A Bean Counter's Way

4 Steps to Get Out of Debt for Good

Table of Contents


When I first started teaching, I saved every penny I could and worked hard to buy a condo. Getting a loan back then was simple, and minimal down payments were common. I bought a house and then realized I was house poor.

I had to utilize credit cards for the shortfall between costs and income. This resulted in considerable credit card debt. My story isn’t rare. The pandemic led many individuals to lose employment and struggle to find new ones. Credit cards are frequently used to bridge financial gaps.

The delinquency, default, or forbearance of millions of loans has caused permanent debt and harmed borrowers’ credit scores.  Your monthly budget might easily be drained by credit card and loan installments. As a result, other financial objectives like home ownership and retirement savings are typically put on wait.

Why is paying off credit card debt vital?

Obviously, you must earn more than you spend to avoid a debt trap.

In my case, I realized I was having trouble meeting my costs. My credit card debt was rising and I had no idea how to pay it. Initially, I shifted my balances from one card to another to take advantage of low introductory rates. I had good credit since I had never missed a payment. After deciding on a strategy, I divided my debt across two cards, focused on paying off the card with the lowest balance first.

What were my debt relief options?

Step 1: Hustle for money.

In my situation, I obtained a second job, a roommate and even sold some stuff.

Step 2: Stop using the credit card.

I only used my credit card for emergencies.

Step 3: Pick a strategy.

To pay off my cards, I employed the snowball technique, which involves paying as much as you can towards your lowest debt card while only paying the minimum on your others.

Paying as much as possible to the card with the highest interest rate while only paying minimums to the other cards is another option, that’s called the Avalanche technique.

The Avalanche approach allows you to pay off your debt faster since you pay less interest. In my instance, I kept rolling over greater credit card debt to retain the low introductory interest rate. So avalanche wasn’t the greatest choice.

Choosing a strategy is a personal decision. This decision is generally affected by the size of the debt on each credit card and the interest rate differential. The snowball method is generally employed when one balance is considerably smaller than the other, and the interest rates are close.

Step 4: Make a budget to avoid debt.

My budget was divided into three parts: discretionary, important, and necessary. I reduced needless expenditures—no more amusement park visits.

My costs have increased, but so has my pay. It’s no longer just me, I have a family to think of now.  Jia and I constantly analyze our income and expenses, and we save a set proportion of our money that we make sure we save or invest each month. Our needs have evolved throughout time, and so has this proportion.

We are lucky to be able to save and leave bad debt behind us, but we would not be in this position if we did not constantly monitor our spending. We strive to save money for pleasant family excursions. Unforeseen expenditures occur, but with careful money management, we will be able to retire someday.


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