How We Got Out of Credit Card Debt

In light of last night’s post on Dave Ramsey’s Snowball Method vs. Suze Orman’s Method for Getting Out of Debt, I thought I would share our experience in paying off our credit cards.

We paid off our last two credit cards nearly a year ago (Card #1 and Card #2). It was an amazing feeling to write those two final checks. Our only remaining debt outside of our home is our car and a furniture purchase and both of those will be paid off in June.

We were lucky (or blessed) because we were able to have 0% on our credit card debt for several years (I don’t remember how many). When each and every dollar you pay goes directly to reducing your debt, you can do a lot of damage quickly. That was what made our journey so much easier. When one card’s 0%-period would end, we would transfer to another card. We just kept doing this until we finally paid everything off. It’s important to note that we wouldn’t have been in that situation had we not paid our bills on time and kept an excellent credit record. That’s the key right there:

Pay your bills on time!

And, if you have a problem, call the company and explain the situation to them. A lot of times they will help you out IF you are proactive as long as you are not trying to work the system.

We also made sure to always pay more than the minimum payment due. If you’re familiar with credit cards, each month your minimum payment declines as long as your balance declines. The minimum payment is usually 2% – 4% of the remaining balance. As your balance declines, your minimum payment declines too. Towards the end of our credit card days, I paid WAY over the minimum payment and just kept my payment the same constant amount. That coupled with the fact that we weren’t paying finance charges, really knocked our debt out fast. Even if you have finance charges, you can still do damage by paying more than the minimum payment.

Last but not least, we didn’t use our credit cards. I think that’s another real key to paying off credit cards. Nothing will make you feel more helpless than to get your credit card bill and notice that you charged more than you paid over the last month. So, as difficult as it may be, you have to quit using the credit cards. Get yourself a pair of scissors and cut them up. That’s what we did.

We kept on paying pretty sizeable payments for two years and then finally paid them both off with a bonus check. The feeling was incredible! Once you pay off a credit card, you don’t EVER want to be enslaved again!

Our situation wasn’t nearly as desperate as it could have been. That just means that those in a worse situation will have to take more drastic measures to getting out of debt (selling their cars and buying cheap cars, delivering pizzas,…).

18 thoughts on “How We Got Out of Credit Card Debt”

  1. Terrific advice and great post. This is the best way to pay down credit card debt (and the way I’m doing it now ;-)) And if you can’t get a 0% card, do the next best thing and transfer it all to the lowest rate card you can get.

  2. You know, since I started reading your site a long time ago (when you had your blogspot account) I would have never guessed that you were paying off credit card debt. Have you ever blogged about what went on those cards?

  3. Him,

    Our debt came mostly while we were in college. We also stupidly charged up stuff right after college. Most of our debt came from over-indulging.

  4. Can you recall anything you actually bought on those cards? I came out of college with $15k of credit card debt, and very little to show for it. Other than my bedroom furniture, I don’t know what I bought with those cards!

  5. congrats. the key with what you did is the fact that you had manageable debt and still had credit worthiness to be able to roll credit to other 0% cards. If you are maxed out, you get to the point where you cannot get credit any longer. That is the worst and requires other ways of getting out of debt.

  6. Howdy JLP … this pretty much sums up how we did it some years ago. At one point we had 50K+ on credit cards, but it’s important to note that this was done with a plan–the cumulative APR never exceeded 3-4%, and was close or equal to 0% for the most part.

    Except for the cutting up of the credit cards-we never quite did this. We still indulge & charge aplenty, but make sure there’s no balance carrying over month to month.

    Actually, we did make a home improvement purchase of 20K+ in November. It’s sitting at 0% for 12 months, but I’ll pay it off by April.

    Good to be back, btw!

  7. I am struggling, but am on the right track. I heard Dave Ramsey make the comment that once you are out of debt, you will never want to go back. He said it was like the bumpersticker that says “Nothing tastes as good as it feels to be thin.” Thought that was funny.

  8. The crucial point in your case is that you are able to secure 0% interest on your card for several year. Imagine if that is not the case, your debt would have snowballed over the hill!
    But still a smart way to move the debt over from one 0% interest card to another when it expires on one card.
    Well done!

  9. Hi,
    my name is Jim. Because of the many individuals and couples who are seriously in debt in both the USA and UK, I decided to create a blog dealing with the subject in detail. I congratulate you on your approach and in fact it is similar to my own. However you will find that there is more the individual can do. They may have problems with relationships created by debt. There may be issues of income etc.

    If you are interested in some alternative ideas, why not link to my blog you will find it at

  10. The minimum payment is one of the most misunderstood and poorly explained principles of credit cards. In 2005, new regulations forced credit card issuers into increasing the minimum payment percentage so that at least a small portion of the monthly payment would go toward the balance. Unfortunately, this percentage is difficult to find and is not listed in most terms and conditions. Call your issuer to find out the percentage used for your account, then use a rate calculator to figure out how long it will take to pay off your balance.

    You may be shocked to find how long it will take to pay off the balance by just paying the minimum. For example, if you have a balance of $5,000, an interest rate of 15%, and a minimum payment percentage of 1%, you will pay approximately $112 per month. It will take almost 26 years to pay off your balance and you will pay $5,974.97 in interest. If you increase your payment by just $38 to $150 per month, it will take less than four years to pay off the balance and you will pay $1,508.52 in interest.

    If you are only paying the minimum, you are probably paying more in interest each month than you are toward your balance. The only way you can pay off your debt is to pay more than the minimum.

    The forum at has good tips for getting out of debt and general credit card information.

  11. When all of your money is going to principle it is very easy to pay down debt and would not be a problem for anybody at all. It’s when they get ya suck at 28% or more, this is where they want you. With those kind of interest rates even a rather small amount of debt will take forever and cost several thousand in interest. The example Greg gave above shys in comparison to what the picture would look like with the interst rate at 28% or more. Even if the minimum payment percentage was 2. One way to avoid the interst rates going that high is to never go late on any payment you have that gets reported to the credit bureaus. Going late with one of your cards or anything else can put you at risk of having everyone of your cards interest rates to skyrocket.

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