by Karen Wilmot

Created on: March 02, 2011

That statement has arrived again. I was hoping it wouldn’t show up in my mailbox but alas it is there. The monthly credit card statement with all I’ve spent and interest due from past purchases. This is what is on that statement. In some ways, I feel like it’s a statement of my inequities, my inability to save, my lack of financial acumen and ultimately my failure. This is how I looked at my credit card statements in the past. However, all of that has changed. I am a convert to the debt free living guild. I am striving, desperately working towards reducing my credit card debt to zero and each month I am giddy to see how far I’ve come towards my goal. I find it amazing how my attitude changed from dread to giddy over the same credit card statements in just two short years.  I am talking about reducing my credit card debt from over $40,000 to approx $20,000 in just two years. Here are the steps I took to achieve this amazing goal:

1. Much to my financial planners chagrin, I took out a 401K loan to pay off one credit card. Now here’s the difference and how I justified taking this loan. I continued to contribute to my 401K fund even increasing contributions while I was paying back this loan. I paid the loan back in the allotted time and never missed it from my paycheck. I never used that credit card again.

2. I found money. I sold everything that wasn’t attached at my house. My books, dvds and cds went to Half Price Books. The key here is to take items in small batches to get the most from your sale. I consigned household goods that weren’t in use (i.e. china, extra furniture from the basement, clothes). I sold my bridesmaid’s dresses online. Basically anything that wasn’t in use was sold and every dime was put towards my debt.  The key here is to transfer the funds immediately to your bank account and pay that amount on the credit card. You are charged daily interest so if you reduce your principal throughout the month, you interest charged will go down much faster.

3. I reminded myself that every dime mattered. When I made a payment on my card I rounded up. So if the bill was for $439.79, I paid $440.00. This small amount makes a difference on the amount of interest you pay. The old adage of a penny saved is a penny earned is true. Every penny you pay off of your balance is saving you a penny in interest. Even when others scoff at a small amount, know that every time you employ this strategy you are saving money.

4. I moved to paying using my debit card. I found that if I had cash to spend it would disappear and I wouldn’t be able to track where it went. In using my debit card, I could sign into my bank account from any internet connection to know exactly where I stood financially. Knowing that I wasn’t increasing my credit card debt and could still live a successful life was a freeing feeling. You can do it too!

This is how I did it. I saved pennies, turned items into cash and began the journey towards debt reduction.  It is truly amazing how great you feel as your balance goes down. I smile so much more and the stress of being bogged down by credit card debt is lifting. Now I still have a long way to go but I promise you, I will become debt free and I will tell everyone my story.  Here’s to paying with cash.

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