Hello, I'm your host, Mr. Chuck. I'm a retired accountant, turn truck driver, I have reduced my debt to zero in a short matter of time, debt reduction to achieve financial freedom takes commitment, confidence determination, paying off credit card debt, is it a sprint? Or is it a marathon? I'll be back in one moment. Together, we're going to explore our finances and figure out how to improve them. reduce debt increase wealth is a podcast to form those to improve personal finances, whether it's eliminating debt or making smart investments, how to pay off credit card debt? Will it be a sprint or a marathon? Well, if you're like most people, you have multiple credit cards with very high balances. And let's just say you owe at least$10,000 in credit card debt. It definitely will be a marathon. The last couple episodes, I talked about the fire movement. What is the fire movement, fire stands for financial independence, retire early, everybody should be working towards their own financial independence, you do not really have to retire early, you can continue working, if you wish. But before you can even consider anything. The first step is getting rid of those pesky credit card debt that you owe. And there's multiple ways of doing it. So in this episode, I'm gonna share with you what I did to pay off all my debt, not only credit card debt, automobile loans, line of credit on my home, and even my first mortgage. And it only took me three years, eight months. So let's get started with how to get that done. Okay, the first thing I did when I was trying to reduce my credit card debt or all my debt, the first very first thing I did was to identify who and what I owed the credit cards, I had three credit cards for a total balance of $7,761. I'm rounding these numbers to the nearest dollar that may was made up of three different credit cards with a balance of $2,982,$2,893,$1,941 don't sound like much, but$7,760 when you make an a minimum payment, or even trying to pay them down, eats up a lot of your cash flow your money. Then I had an auto loan of$11,000, which I just took out when I started my program. I had a line of credit of$29,000 that money I used to remodel the home and fix the home up and my first mortgage of$38,000. Well, that doesn't sound like much for first mortgage. But I've been in this house for at that point, around 25 years, 23 years somewhere in that time range. And I just refinanced it with my bank down to a 10 year loan at I think it was 4% 3% range rate of interest. And I did that to get my payment down. So my monthly payment was $500. So even if I had a bad week at work, I may have made enough money to pay my monthly mortgage. That was my thought, you know getting everything under control. I identified my credit card that my auto loan, my line of credit my mortgage, and that added up to a total of $86,000 roughly towards the end of paying off my debt. I have a $1,700 medical bill that was thrown in there at the last moment about six months before I had it all paid off, kind of extended it for a few weeks so I could get that paid off. But I was in fairly good shape when that happened. I wasn't struggling. At the very beginning. It was a very slow process. So what did I do? I identified what I owe, I have identified and this is what you need to do is list down all your credit cards, the dollar amount you owe the rate of interest that you are paying, and the due date. And you need to do that for your credit cards, your auto loans, when is it due? That total amount owed the rate of interest? And the due date? What day of the month? Do you pay it? And you're thinking, why do you need to know that? Why do you need to know the due date. And it's very important, because once I identified it, I started making the minimum payment on all my debt. Very minimum, what was required? Well, the loan, the auto loans line of credit, that wasn't a minimum payment. And the mortgage, the auto loan, and a mortgage was a set monthly amount. So I couldn't reduce that any farther. But I just wanted to pay the minimal amount due on the date it was due, maybe a day before, because I want to make timely payments. And you're thinking why are you only paying the minimum amount on the credit cards. Everybody knows that the only way to get out of credit card debt is paying more than the minimum. But what my goal here was to quit creating new debt and quit using those credit cards, quit increasing the balance. And once I got that down and under control, and the only way you can do that is to set up a budget. So you identified the debt that you owe, then the next step is to identify everything that you pay, other than this debt every month. And examples would be, you know, he water sewer electric. So your utilities, groceries, gas for the car maintenance for the car, cable bill, everything that you pay every month, you need to write it down the how much you pay every month, and the date, you pay it so that every month, you know what is due that how much is due. And when it's due, I plotted that on a counter. I didn't look back what happened in the past happened in the past, I can't change that. What's going on in the future, I can control. And you can do the same thing. I didn't even cut out anything. I just plotted everything I pay every month, month in and month out. I even went as far back as a year looking to try to figure this out. And I came across some subscriptions I pay once a year I put all that information in there, you know, maybe I only pay it once a year on January 5 of every year. But I put that information in there. I compound on into a spreadsheet, and I called that my budget. So it's on a spreadsheet with the dates is due and the dollar amount is due. So I'm looking forward. That's the important concept here. You need to be looking forward and then put in your pay check on the day you receive your pay. If you're on salary, or if your paycheck is close to the same every week just put in what you get every week or every two weeks or whatever your pay period is. If it changes a lot like minded I want back for five pays which have been for me it's weekly. So had been four or five weeks. I add them all up i divided by five and I came up with an average and that was my starting point. What was my average take home pay every week and I plug that in there. So now I know. And then I started out the beginning. What's the balance in my checking account? Put in the balance on my checking account Wednesday. My next payday tomorrow, put in my net, take home, pay my average, plug that in, I look forward, what's gonna be due until, from today pay to the next pay, what do I have to pay. And I put all that in there, I knew exactly how much money I needed to pay all the bills. And when I say all the bills, I mean, groceries, gas for the car, insurance, utilities, whatever, whatever he's gonna pay, I then decided that my checking account can never go below $300. So I projected pay get paid today X amount, I have all these bills, I gotta pay, subtract, subtract, subtract, I have this much left in my checking account, I need a $300 balance in there at all times, anything over $300 from the current pay to the day before the next pay anything over $300 that was still in the checking account, I transferred to my savings. So let's say my pay was 900, I was making easy $1,000 a week. And from one pay to the next pay, I have $1,000 to pay my bills, let's say that all my utilities are due, my natural gas is $100. My electric is$100. These are just made up numbers here, I'm gonna spend$300 at the grocery store, I'm gonna put $100 a gas in the cars. You know, we subtract, subtract, subtract, and I have, I want to keep a $300 balance in my checking account. I don't remember what those numbers are. But let's just say that I have$500 in total balance my checking the day before my next paycheck comes in. So back at the pay where I received it on my new transfer $200 to the savings account. Because I got 500 in there, I'm projecting forward that I have $500 left over after I pay for everything. So I'm going to take that extra money. And I'm gonna put it into my savings account. Why am I putting it in a savings account, because I want to stop creating new debt. So I need to have an emergency fund. That's how you build up your emergency fund. And just a note, you can make as many deposits in your savings account every month as you wish, you can only make six withdrawals a month, or you're going to be subject to fines from the bank. It's not the bank's rules. It's the Federal Insurance depository rules, you only allowed six withdrawals a month from a savings account, you don't want to pay any of those penalties or fees. So don't do it. I did that weekend and week out and I paid the minimum balance on my credit cards every month on the due date. Once I had that down for a week or two, and I was putting my discretionary income money money I hadn't spent into the savings account, I set a goal of an emergency fund of $1,000 I want at least $1,000 in my savings account at all times in case something would happen and I need the money to pay for say, a flat tire on the car or get a new set of tires for the car or a medical expense that popped up that might be three or $400. I want to be able to pay for that without using credit. Okay, so we achieved that. It may I don't remember how long that took. It might have been six months, but it was a slow process. Once I built up my savings account to $3,000 I took the extra amount the $2,000 I had in there over that $1,000 I wanted to keep for an emergency fund. And I applied that $2,000 to a credit card. And in this case, I picked the lowest balance credit card which was under $2,000. So I paid it off Now I have two credit cards with outstanding balance, not only did I pay off the one, but then I took the extra and applied it towards as second one. So now I'm working down the credit cards, then you go back to making the minimum payment every month, you're gonna make the minimum payment. And then when you have the excess, I call it excess, when you have the additional money funds in your savings account where you can use it to pay down debt. That's in addition to that minimum payment. So you make in progress. I'm going to say it took me close to a year to get that 70 $800 credit card debt paid down, it was slow going. I wasn't making a whole lot when I first started, that afford Fortunately, I changed jobs about four months into this program that I set up for myself and was working on. And when I change jobs, my income almost doubled. And that has gone a long way to speeding up this process. Now you may be thinking, well, he only had 87,000 86,000 total, that's not a whole lot of debt. Considering that was credit card all our loans and mortgages. During that three year eight month period, I acquired new auto loans that's also included and what I had to pay off in that same time period, and the new auto loans amounted to $44,806. So the total debt I paid off was$132,532, that I paid off, and three years and eight months. So it's obvious that I paid off those auto loans much faster than the five year period that that was financed for. I bought a new car for myself and paid it off. Well what knew I buy used cars, I bought it, I financed it, paid it off in four or five months, the wife had a few mishaps, the insurance kicked in and paid off the old loan, bought a new car, got it paid off, I saved an interest $31,267 in interest, which was more than the amount of my line of credit. So the less interest you pay, the faster that principle is going down. So I use the at the beginning the snowball method, as far as applying what credit card I'm paying off, snowball method was pay off the lowest balance first. And then I switched to the avalanche method after I got one credit card was a zero balance. And the avalanche method is pay off the highest rate of interest first. And when you pay off the highest rate of interest first, you're going to repay and a whole lot less interest, which allows you to pay off the principal faster. And that's what I did. And I just stayed with it. So I already told you about three, four months into this. I changed jobs, and I almost doubled my income. And that had a great effect on increasing this rate of paying off the debt. The other thing I did is once I identified all those payments that were making, I started thinking to myself, why are you paying for this? How can you get that same service cheaper. So I went through and start canceling things. I was no longer using gym membership, which I really didn't have a gym membership. That's an example. subscriptions, computer subscriptions, basically, the anti spam or the anti protective your computer. I had multiple subscriptions doing the same thing. I only had one computer at home. So I cancelled one of them. That was like 80 bucks a year. Not much but all adds up. I then got rid of cable TV and I started streaming. When I started streaming I limit it to one service. When you stream it's a whole lot cheaper but the risk is You may stream multiple services. And it can add up. And then you're paying as much as cable TV. So I got rid of key cable TV, which reduce my spending by about 125 $135 a month, I switched to streaming, and I limited to two services. So it was about $30 a month, a whole lot cheaper. And then I was switching, I would use one service for six months. And when I got tired of that, I would cancel it, I would start a new another service for six months. And then when I got tired of that, or so there, I was switched back and forth. And you could stop paying for one or the other and use the other one, if you do it within a six month time period, all your settings are still there. So you don't have to reset up and then all your favorite channels will be there. Everything that you want to record or watch later will be all set up and it will be there. So your your your mate, you got it made. So I was switching back and forth. Based on when the programs I watched was no longer being new episodes released. I don't I don't I don't watch any old episodes, or I don't watch anything twice as to say that. So I just switching back and forth, which is saved me 17 bucks a month. Not a lot. But it adds up, everything adds up. It's the little things you do. And then I started calling other service providers to see if I can get the price reduced. Now my thought was if I'm paying for internet that I have to use it for to its fullest extent. That's why I want to streaming How can I get my internet payment down? How can I keep from paying too much on that I called him up told me they they're charging too much. And I was gonna switch unless they gave me a better price. And most likely about once a year or a little bit every 14 months or so I would call them and I would get a little bit better price and and keep the price from going up because it just kept going up. Finally, I just recently cancelled my service and went to a completely new service. Because one, it's cheaper. And two, it's a whole lot faster, a whole lot more efficient. So look for those things, and just quit doing things that cost you money. I even went as far as buying my own espresso machine, and then they're not cheap. So I would cut out buying my Gilad taste at coffee shops. I figure over time that espresso machine would pay for itself. And it pretty much Hey, as I do it at home myself took a while to master. But I got it under control. So that is what I've done. And I continue to do it. And why did I want to get out of debt. I was looking at how much money I was gonna be making. Once I retired. And my expenses for the month was more when I had all that debt than what I was making, because my income is gonna drop about half, maybe a little more in half. I didn't want to retire and still be having all this debt and use up my retirement savings to pay off debt. I figure I'd be much better off in the long term by being debt free, before I retired, and that's why I did it. And that's was my personal story. I'll be back in one moment with my final thoughts. If you listen to this podcast using an apple podcast app, please rate and review this podcast for all your non Apple users. You can download iTunes on a Windows machine and go to the upper left hand corner, select podcast, do a search, reduce that increase Well, he can subscribe to the podcast. And you can also write and review the podcast. I appreciate any feedback that I get. If you're trying to reduce your credit card debt. The first thing you need to consider is why are you trying to reduce your credit card debt. You need to know your why. My why was I wanted to be debt free before I started my retirement. If you think I hadn't covered how to reduce credit card debt you need to go back and listen to Breaking Bad spending habits, then listen to financial plan Made Simple. And then listen to debt reduction plan. These are all episodes I've done in the past, and that will help you learn how to get started on your debt reduction plan and getting rid of those pesky credit cards. If you think this episode didn't cover, how to pay off credit card debt, you need to go back and listen. I covered it in detail. One with creating new debt lists all the debt you currently have. Make the minimum payments on all your debt, and then start a emergency fund, build it up and then keep building it up until you have access in your savings account slash emergency. Then apply the extra to your credit card debt. The way you choose to do it, use the snowball method or use the avalanche method. You can do research online if you don't know what those two methods are. I did cover it briefly in this episode, so you can get started right away. Good luck on getting rid of your pesky credit card debt. I also included in my show notes, two articles that will help explain some of what I talked about. So check my subtle notes and go ahead and read those two articles.