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- At the beginning of the year, I was facing nearly $30,000 in credit-card debt.
- I made a budget to pay it off in 18 months, but a big project let me pay off most of it in just one.
- This article is part of "My Financial Life," a series helping people live and spend better.
When December ticked into January, I knew it was time to face something I had been putting off: my credit-card debt. When I added it up, it was even worse than I'd thought. I owed $29,357, and my monthly payments alone were approaching $1,000.
If I were reading about this happening to anyone else, I'd probably think, "How did that happen?" The truth is, it was just too easy. I wasn't dining out regularly, shopping impulsively, or doing anything extravagant. I racked up most of the debt improving my house, which I bought as a foreclosure in need of serious repairs. Another major chunk was from a bucket-list trip to Italy with my sister and cousins for a wedding.
I didn't regret either of those things, but I was starting to feel suffocated. I vowed to pay off my debt as aggressively as I could.
I realized I was undermining my financial security
I've been freelancing for more than a decade, and I believe there's a lot of job security in being a contractor. If one client goes under, I can find another. Yet at the start of this year, I barely had any work.
This compounded my stress about my credit-card debt. A major change in my workflow could make it impossible to keep up with even the minimum payments. That much debt could easily snowball and overwhelm me, flattening my plans for a stable financial future.
Over the past five years, I've worked hard to create a stable career — and eventual retirement — as a freelancer. To me, that means being able to pay for my needs and wants comfortably while doing the type of work I love. I save monthly for retirement and budget diligently for quarterly taxes. I felt frustrated with myself when I realized I was leaking money on credit-card interest when it would otherwise help build my security.
I made a budget and planned to pay off the cards in 18 months
My resolve was strong, but I was still overwhelmed by the sheer amount of debt. I thought about a home-equity loan, but I didn't want to change unsecured debt for a loan that put my home on the line.
Instead, I put together a budget — something I'd been good about sticking to in the past — and laid out all my household expenses. With my low January income, I would just meet them. I decided to do a no-spend month, where I didn't purchase anything but essentials — not even coffee. I stopped using the cards and canceled any automatic charges and subscriptions linked to them.
I planned to stick to my budget and direct any extra income toward my debt. I thought it would take me about 18 months, which made me think twice about how much I really needed that trip to Italy or the new floors.
An unexpected project gave me a huge boost
I stuck to that plan for the first few weeks of the year. Then, in February, I had a huge windfall. An occasional client explained they had a massive project that needed to be finished that month. At first, I thought it would be about $5,000 of extra income, and I was thrilled to be able to pay off a chunk of my debt.
As the month went on, the project ramped up instead of slowing down, and I worked long hours daily. I felt glued to my computer, but by the end of the month, I had made almost $25,000 more than in a typical month. It all went to my credit cards.
I feel like I have a clean slate and a better understanding of my financial goals
Getting that project felt like a gift — a chance to right the wrong choices I'd made financially. I had $5,000 in credit-card debt left after that, and I'm following my budget to pay that off. That feels like a much more manageable amount, and I'll be able to pay it off this year.
Now, I'm determined to use my clean slate to set up a solid financial future, not one built on debt. I'm already planning to increase the amount of money I put in my retirement plan and tackle my remaining student loans next year.
Like most millennials, I can get distracted by the shiny spend-now, pay-later promise of credit cards. But after feeling overwhelmed by them and being lucky enough to escape, I know that the real goal is a future where I'm financially stable enough to fit major expenses into my cash flow, including the travel and home improvements that almost took me down.