Credit Card Ban: PAYOFF

A journey 10 years in the making!! There has not been a month since the card opened where I haven’t carried a balance.

Check out the full story: 6-month, 1-year, 18-month, 2-year, and 3-year.

The Reality

My staring balance of this payoff journey was $9,943.77 in January 2018. It represented living above my means in a New York City and a low paying publishing salary. It represented how much I didn’t understand about how credit card debit is a vicious cycle. It represented how I was using my credit card as a crutch for emergencies (and more often than not, non-emergencies). So I made a plan to pay it off.

In 2020 I was aggressively saving money because of the uncertainty with my fiancé’s job loss. In mid 2021 he was finally able to get a job as a software engineer and at the same time, I jumped from my publishing job of six years into a new publishing job that paid $7k more. Finally, some breathing room from the stress.

My plan earlier in the year had been to increase my monthly payments in the card from $150 (January to June) to $250 (July and August). And that was going fine. But I kept looking at this cash in reserve. It was because I aggressively saved last year that I was able to make this lump sum payment. I told myself that now, September, was a good time to pay off the balance of $2,000.53. I would have 10 months to build back that cushion in my emergency savings account (our lease is up in August 2022, and we do plan to move).

So I have taken a big leap!! I still have my student loan savings cushion (still going strong until Jan 31, 2022). I couldn’t bear the idea of making $250 payments for the next 7-9 months and pay this off slowly. I have 3-6 months of expenses saved and I felt that I was hoarding cash rather than putting it to use!

The payments made in 2021 total: $3,400, but the total interest paid $358.63. When I started this credit card payoff, I had three interest rates. In these past three years, I paid off two of the interest rates on the card, so essentially now I’m paying for really old purchases prior to 2017.

  • Purchases made 4/12/17 and after, an interest rate of 18.49%
  • Purchases made during a promo period of 12 months interest free, 20.24% (2016 maybe?)
  • Purchases made between 8/20/10 and 4/11/17, an interest rate of 17.99% (from the time I opened the card to 2017)

The Strategy

Strategy is essentially: have a stable income and get a higher paying job. Looking back at my previous posts on this saga, it’s apparent that salary increases helped me succeed here. And it’s a giant privilege to say that I’ve never been in a financial hardship where I couldn’t pay my bills or have an emergency cash cushion.

I would have stuck with the slow and steady pay-off method. I know that works and, in my mind, it would be satisfying. But here I am with the means to get this weight off my chest and I wasn’t doing anything about it? That also didn’t sit right with me.

The Future

I don’t plan to close my card. It’s my oldest credit line so closing it would hurt my credit score. Since I’m keeping it open, I’ll probably put my Spotify subscription on it and pay that off monthly. And I’ll be able to earn cash back on (reasonable) purchases again. The future looks like me paying off the bill monthly with no interest and racking up rewards. It feels good to think about using the card responsibly. It’s no longer a crutch.

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