A few months ago I was finally buying my first home. Well, kind of. It was the first time I was signing on the dotted line, although my husband had purchased a home before we were married. If you have ever been through the process–purchasing or selling–it can be quite a tedious experience. The day or so I was supposed to sign for purchasing, my loan officer called me, apologetic. He hadn’t received a clear to close due to a hold-up with one of his vendors. Cue angry realtors entering the scene. He was adamant, to both me and the realtors, that this had nothing to do with us being approved for the loan or getting the money. “I really don’t know what the hold-up is,” he frustratingly told me. “I will explain to the seller that it’s not a hold-up on your finances. You and your husband have some of the best credit I’ve ever seen.”
The best credit I have ever seen.
It made me pause long after we had hung up the phone. Not that I was necessarily surprised, since I knew my own credit score and have made sure it was beautiful, if anything, for a moment like this. And for the record, two hours later, we got the clear to close and our realtors were able to relax. No, it made me stop for a second because it wasn’t always like this. And when looking back, my, what a journey it’s been.
Like most, my history with credit cards starts in college. I remember opening up my first credit card, which was Banana Republic, and quickly learning about the concept of maxing out. I think the limit was $600. At the time, especially working a minimum wage job, that seemed like so much money to pay off. However, I was able to do so, and I immediately canceled that card. I vowed never to open up a card again…until a few years later. I needed to pay for summer school and my student loans hadn’t come in yet. But tuition was due. I signed up for a credit card, vowing to only use the card for emergencies. Because that’s how it starts. We need a credit card only for legitimate emergencies.
Famous last words.
Life happens, and soon I needed an internship to complete my college curriculum at a significantly lower pay than I was used to. Before I knew it, my credit card was becoming a crutch to make ends meet and making sure I could still pay for groceries. But to me, it was still valid, as these were “emergencies”.
It wasn’t long until I found myself at Ann Taylor Loft months later, charging my card for “essentials”. Because a new dress was needed every now and then, surely? Graduation couldn’t come quickly enough, and I dreamed of the days of a full-time job and a full-time income. Upon receiving my diploma though, I probably had a good $12,000-$15,000 of credit card debt.
You Don’t Have to Have Credit Card Debt
My internship-turned-full-time-job at the time happened to be offering a special 9-week financial education course the month after I graduated. It seemed like a perfect time to confront my financial situation and just how I was going to pay off my student loans while making credit card payments. It didn’t even occur to me to develop a plan to pay off my credit cards. After all, everyone had them, right? That was just a necessary evil to live the American way.
Imagine my shock when this course taught me not only to develop a plan to pay off your credit cards, but you could also avoid credit card debt in the future. Mind. Blown. I also learned many other facets of personal finance that I previously did not know and definitely was never taught. I am so thankful for this class, as it helped me develop a plan and gave me the confidence that I needed to achieve it.
Anyone Can Save
There was only one problem. I was a fresh graduate, only making 30k a year at my first big-girl job. Clearly, this was not going to be an easy task. But I was committed. As someone who literally never had a dollar saved, I was enticed by this life of thousands of dollars saved and owing $0 to credit card companies. But I had to start somewhere, and that meant saving $1000 in my savings account. I don’t think I had ever had $1000 saved at any point in my life, but, here goes. I achieved it much quicker than I thought, and a lightbulb went off. Savings was so much more than how much income I had. Saving had to do with choices, for me personally, and I realized it was always in my grasp. There were just some sacrifices that needed to be made, and depending on my situation, there needed to be big sacrifices. But always with the intention of this is short-term. Ultimately they helped keep me motivated during the process.
I wish I had a special hack to tell you. Something that makes this a fast process and so easy. But the truth of the matter is, it is a formula of hard work, dedication, and determination. At times I took some part-time jobs to help throw money at my debt, other times, just cutting as much as I could from my budget in order to make additional payments. For one particular credit card, I did take out a refinanced loan, since that was so much cheaper to do than paying an incredibly high rate of 20% interest. Overall it’s hard and challenging, but the reward of having no credit card debt is incredibly freeing.
I now know that a life without credit card payments is possible.
These days you can find me still using a credit card – but I pay it off each month in order to collect points (I have to convince my husband to take my daughter to Disney World, right?) But we have a rule: once the credit card can’t be paid off, we ditch it. It’s not worth the headache and stress. We much prefer this debt-free life.