I received the following email from a reader who wished to stay anonymous. Even though I talk a lot about getting to the point of being debt-free, it’s always nice to hear the story of those who have basically made it.
“I too owed quite a bit of money on not one but two credit cards, about $22,000 to be exact. I noticed that even if I paid the minimum every month on each credit card I never saw any major debt eliminating results. So what I did for a time, knowing that I was a committed payer to the credit card companies was to call the credit card company from time to time and always was able to negotiate a reduction in the interest owed on the amounts. At least, the credit card companies were willing to work with me. I optioned to increase the amount of money to pay out at the billing period. In other words, I began to pay more than the minimum for a couple of months.
Mind you my method was not based on any scientific fact just based on the notion of what if. By the way, all this time that I was making all of these payments the credit cards were in the possession of the local garbage dump. The minute I got a credit card. I mutilated it beyond recognition. One more thing that I forgot to mention earlier I also authorized the bank to directly deposit the required amount for payment to the credit cards thus avoiding any late fees or penalties incurred with late payments. The next thing that I did was to look at the credit card interest rates and decided to consolidate the credit cards into one. Now why didn’t I do that in the first place you may have asked. One financial immaturity and two not really knowing that most of the money that I had forwarded to the credit card companies was going mostly towards those darn high interests.
I just happened to start a new job that paid slightly more than I had been making. But the best thing of all the new company had a credit union. Well now, here is where I got savvy. The first thing that I did was to get a part-time job that I worked at one day a week. The next thing that I did after I got the part time job was to have the money from the part time job direct deposited into the credit union. I also gave myself specific instructions not to touch the credit union money for any reason for a period of about two years. By the time I had been employed at that company with access to a credit union I had whittled the credit card amount to about $10,000. This was, of course, without any outside intervention other than a lot of saving and self-control.
Gee! One fine day I get this notice in the mail telling me that the credit union offered a credit card with zero percent interest for a period of six months. I had been saving money into the credit union account for almost two years. Oh! by the way another fine little detail that I forgot to add, I had also asked that a small part of my regular 40 hour work week pay-check go to the credit union as well, about $200 a month to be exact.
So now to put the simple math equation in motion. The part time job paid me a little over $200 a month and I had asked for my employer to put aside $200 a month from my regular job. All totaled to about $400 per month on the side untouched. By the time I transferred the credit card amount to the no interest bearing account I owed about $8,000. But I had an monetary ammunition garrison of about $9800.
Now instead of paying all in one lump sum I felt that it would be best if I established some sort of good standing with the credit union and credit card company. And of course I did not want to pay all of the money out and not any left for an emergency. When the first credit card statement came from the credit union it asked for $22. I transferred $1,000 & some months I gave $500 others I gave $750. With in the 6 months offered interest free I had paid all that I owed. At the current moment I owe again about $800 but now I still sufficient assets to pay what I owe in one shot. I have also limited my credit card spending to to no more than $1000.”
Congrats are in order to this reader who has managed to really pay off some debt. The method used isn’t one that I’ve ever read in a book, but it worked (if you remember, I’m a believer in taking things from here and there and making a plan that works for you). This reader had a plan and self-control and made the debt go away. 🙂