When my husband and I moved to Los Angeles together in 2012 we had four credit cards between us with low to zero balances. We were mostly very sensible and paid cash for a lot of our moving expenses. But then we found ourselves in a new city and dying to have some FUN. We charged concert tickets, nights out, probably some furniture for our tiny studio apartment. And every single morning on my way to work I charged a peppermint mocha and an everything bagel – until one day I no longer had the funds to charge a cup of coffee.
I may not remember all of the big and small, absolutely necessary, gotta-have-it expenses that got me to that point but I sure do remember the feeling of being maxed out and finally facing how bad it was. We were in excess of $10,000 of credit card debt, but we were hopeful. We both had good jobs and now that we had admitted we had a problem we were able to put a dent in our debt.
That is until the next festival weekend came up. That’s right, we continued to clear a little debt and max it out over and over again for the next three years. And then in 2015 the glamour of living in a big city wore off and we recklessly decided to quit our well-paying jobs and move home. When we got there we took a weeklong trip and eloped (to save money!) and since we were only half-employed this meant, you guessed it, whipping out those good ol’ credit cards again.
It was an amazing week full of beautiful memories but we were also teetering on the edge the whole trip. One wrong charge and we wouldn’t even have the money for gas to get home! Thankfully we avoided catastrophe and made it home where we both soon had gainful employment. Shortly after I read Ramit Sethi’s I Will Teach You To Be Rich and I loved his very simple, straightforward approach. I had already automated most of our bill payments and I went ahead and set our credit card payments on auto as well. At that point we owed $13,500 on our credit cards.
We very quickly snowballed our lowest balance, $1750, to zero and moved onto another. Fast forward to September of 2017 and without even realizing it we had paid off almost $3000 from our highest balance and highest interest card and chiseled away another $1278 in minimum payments on the other two cards. This is the magic of Ramit Sethi’s “set it and forget it” approach. Now if you’re keeping track that means we’ve paid about half our original debt which would be amazing progress IF we had not added TWO more credit cards AND maxed out the card that was paid off.
Yep, after two years of dutifully making payments we were right back in the same place: $13,063 of debt.