I had little credit card debit during college and was actually very fugal. My parents get the credit for that, as they taught me early on to appreciate the value of a dollar. After college, however, I moved from the central valley to San Diego and the wheels fell off the cart. I started using credit cards to help make ends meet. The credit cards were addicting, and eventually, I was using them to fund a lifestyle well above what I could afford. I went out with friends nightly, traveled, and got expensive new hobbies. . . all on plastic. I remember one truly low point, when I received a new credit card in the mail with a $5,000 limit, and maxed it out buying accessories for my truck the same day. Astonishing? Irresponsible? Probably even more so if you knew that my truck was barely worth that much before I bolted on all of the new “make-up”. I got to the point that I was paying only the minimums each month on all six of my credit cards. I was never late on a payment, but I was also sinking further and further in debt.

Fast forward to 2004
As my relationship with my girlfriend was developing, and it was obvious that marriage was in our future, I had to share with her my terrible secret – I was bringing over $30,000 worth of debt into our relationship, and no plan of how to pay it off. I must be better looking than I thought because she stuck around, and has been extremely supportive and understanding. As of today, my credit card debt is only $3,475.38, and dropping at an amazing rate. As weird as it sounds, I actually enjoy making credit card payment now because I love seeing the balance whittle towards zero.

The approach I’ve taken to paying off my unsecured debt is as follows:

• Quit making charges to the credit cards
• Apply 90%+ off my disposable income to the highest interest rate card (while paying the minimums on the other cards)
• Once the highest interest rate card is paid off, do the same with the next highest interest rate card (repeat until all credit cards are paid off)
• Whenever possible, transfer debt to lower interest rate cards, or better yet, 0% interest rate cards
• Request cash gifts for holidays/birthdays and apply them to credit card debt
• Sell useless items on craigslist.org or ebay.com and apply proceeds to credit card debt
• Increase income (easier said than done, but I went from $40K per annum in 2004 to $66K+ per annum in 2007)

Some other suggestions I have heard, and why I choose not to use them:

• Cut up all credit cards – Not for 1MansMoney because we do not have an emergency fund yet.
• Pay off the small balances first (for a sense of achievement), then attack larger card balances – Not for 1MansMoney because I can do math and know that you want to pay the higher interest rate cards first, regardless of the balance size.
• Debt consolidation – Not for 1MansMoney because there are too many debt consolidation horror stories.
• Store credit cards in the freezer to eliminate impulse purchases (the cards supposedly can’t be swiped for a few hours after freezing) – Not for 1MansMoney because this gimmick wouldn’t stop me from purchasing online.

To get an idea of how vigilant I have been with my debt payments, check out the one year payment history for a credit card I just paid off (click on spreadsheet below):

* NOTE: As you can see in the balance column, some charges were made to the card from time-to-time. Hey, nobody is perfect.

Sacrifice, sacrifice, sacrifice. It’s worth it to get out of the strangle hold of debt and start building your net worth.