I’ve never been one for “quick fixes,” so even though my debt total was higher than my salary, I decided that bankruptcy wasn’t an option for me. Neither was consolidation or credit settlement. It had taken me years to create this mess, so I knew it was going to take some time to get out of it.
First, I sat down and figured out what I owed. I had been avoiding this step for years. Once I totaled it up, $30,000 between three credit cards and a personal loan, I cried my eyes out. I felt sick to my stomach, and I was angry. Angry at myself for letting the problem snowball. But I took that anger and used it to make a decision: to stand up to the situation and the creditors and fix this thing. Suddenly, I was determined, resolute and scared as hell. That night, I cut up all my cards, except the one my parents had opened for me in college. I put that one in a Tupperware container filled with water, and stuck it in the freezer, so I couldn’t use it.
Next, I sat down and figured out how much I was spending in relation to what I was making. It was clear I was a classic underearner. I was using the credit cards to float my lifestyle and was too nervous to ask for a raise. I realized I had to cut back on spending, but I also needed to get a higher paying job. I knew I was doing more than my share of the work and not getting paid accordingly and was feeling resentful: I received praise and recognition, but not an increase or a promotion. So I decided to look outside the company for other opportunities. I found a higher paying job with a promotion, at a company that paid all my benefits and a had a generous bonus structure. It came at the perfect time.
From there, I began to put new habits in place, such as checking my account balances every day, to keep my spending on track. I also committed to using all cash, all the time. I stopped using my credit cards, cold turkey, and I started paying them off one by one, beginning with the lowest balance and working my way up to the highest balance. To stay motivated, I built rewards into my budget. For instance, if I stuck to the plan for two weeks, I would buy myself a new book or go out to lunch.
I ate at home a lot and cut back on shopping and entertainment. I started making sure that after I paid bills and living expenses, I was spending the leftover money on things I actually enjoyed. So I took improv classes and bought books and cut out things that I didn’t value all that much, like excess clothes and mindless happy hours.