How I Paid Off $4,500 Of Debt In 4 Months & Completely Transformed My Credit

In what might be the world’s most obvious metaphor, I decided to ring in the new year by starting anew. I quit my job, moved out of my apartment with a lease that poetically ended on New Year’s Eve, and followed my dreams to New York City. I boarded a one-way flight with a carry-on, $4,000 in my checking account I’d saved, and a brand-new $3,000 in debt — the amount I put on an American Express card to cover moving expenses and a sublease.

I feel it is important to say that my parents did not help me with any costs and never paid a single dollar of my rent. “You want to move to New York?” my mom asked me as we stood separated by the granite island in the kitchen that may as well have become a towering wall. “You pay for it. Don’t look at me,” she said. We argued for about an hour. She didn’t budge. I became determined to figure it out. And for me, figuring it out meant using a credit card.

Even though I managed to get a well-paying job (especially for someone who was at risk of having no job) just two weeks after moving, I underestimated how much New York really cost. New furniture, an A/C unit, and other things started to add up, and they all went on my credit card, bringing my total debt up to $5,700 just two months into my new life. Before I knew it, one credit card turned into three to cover all the expenses. But for months, it didn’t worry me. I called by phone every month to make the payments so I didn’t have to log into the accounts. I was grossly uneducated about how credit cards work and had no plan to pay them off, paying the minimum every month in order to free up more of my money for fun things. “I’ll pay it off eventually,” I told myself. So for months, that’s what I did.

Almost no one knew I had debt, and those who did were purposefully clueless to the amount. It wasn’t until my childhood best friend and I met for coffee on an unseasonably warm fall afternoon that I opened up about it. Our conversations usually last for hours without breaks and cover everything from the silly (laughing at next to nothing) to the serious (breakups, boyfriends, and career musings). Somehow, on that day, we got on the topic of finances. We are always open with each other, including during this conversation. For whatever reason, I decided to be honest for the first time about my debt. Not because I didn’t feel like I could be up to that point, but because I didn’t want to be – I have a thing about appearing to have flaws, perceived or otherwise.

She told me she had $10,000 in savings. “I don’t even have a savings account,” I told her. “I can’t really save any money right now because of my credit cards.”

“How many credit cards do you have?” She asked. She is by far my most patient friend. She will ask questions seriously, but calmly. She really wants to understand when she hears your answer, whatever it might be.

“Three. Well, two, technically. I’d been afraid to log into the accounts all summer, so I’ve been paying the minimum by phone but I completely forgot I opened one when I first moved here. The bank teller talked me into it when I opened my account,” I still wasn’t quite ready to take full accountability for my debt. “I finally got the courage to log in the other day and saw they closed my account. I think my credit score is like five-something.” Considering it had been in the 700s right before I moved to New York, I was doing a pretty good job of sabotaging myself.

We had each just bought a cup of black coffee, two dollars, and some change. With a quick swipe, the money came out of my account, leaving me now $9.32 until payday, nine days from then. I’d been living paycheck to paycheck, and sometimes not even then. I was tired of it all. In the moments following our conversation, I vowed to go home and log into all the accounts, an attempt to fill the massive hole I’d dug myself in to.

Here’s how I crushed $4,500 of debt in just four months:  

1. Open Up To Someone You Trust

The ability to open up to someone really forced me to take accountability. Not just saying, “oh yeah I have some credit cards,” or, “oh yeah I have some debt.” But if you’re comfortable, really break it down with someone you’re close to. Being specific and totally transparent is the only thing that helped me start to turn everything around.

2. Ignorance is Absolutely Not Bliss

Log into your accounts. Write down the usernames and passwords, and change them to something more memorable if you need to. Download the apps to your phone, and allow notifications. It will be overwhelming. It will be gutting. But know that the pain is temporary and then you will start making strides to fix your situation. You will get through it.

3. Get Organized

Whether it’s a Google Doc, a spreadsheet, or a dedicated notebook you want to use, write down your balances, your credit score, and your credit usage. I had a Google doc I made where I listed each of my cards with their balances. Every time I made a payment, I updated it. Every month when my FICO score recalculated, I noted that as well.

4. Stop Using Your Credit Cards Immediately

Interest on statement balances is enough of a hamster wheel when you’re trying to pay off credit cards, and additional purchases make it spin even faster. Take them out of your wallet if you can and put them somewhere safe in your apartment. Better yet, give them to someone you trust.

5. Put Any Extra or Unexpected Income on Your Cards

I’m a freelance writer because it’s my passion that I’m working on turning into a full-time job. But the money varies wildly and is paid inconsistently, hence my day job. But whether I got a check for $25 or $200, it went straight to my debt.

6. Take Advantage of a Balance Transfer Offer

The last $1,200 of my debt was transferred to a credit card with 0% interest for 18 months. It will be paid off well before the interest kicks in January 2019.

*****

Fast-forward to now, I have a 401(k), a savings account with a balance, and even an idea of how to manage money. And by the way, I did manage to make that $9.32 last for nine days. It involved a lot of pasta, but more importantly, a life lesson on money – even though I had to learn it the hard and very, very expensive way.

Kathryn Greene is a 25-year-old communications professional and freelance writer following her dreams in Manhattan. She has been published by Racked, Edible Manhattan, Visit KC, and can be reached at kathryngreene.net. When she’s not writing, she’s in exploring the big city and probably (definitely) Instagramming it. 

Image via Unsplash