A Different Way To Get Out of Debt

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I was a 20 year old student with zero income when I got my first credit card. I signed up for it on my college campus.

Using my credit card didn’t feel like I was spending real money so I started charging away. I had no sense of what I could or could not afford because my pretty plastic card got me whatever I wanted.

Add to the fact that no one ever taught me how to manage my own money or spend responsibly, I ended up in a whopping $30,000 of credit card debt by age 23. And although I had studied accounting in college, we never had any courses on personal finance. Our curriculum was all about learning accounting for huge public corporations.

Once I opened my own accounting & bookkeeping business in 2002 I realized I was really good at helping my clients with their money. But I still could not help myself. It seemed a lot easier to help other people with their issues than to face my own.

I was very ashamed because how could I be an accountant but suck so bad with my own money? So I tried everything I could think of to get rid of my $30,000 of debt, like:
-Pay as much as I could on the worst card and only minimums on the rest
-Pay as much as I can on every card every month
-Consolidate my debt onto fewer cards
-Debt counseling
-Take out personal loans to pay down my credit cards

None of those methods worked for me and I could not understand why because I had seen them work for other people. By age 27 I was in the same amount of $30,000 debt that I had at age 23. WTF? How can you make your payments but still have the same amount of debt years later?!?

It’s because credit card debt works on compounded interest. That means interest accumulates on TOP of interest. So whatever interest you were charged this month on your credit card is now accumulating more interest. Yucko!

That’s why it can take so long and be so hard to pay credit cards down. It’s not like a loan with a fixed interest rate…credit cards are a crazy money eating monster type of loan.

fence and ladder

Credit Image: mlcastle on Flickr


Finally at the ripe age of 27 I decided to do something a bit unconventional – I stopped worrying about my credit cards and only focused on making more money. I paid only a bit above the minimums on all my cards and instead I saved all my extra money, with the goal of paying down all my debt IN BULK as soon as possible.

And it worked like gangbusters! Within 3 months I tripled my income and began making six figures for the first time in my life. Then after only 18 months I paid of all $30,000 of my credit card debt!

So why did this way work so much better than any other method? And wouldn’t most finance professional tell you NEVER to do it this way because of all the extra interest you’d be racking up? Probably.

But here’s how I see it. All those years I spent slaving away to just pay my credit cards made me obsessively focused on one thing: my credit card debt. And you know what they say…whatever you focus on grows.

So by building up my income and savings account instead, I felt more powerful. I took charge of my money and my life. Chase Bank was no longer the boss of me! And, in turn, the more powerful I felt the more money I made.

And what about that extra interest I was charged because I only paid slightly over the minimums? I say WHO CARES! To save tons of money, pay all your debt down, and finally feel good about your finances is worth the extra few hundred dollars I spent in interest.

So, if you’ve tried everything else and nothing seems to be working for you why not try this for a while?

Agatha Kulesza is an accounting nerd that believes dealing with money doesn't have to be so boring. She shows people how to be better with their money by making it simple and fun. For more of Agatha's free money tips sign up at www.Agatha-K.com.

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