it. I commend you on this accomplishment, and it’s great to feel lighthearted after being debt free. The lessons we learn are priceless.
    Amy Turner recently posted..Most Plan to Pay Off Holiday Purchases by End of JanuaryMy Profile

  35. Nice,
    Well explained and very useful article.
    This will help me a lot in my business life.
    Thanks
    College Credit Card Debt recently posted..The Average College Graduate’s Credit Card DebtMy Profile

  36. Congrats on the debt payoff! May I ask more about the psychology of getting into consumer debt?

    Why do you think folks can’t just wait until they have the money to buy things? Do you think everything is rational, in the sense that we spend money we don’t have b/c we don’t mind working harder for longer?

    Thanks!

    Sam
    Financial Samurai recently posted..Why Does It Take So Long To Refinance A Mortgage?My Profile

    • The psychology should be a whole post in itself, but I think for my husband and I, we thought we deserved to have things and we let society influence us. He made some very bad financial decisions in his early 20′s that took years to overcome and his parents always spent money like it was the end of the world. When he was able to have credit, I think it was so exciting to buy things, it all kind of got out of control. For myself, I was raised with very strict parents in a very rural town. I’ve never quite fit because I wanted out and didn’t buy into the Southern belle mentality where girls were supposed to look pretty and dumb it down for their husbands. I have always sought my mother’s approval and have never quite gotten it. I think that my having things was partly to impress her in some sad sort of attempt at gaining acceptance. Ultimately, you can’t blame your parents. We did it to ourselves and thankfully there are people out there, like yourself, who have shown me a different path is possible.

      I don’t think people look much past tomorrow when purchasing things they can’t afford. Society expects us to work until we are old, so why not have things now since we’ll be too senile to enjoy them when we retire?

  37. Great post, I like the fact that you shared with us how you got out of debt, you can answer if you want no worries, during your journey to be debt free you added a new mortgage. Do you feel like you paid off a big chunck of debt but then added more in the process? Or was it worth it to buy the rental eventhough you added more than 30K of debt, I’m assuming.
    RichUncle EL recently posted..How many times have you failed?My Profile

  38. Credit cards can be a double edged sword and must be managed wisely. Earning points from making credit card purchases is great. However, the world’s biggest shopping community is offering you CASHBACK with every purchase, either online, at your local shops, with vouchers or with mobile shopping using your smartphone. Earn discounts AND cashback. To get your very own cashback card go to http://getmycashbackcard.com/ and join TODAY!
    Michael Latham recently posted..Mobile Payments Create Opportunity But Produce Risks for Small BusinessMy Profile

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