How I Ditched Debt: From $20K to $0 in 5 Years and eight Steps

On this sequence, NerdWallet highlights folks’s debt payoff journeys. This month, Kenley Younger recounts how he mixed numerous instruments for slicing debt, with information he gained working at NerdWallet, to wipe out bank card debt. 

Within the first week of 2022, I checked off a long-running New Yr’s decision: I paid off the greater than $20,000 in bank card debt I’d owed for about 20 years.

It was removed from an in a single day success. I didn’t actually begin attacking my debt in a deliberate manner till the summer time of 2016. 5-plus years later, by the point I zeroed out my balances throughout these two bank cards, it felt like I’d exhausted each trick within the ebook.

Even acknowledging my struggles with debt makes me self-conscious: I work at NerdWallet, so should not I’ve been capable of keep away from this?

Nicely, I do know extra now than I did 5 years in the past, together with simply how tough it may be to keep away from bank card debt as main life occasions unfold.

Right here’s how I racked up my debt, how I attacked it — and the instruments that made probably the most distinction.

My debt journey began within the early aughts with an $1,800 Martin guitar I could not afford. As soon as I justified that buy on a meager newspaper wage, it was no sweat to rationalize journey, furnishings, rounds of drinks, no matter.

However guitars and Guinness are one factor (properly, two issues, technically). Then, got here the home. The engagement ring. The honeymoon. The vet payments for a really sick canine. The cross-country transfer to Los Angeles for a brand new job. The LA hire. The 2 kids. The day care invoices.

I had no emergency fund — or any financial savings to talk of — so I leaned on bank cards. I used to be drowning in debt in an costly metropolis.

Perhaps it was the afternoon I discovered myself driving the streets of West LA, scanning gutters for aluminum cans to show in for pennies. However in some unspecified time in the future, it dawned on me that excessive frugality alone wasn’t sufficient. The steps I took from there included:

In the summertime of 2016, my household and I moved from Los Angeles — probably the most costly cities on the earth — to Columbia, South Carolina, a metropolis routinely acknowledged as probably the most inexpensive within the nation.

Earlier than I get too far with this tip, I must acknowledge my privilege and the truth that merely packing up and leaving city is just not a chance for everybody. Uprooting your self could be painful and prohibitively costly. We not solely misplaced my spouse’s $40,000 wage after we left city, however the transfer itself value hundreds of {dollars}. We paid for it by liquidating a life insurance coverage coverage that my spouse’s late grandfather had put in her title.

Long run, although, it made sense. I’d gotten a brand new, higher-paying job that allowed me to work remotely. And regardless of the short-term web loss in family earnings, we had a mushy place to land.

My spouse and I are from South Carolina, and our households are right here. We had a village to assist us get on our ft. For the primary eight months, in truth, we lived rent-free with my gracious and accommodating in-laws. That’s a security web that not everybody has.

Now that now we have our personal place in Charleston, we’re paying a mortgage. It simply occurs to be $1,000 cheaper per 30 days than our LA hire. These financial savings on housing prices have been what made the largest distinction, at the same time as our family earnings had initially shrunk to $95,000.

Counterintuitively, the second-most-important weapon in my bank card debt-zapping arsenal was … one other bank card.

However this one had a superpower: a 0% introductory APR on stability transfers for 21 months. I moved a big sum to it from an present card with a double-digit APR, in order I chipped away at that stability for almost two years, none of my cost was wasted on curiosity. It was a step I used repeatedly with related card provides.

• You’ll normally want at the least good credit score (scores of 690 or greater) to get one. Regardless that I had important debt, I’d by no means missed a cost and had an extended credit score historical past. Thus my credit score scores have been in good condition.

• You’ll be able to switch balances solely as much as the brand new card’s credit score restrict, and also you normally gained’t know what that’s till you’ve utilized.

• You’ll usually owe a price, typically 3% to five% of the transferred stability. So “parking” debt on these playing cards — letting it sit there with out paying it off till curiosity resumes — is counterproductive.

In one other life, I used to be a singer and guitarist in a rock band. We broke up way back, however I held on to reside music as a passion. I additionally held on to a lot of the gear I now use for aspect gigs.

My typical solo acoustic gig pays $150 to $200, and on an excellent evening, ideas can add an additional $75 or so to my haul. I’ve additionally arrange a digital tip jar, so patrons who don’t carry money can slide me a five-spot by way of Venmo.

In an excellent month, I’ll ebook two to 4 gigs. So, conservatively, that’s at the least an additional $300 per 30 days that I as soon as put towards my debt and now drop right into a high-yield on-line financial savings account.

(Seems that guitar wasn’t such a foul funding in any case.)

Tax refunds, Christmas items, escrow overages. You title it — I threw it at my debt.

After all, as a father or mother and a house owner, these windfalls have all types of tempting makes use of, so prioritization is vital. I had lots of needs, however the greatest was getting out of debt.

We purchased our dwelling in 2017, and I’ve since refinanced our mortgage twice and paid off a automotive mortgage. That saved us a piece every month.

However smaller cuts helped, too. We ditched cable, discovered cheaper dwelling and auto insurance coverage, acquired a greater deal on our cell telephones, unsubscribed from month-to-month companies like newspaper supply, Sling TV and extra.

Sure, bank cards acquired me into this jam. However my new job taught me quite a bit about them, and I knew that utilizing playing cards strategically would reap advantages.

My credit score was adequate to qualify for a rewards bank card, which I used for obligatory purchases like groceries and fuel. I paid off no matter I placed on that new card instantly, so it didn’t add to my debt, then used the rewards to assist pay down what I nonetheless owed.

Once I realized about “double-dipping” — utilizing a rewards bank card on a cash-back web site to earn each the cardboard’s and the location’s rewards — I used to be hooked.

My most frequented websites once I store on-line are TopCashback and Rakuten, however I at all times verify the Cashback Monitor aggregation website to ensure I am getting the best charges.

I additionally joined a web site referred to as MyPoints, which helps you to take surveys or snap photographs of receipts for factors that you could redeem for cash. I now save receipts religiously and submit them to a wide range of cash-back apps: Ibotta, Fetch and Upside, to call a number of.

As well as, I used an app referred to as Qoins, which helps you to spherical up purchases to the closest greenback and put the distinction into an account. On the finish of the month, Qoins mails that stability — minus a price — to your collectors.

A tried-and-true approach to make fast money? Promote some stuff on Craigslist. I centered on fashionable and high-margin gadgets, largely electronics and musical tools, but additionally youngsters’ toys and bikes. Some child on the market now has a good hand-me-down guitar she will be able to smash to bits on stage in the future.

And it wasn’t simply merch I unloaded. Many vacation seasons I acquired a present card to a retailer I not often frequented. It’s the thought that counts, in fact, however on many events, my foremost thought was, “If solely I may liquidate this factor.”

Excellent news: Many on-line exchanges allow you to promote undesirable present playing cards for money. The dangerous information is you gained’t get face worth. A $100 present card offered by way of CardCash may web you $80. However when you have been by no means gonna go to that Ponderosa Steakhouse anyway? May as properly take the cash and run — or put it towards debt.

After eliminating bank card debt, I can focus assets elsewhere. My spouse and I’ve began a month-to-month price range and monitor our spending. We’re setting targets for journey, dwelling enchancment, investing and saving.

Our discussions aren’t at all times simple. Speaking about cash — particularly debt — not often is. However I discovered that confronting my debt and being sincere with myself about it made the method simpler.