As an immigrant who moved alone to the U.S. from Jamaica at age 17, Jordanne Wells didn't know much about managing finances in her 20s.
She graduated from college with eight credit cards, and eventually found herself $30,000 deep in credit card debt.
While Wells had a steady income at the time and was already a savvy shopper — using coupons, buying clearance and generic brands — she realized her debt was holding her back from doing the things she wanted to do.
"The debt itself wasn't hurting me," says Wells, now a personal finance blogger at Wise Money Women. "I realized it was what I couldn't do because I was servicing my debt. That realization flipped a switch in my head."
Instead of just getting by making theminimum payments on her credit card debt, Wells decided it was time to make some drastic changes.
CNBC Selectspoke with Wells about the six-step method she created— what she calls the debt "S-L-A-Y-E-R" system — that kick-started her payoff journey and helped her get rid of her credit card debt within a year. Here are the steps:
Step 1: Survey the land
The first step in Wells' payoff plan is to organize your debt. Gather all the details of your outstanding balances.
Make a list of who you owe, how much you owe, the interest rates, minimum payments and due dates. After you have all the information laid out in front of you, calculate how much your monthly payments are to cover your debt.
Step 2: Limit and leverage
In order to avoid any temptation to score a new sign-up bonus on a credit card, opt out of receiving any additional new credit card offers. Then leverage your current income as much as possible. This could include cutting back on monthly expenses, like subscription or streaming services, to have more money for paying off your debt.
Step 3: Automate your minimum payments
To keep your credit card accounts in good standing, you want to make sure you at least pay the minimum amount due on your bills on time each month. This will help protect your credit score as payment history is the most important factor in determining that important 3-digit number.
To make it easy, automate these payments so the money is taken out of your account every month on time and you don't have to think about it.
Step 4: Yes, you must pay extra and often
Wells credits her success paying off 5-figure debt in 12 months to the extra payments she made as often as she could. "No matter if it's $10 or $100, make the payment," she says.
Even if it doesn't feel like you can afford to pay much more than the minimums, know that every cent counts. Wells once made an additional payment of 60 cents toward her credit card debt because she knew every bit would help and as soon as she had extra cash, she put it right toward her debt. "I knew that if I didn't I would've spent it," she says.
Step 5: Evaluate the plan often
Once you get started on your debt payoff journey, track your plan to make sure it still works for your lifestyle and adjust as needed.
For Wells, she decided to open abalance transfer credit card so she could pay off her debt with no interest. Once she consolidated her high-interest credit card debt, she made a plan to pay extra every single month during the introductory interest-free period.
Balance transfer cards are a great way to save money while paying off your debt, since you don't accrue additional interest during the intro period. Just note that most cards, like the U.S. Bank Visa® Platinum Card and the Citi Simplicity® Card (see rates and fees), require good or excellent credit to qualify.
While you track your plan, it helps to keep an eye on your successes, too. Finance expert Sallie Krawcheck suggests carrying around an index card in your wallet and checking off when you pay off a chunk of debt so that you feel a sense of momentum in your payoff journey.
Step 6: Ramp-up when you 're ready
Once your plan is up and running and you are comfortable with the system, Wells says that it is then time to accelerate the debt payoff. She suggests refinancing with your card issuer for better terms or finding more funds to pay off your debt. If you're not sure where to turn, check out these easy ways to earn extra money from your couch.
As you pay down your credit card balances, watch your credit score slowly rise since your utilization rate is decreasing.
Debt payoff is a journey, and for most people, it's not something that can happen overnight. Wells was able to find a plan that worked for her and kept her motivated. The most important thing is to decide on a plan and get started. Here are a few more stories that may inspire you:
Don't miss:
- How to achieve financial freedom and pay off debt, according to a financial expert who paid off $87,000
- 3 common myths about being in debt that are stopping you from paying it off
- These newlyweds paid off $21,000 in credit card debt by following their own rules—here’s exactly how they did it
- How a 39-year-old paid off $16,397 in credit card debt in less than a year (and hasn’t paid a cent in interest since)
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
FAQs
It will take 41 months to pay off $30,000 with payments of $1,000 per month, assuming the average credit card APR of around 18%. The time it takes to repay a balance depends on how often you make payments, how big your payments are and what the interest rate charged by the lender is.
How to get rid of $30K in credit card debt? ›
How to Get Rid of $30k in Credit Card Debt
- Make a list of all your credit card debts.
- Make a budget.
- Create a strategy to pay down debt.
- Pay more than your minimum payment whenever possible.
- Set goals and timeline for repayment.
- Consolidate your debt.
- Implement a debt management plan.
How long will it take to pay off $30,000 in credit card debt? ›
It will take 41 months to pay off $30,000 with payments of $1,000 per month, assuming the average credit card APR of around 18%. The time it takes to repay a balance depends on how often you make payments, how big your payments are and what the interest rate charged by the lender is.
Is 30K in debt a lot? ›
Credello: Studies show that Millennials often have debt. The average amount is almost $30K. Some have more, while others have less, but it's a sobering number. There are actions you can take if you're a Millennial and you're carrying this much debt.
How to pay off $60,000 in debt in 2 years? ›
Here are seven tips that can help:
- Figure out your budget.
- Reduce your spending.
- Stop using your credit cards.
- Look for extra income and cash.
- Find a payoff method you'll stick with.
- Look into debt consolidation.
- Know when to call it quits.
How to pay off $30,000 in debt in one year? ›
The 6-step method that helped this 34-year-old pay off $30,000 of credit card debt in 1 year
- Step 1: Survey the land. ...
- Step 2: Limit and leverage. ...
- Step 3: Automate your minimum payments. ...
- Step 4: Yes, you must pay extra and often. ...
- Step 5: Evaluate the plan often. ...
- Step 6: Ramp-up when you 're ready.
Will credit card companies forgive debt? ›
Most credit card companies won't provide forgiveness for all of your credit card debt. But they will occasionally accept a smaller amount to settle the balance due and forgive the rest. Or the credit card company might write off your debt.
How long does it take to pay off $25,000 credit card debt? ›
$25,000 at 20%: Your minimum payment would be $666.67 per month and it would take 437 months to pay off $25,000 at 20% interest. You would pay $41,056.85 in interest over the life of the debt.
Is national debt relief legit? ›
National Debt Relief ratings
The company is accredited by the Better Business Bureau (BBB) and it has an A+ rating. On TrustPilot, it has a 4.7 out of five rating based on over 39,000 reviews. Customers praised the company's responsive customer support staff, affordable payments and user-friendly platform.
How to pay off credit card debt when you have no money? ›
- Using a balance transfer credit card. ...
- Consolidating debt with a personal loan. ...
- Borrowing money from family or friends. ...
- Paying off high-interest debt first. ...
- Paying off the smallest balance first. ...
- Bottom line.
Average debt by age
Generation | Average total debt (2023) | Average total debt (2022) |
---|
Gen Z (18-26) | $29,820 | $25,851 |
Millenial (27-42) | $125,047 | $115,784 |
Gen X (43-57) | $157,556 | $154,658 |
Baby Boomer (58-77) | $94,880 | $96,087 |
1 more row
How much debt is unhealthy? ›
Generally speaking, a good debt-to-income ratio is anything less than or equal to 36%. Meanwhile, any ratio above 43% is considered too high. The biggest piece of your DTI ratio pie is bound to be your monthly mortgage payment.
What is the 28 36 rule? ›
According to the 28/36 rule, you should spend no more than 28% of your gross monthly income on housing and no more than 36% on all debts. Housing costs can include: Your monthly mortgage payment. Homeowners Insurance. Private mortgage insurance.
How to wipe credit card debt? ›
Filing for Chapter 7 bankruptcy could discharge (forgive) all of your credit card debt. However, bankruptcy should only be considered as a last resort option due to the lasting damage it will cause to your credit. Bankruptcy will remain on your credit for up to 10 years after the filing date.
How to get out of debt when you are broke? ›
How to get out of debt when you have no money
- Step 1: Stop taking on new debt. ...
- Step 2: Determine how much you owe. ...
- Step 3: Create a budget. ...
- Step 4: Pay off the smallest debts first. ...
- Step 5: Start tackling larger debts. ...
- Step 6: Look for ways to earn extra money. ...
- Step 7: Boost your credit scores.
Is debt forgiven after 20 years? ›
Borrowers who have reached 20 or 25 years (240 or 300 months) worth of eligible payments for IDR forgiveness will see their loans forgiven as they reach these milestones. ED will continue to discharge loans as borrowers reach the required number of months for forgiveness.
What is the credit card forgiveness program? ›
Credit card debt forgiveness is when some or all of a borrower's credit card debt is considered canceled and is no longer required to be paid. Credit card debt forgiveness is uncommon, but other solutions exist for managing debt. Debt relief and debt consolidation loans are other options to reduce your debts.
What is the fastest way to get out of credit card debt? ›
Strategies to help pay off credit card debt fast
- Review and revise your budget. ...
- Make more than the minimum payment each month. ...
- Target one debt at a time. ...
- Consolidate credit card debt. ...
- Contact your credit card provider.
How to pay off $20k in debt fast? ›
Use a debt consolidation loan
With a debt consolidation loan, you borrow money from a lender and roll all of those debts into one loan with a single interest rate. This allows you to make one monthly payment rather than paying multiple creditors.
Is a 30k credit limit good? ›
Adam McCann, Financial Writer
Generally, a high credit card limit is considered to be $5,000 or more, and you will likely need good or excellent credit, along with a solid income, to get a limit of $30,000 or higher.