what's up budget buddies it's Kim welcome to debt to none I feel like every now and then people need a little encouragement a little boost to keep them going working towards a goal that may seem hard to achieve or may just be tiring and I do feel like debt payoff can get like that if you're struggling with paying off debt if you feel like you're drowning and you're not making any Headway I totally understand I know that feeling I have been there for quite some time actually when I started my debt free journey I had just over twenty seven thousand dollars worth of credit card debt most of it was home improvement loans or whatever that I put on credit cards some of it was a car loan it doesn't matter where your debt came from what matters is getting it paid off so if you need some motivation some encouragement or maybe some tips on how to get through it fast stay tuned in this video I'm gonna go through the five steps that help me to get through my credit card debt fast let's get into it [Music] I read an article online and it was talking about like I think four or five tips of how to pay off debt really fast and as I was going through those tips I thought about it for a second and I'm like you know what I pretty much did all of these tips I want to share this with you or hacks or whatever you want to call them maybe it can help you and your debt payoff Journey or just encourage you to keep on going keep on working towards that goal in that article that I was looking at online a couple of days ago the first step that it mentioned was pay more than the minimum payment now that seems like a given an obvious thing to do I was drowning in credit card debt I maxed out my credit card at seventeen thousand dollars this was some years ago but the limit was seventeen thousand dollars and I went over the limit multiple times when you do that they'll charge you a fee and they hike up your interest rate so that happened to me more than once and just to give you a little example of how horrible it is to only pay the minimum payment some of you probably already know because you're living this life right now let me show you what I was going through okay so I'm one of my study Bank credit cards actually it was the only City Bank credit card that I had at the time this is over 10 years ago let's say my balance was about sixteen thousand dollars this is actually true at one time sixteen thousand dollars my interest rate was somewhere around 26.99 and it would say minimum payment three hundred seventy four dollars and fifty eight cents okay so I'm looking at it and I'm like all right I'm gonna pay four hundred dollars in my mind I'm doing really well because I'm paying over the minimum payment all I knew was don't just pay the minimum payment so I'd always strive to pay more so let's say I see the bill 374.58 I send them four hundred dollars what did that payment really do take the sixteen thousand multiply it times 26.99 if you have the percent sign that's going to bring you to 359.86 so if my minimum payment was 374 58 and the interests that actually is Due based on that 26.99 percent would be 359.86 that is fourteen dollars and seventy two cents above that minimum payment so even though I thought I was paying over 25 dollars above the minimum payment what would actually get credited to my account is the 14.72 cents so on sixteen thousand dollar balance I send them four hundred dollars they end up deducting 14.72 cents which would bring it to fifteen thousand nine hundred eighty five dollars and twenty eight cents when I get the next statement they're going to charge interest based on this amount so if they take that 59.85 28 times 26.99 percent equals and then you come up with this 4 314.42 take that number divide it by twelve this is like a good estimate of how horrible the pain of interest is and then you come up with 359.535589 blah blah blah but I just go ahead and Round Up if it's a five or above so 359 and 54 cents my minimum payment last time was 374.58 so let's say this time if interest is going to be 359.53 maybe the next bill that I get they're like um let's say your minimum payment is three 73 and some change I don't know how they figure out the minimum payments I really don't how much am I really knocking this down not very much I remember at one time when I was with Citibank my minimum payment was always it was actually less they gotten troubled the credit card companies but my minimum payment due was actually less than the interest they'd say pay us like 250 dollars knowing that the interest was going to be 359 so let's say I can only pay the minimum payment then I get the next month's bill and it's even higher than last month they took them to task about that so I believe they do not do that anymore it's been a while since I've had to deal with that kind of stuff the tip is the first tip in that article pay more than minimum payment yes okay great but how much more than a minimum payment that also makes a difference so for me when I was doing clawing my way out of debt in this journey I would do this math I would pay attention what is my interest rate that they're charging me that I would go ahead multiply that percent times the balance get that number and I would always divide that number by 12 because it is like an annual they don't just hit you with that entire amount because who could afford that like who could afford forty three hundred dollars worth of interest every single month so they divide that by 12. it might not be exact but it's going to be pretty close this gives you a great starting point so if you were trying to get through sixteen thousand dollars with a high interest rate like that know that you've got to come well above this 359.53 because that's going to interest so if I was trying to get through this I would decide how much do I want to knock this balance down every single month so that was something I instituted when I decided to do my debt free Journey sat there decided how much do I want to knock my debt balance down every single month whatever the amount is maybe it's only two hundred dollars maybe it's only a hundred dollars it doesn't matter take that number add it to the interest that you have fared out that way you see the movement that's important when you're going through a debt-free journey not only pay more than a minimum make sure you figure out how much interest you will be charged add that on top of the amount that you've decided that you want to knock off each month the second step is to create your debt snowball or for some people like myself your debt Avalanche method so your debt snowball if you're going to do that which which is a great way to pay off debt tried and true many people use it you're going to attack your smallest balance first however extra amount that you can pay towards that smallest balance to get it paid off whatever that is throw it towards your small Bill and then minimum on everything else and then that gets paid off really fast but whatever you sent towards that balance that smallest balance each month once that's paid off you're going to add that to the next smallest balance plus the minimum payment you have the same amount of money that you're paying towards that every single month but the way it's being aimed at the debt keeps shifting it's similar with the debt Avalanche because let's say all you have is your 500 every single month and 400 about that goes towards one specific Bill and then the rest is minimum payments to other ones either way you're still going to work through this debt at a faster rate because you've you've already set in place this amount that is going to pile through it's just going to blow through this debt the reason why I prefer the debt Avalanche is because I don't want to get buried in interest as I'm working through my debt now I know that's not a math problem some people say I mean it's not you have to get control of your spending and all of that stuff of course but for me I can't handle receiving a bill that's higher then the last month's bill when I made a payment and because I've had many experiences like that I'm the person that attacks the interest if it's a high if the if it's the highest interest that I'm being charged that's the balance that it's going to get my focus that's just how I did it both ways actually work the third tip to get through your credit card debt fast is some people will say to do like a debt consolidation loan I if uh you know I don't know that may help I think that could help people if they have a lot of different balances out there and and high interest rates on multiple accounts then maybe a debt consolidation loan might be the answer um I've been guilty of it not not a consolidation loan per se but I have been guilty of moving debt around feeling like I'm doing something a lot of times you're not really doing anything but if you have a lot of high interest debt out there multiple accounts it could be very overwhelming paying all these different creditors getting charged a lot of interest in different directions for different places that could be very overwhelming I haven't had it like that so I'm I can't speak from experience but something similar guess maybe that I have done that I that has helped me move through my debt faster was taking advantage of services that my credit card offered so for me I'm with Citibank I have a couple of credit cards through Citibank and they do what's called a flex loan which is alone but they don't check there's no credit check on it and it's an immediate funds so that comes in handy also the interest rate that they give on the flex loans are a lot lower than the average credit card interest rate so I did take advantage of that when I had a nineteen thousand dollar loan for home repair at 10 interest I split that amount up between my Visa card with my credit union and Citibank so I sent over I think about I sent over about 7 900 to Citibank using the flex loan at 6.99 percent and then the remaining amount went to my credit union so for me it wasn't I wasn't consolidating any I wasn't consolidating my loans but I was finding a way to lower my interest rate for me that that helped me get through my debt faster not everyone's going to agree with that because some people say it doesn't matter how much you're getting charged interest just move through those balances as fast as you possibly can for me it mattered because I wasn't able to move because I was getting charged so much interest so that's why I did that so that's the opposite of the debt consolidation because I took one loan and split it up into two two creditors but that I saved on interest and I was actually able to get gain momentum attack it and zero it out so that helped me the fourth tip in the article and something that I did take advantage of it's using balance transfer credit cards not everyone's going to agree with this and that's fine do what works for you we can't stress that enough whatever works for you do it for me that was also key again because of the interest rate and not being able to gain as much momentum in my balance payoff I took advantage of the credit cards zero percent balance transfer promos well that involved me opening up new credit cards sending a chunk or paying off a high interest rate loan or card sending it over to a new creditor at zero percent interest for a period of time usually 18 months on a new credit card if it's a credit card that you've already had then it's probably just 12 months I did take advantage of that multiple times throughout my journey to help me move through my debt faster for me it worked one thing I will say about balance transfers is there's always a fee it's either a three percent fee on the total of the transfer or five percent of the balance transfer that could seem kind of Hefty because that is just one chunk if it's five thousand dollars you're and it's a five percent fee you're gonna get hit with that 250 dollar boom fee it seems like a lot but if you divide it by let's say you're going to take the 12 months to pay it off divide the 250 by 12. oops and that really that much when you compare that to the amount of money that you would be paying every single month in interest that's how I rationalize the balance transfers but like I said it worked well for me but it might not be for you it's not for everybody you've got to figure out what works best for you in your situation but with all of this if you're going to use like a flex loan or any kind of loan balance transfer if you're going to use debt to pay off debt okay because that's what you're doing if you're going to use debt to pay off debt you have to make sure none of these cards or none of these accounts are being used at all period I made plenty of mistakes throughout my journey where I was using the credit card that had a balance transfer on it and I ended up paying a lot of money and interest because even though I've got this large amount that's not being charged interest in a small amount of purchases of course the Creditor decided to attribute all of my payments towards the large amount that's not getting charged interest and then said well you've made these purchases so we're going to charge you interest on these purchases that kind of defeated everything because I didn't want to get charged interest so that didn't help me at all that stunk so don't use it don't do it whatever you do just put it up and all you're you're just gonna keep paying act like you don't have credit cards you don't have these accounts just trying to zero them out the fifth tip which is an obvious one is to increase your income I'm not able to do that I'm not able to take on any side hustles but in a sense I did add to my income throughout my journey because I have CDs Certificate of Deposits um through Marcus Goldman Sachs and as they mature I'm able to get through a nice chunk of my debt thankfully so I did have one that matured last year in March for a little over eight thousand dollars that knocked out a great chunk and then I am receiving another one this year in September it will be over eleven thousand dollars well that's gonna that easily can knock out whatever debt I owe at that time so those are the things that I did take advantage of to just pile through these large balances and clear that debt I'm happy to say that right now I have six thousand dollars left I have already paid over thirty thousand dollars worth of debt I can't believe that it was a total of 39 000 something hundred I think seven something seven hundred all together because my debt increased throughout my journey and I have six thousand dollars left that's between three credit cards um at this point right now I am going to focus on saving money I keep bouncing back and forth between being aggressive with the debt payoff and then trying to be aggressive with savings right now I really do want to be aggressive with savings because right now the interest rates on savings accounts and CDs are at a all-time high and I want to take advantage of that and thank you so much to you who use my referral code for Marcus Goldman Sachs I just got the notification that someone else used my referral code thank you so so so much because that gave me another three months of the 5.15 interest on my savings account so because it's only for a limited time three months per referral I just want to put as much money into my Marcus account as I can during this time that I'm earning this interest rate so this means we're pausing the debt payoff I mean I'm I am going to send minimum payments to the three credit cards they are the promotional zero percent uh balance transfers one is expired in November the other one is expired in December and the last one expires in February of next year I want everything zeroed out this year but I'm actually going to wait until the end of the year I've never said this out loud I'm gonna wait until December to go ahead and pay everything off completely because I want that chunk that I get from the CD and whatever I'm able to save up I just want it to collect as much interest as possible and the reason why because I can if I'm not paying interest on the debt and I can gain 5.15 interest on my cash and account I'm gonna go ahead and take that because I've paid out enough money I've paid enough interest in my time it's time for them to pay me so that that is my plan that's what I'm gonna do that's how I move through my debt at a quicker speed uh since January 2022 and that's what I'm going to do at this point on now we're just pausing and we're just going to save and stack the cash because I can so that's my plan what's your plan what are you working on how are you doing in your journey do you need some motivation are you feeling like you're just taxing yourself if you are maybe lift up your foot off the gas a little bit maybe focus on another goal I've had to do that so many times throughout this journey that is just what I had to do it worked for me I'm not the person that can just stick to the same thing day in Day Out I don't know why I just I'm not but the cool thing is about it is you are the boss so you are in control of your journey how fast you want to go with the payoff how fast you want to go with savings it's up to you so right now we're stacking the cash again but for real this time thank you so much for taking the time to watch this video and hang out with me check in see how I'm doing let me know how you're doing let me know how your goals are going this year we're halfway through the year so hopefully you guys are seeing some good progress with your goals so far let me know how you're doing and comments I'd love to talk about it so hopefully that was a little bit of motivation for you don't give up whatever goal you have set for yourself keep on going you are closer than you were yesterday if you keep moving forward so with that I hope that I see you next time [Music] [Music]