By Ashley Rogers
August 12, 2022
People are swimming in debt. Credit card debt, student loans, personal loans — you name it.It’s easy to get into debt, but much, much harder to get out of it.We talked to 31-year-old Allison* who has the lofty goal of getting out of her credit card debt in six-months.While getting out of debt is never easy, there are a lot of ways according to Allison to come up with extra month to pay down the debt that aren’t nearly as hard as you might think.
OK, so you are on your way to paying off yourcredit card debt in just six-months. What was the very first thing you did that started you on your journey?
The first thing I did was read a lot about credit card debt and the various methods for getting out of debt. That’s how I ultimately decided to try and consolidate my debt so I could get a lower interest rate. The less money I was paying in interest, I realized, the better.Someone recommended a site called Credible to me to easily check out what interest rates I might be eligible for. I entered the amount of debt that I wanted to consolidate and was easily able to find a company that would allow me to consolidate my debt under a much lower interest rate.Another reason I love Credible is because if you find a loan with a better rate somewhere else, they’ll pay you $200! Pretty sweet.Once I did that, I chopped up my credit cards. I didn’t want to fall back into bad habits and have a personal loan that I needed to pay off and then also start to rack up credit card debt again. That’s a pitfall I know a lot of people fall into.
The debt didn’t just go away, you still need to pay it off, how are you doing that?
It’s so easy when you have debt to just put off paying it off — to not make it a priority. The biggest thing that I have done to speed up paying off my debts is to put it onto autopilot.I signed up for Digit, which I honestly can’t say enough good things about. After I signed-up, I specified my goal for how much I wanted to sock away each month. Then, Digit started to analyze my spending, pulling small amounts of money out of my checking account throughout the month so I barely missed it.All of that money that gets socked away I then use to pay down my debt.Basically, it does all the hard work for me, which has made all of the difference.
A lot of people struggle with this idea of keeping up with the Joneses — keeping up with their friends. Any advice on how to not fall into that trap when you are trying to get out of debt?
I actually told all of my friends what I am trying to accomplish. I wanted it out in the open. That way if they invite me to a fancy dinner or a vacation they’ll know why I am saying that I just can’t right now. This actually just happened: one of my friends is having a bachelorette party in Mexico. I just couldn’t make the numbers work with my budget, so I had to tell her I couldn’t go. But everyone has actually been more supportive than I thought they would be. They know when I am turning an invite down it’s not because I don’t love them or want to spend time with them, but because I want to get my debt under control.
What have you done to cut your bills?
I used Truebill to analyze what I am spending money on and see what subscriptions that I am paying for. I realized that I was paying for a Hulu subscription that I never use, Audible, which I never listen to, and a gym membership that I honestly rarely use.With Truebill I was able to cancel all of these subscriptions immediately.
It’s kind of scary when you realize how much money you are spending on things you don’t even use. It was definitely a wake up call for me.
What about some of the bills that you can’t get out of, what are you doing?
I need my car to get to work, and because of that I need car insurance. Again, I did some research (I can’t recommend that enough) and I found that financial experts recommend you switch car insurance every year in order to save the most money.A friend recommended Gabi because they have a reputation for on average saving people $865 a year on car insurance. I checked out the site, connected the policy I had at the time, and in a few minutes they supplied me with 20 car insurance quotes. I immediately switched.
I consider it a pretty awesome discovery when you realize you can cut back on a bill that you have no way out of getting out of.
What about as far as your day to day spending goes, is there anything there you have cut out?
I love to travel and I love to eat out. Those are two things I have just had to pause in my life right now. It won’t be forever though, and I know that. A big bonus is that I have been cooking more and having friends over rather than eating out. Sometimes it’s about looking on the bright side.
Any other surprising places to save you’ve found?
Trying to get out of debt has made me hyper conscious about every dollar that I spend. It’s also made me realize that I don’t want any surprise bills. I can’t afford them if I want to get out of debt in six-months. The thought of having to put a new laptop on a credit card right now gives me the shivers.I’ve never had renters insurance, but I actually recently signed up for Lemonade.Their renters insurance starts at just $5 a month and actually protects my stuff whether it’s inside my apartment or outside my apartment.
You’ve probably had to make some big changes to your lifestyle to set yourself on the path to accomplish your goals. What have you done?
You know, it hasn’t been as hard as I thought it was. The very first thing that I did was I made a budget for myself of how much I could spend on food and other essentials each month in order to stay on track.I also immediately started to find ways to cut back on everything that I was spending money on.Take my bank account. As I was analyzing what I was spending money on I started noticing all of these fees that my bank was charging me that I never really questioned.
I started freaking out! I couldn’t believe I was wasting money on bank fees of all things.
I immediately started looking into banks that don’t charge ridiculous fees and switched to a better option.*We omitted Allison’s last name on her request to maintain her privacy.
