- Hello my dudes, my name is Tiffany, and today's video is about
how I paid off $10,000 in credit card debt in six months. I am so excited, and this really hasn't even hit me yet. You know how mobile banking is. Money doesn't even seem real. It's all numbers on a screen. So in this video I'm going to
explain how I got into $10,000 of credit card debt as well
as how I got out of it. Let's jump right in. First of all, this has been the best
year for me financially, and this is my first year
being a full time YouTuber, where this is the only
job that I am working. It's been that way since January so it's still relatively new, and I have been earning small
amounts of money from YouTube since about 2012, but this is not a YouTube
get rich quick scheme. It has taken a lot of time, and work to get to the point
where this is my full time job, and of course I want to mention how grateful I am for this job, because it has given me the
flexibility to work while I am still a full time college student. And of course it's not only allowing me to earn enough to pay my bills, but also to be able to throw large amounts of money at my debts. If I were working a minimum wage job like I have in past years, I would not have been able
to do this in this timeframe. Of course, I still would
have been making payments, but it wouldn't have been possible to pay this much, this fast. So first of all, thank you to everyone watching my channel, and supporting my videos. Keep doing it, please. No, but really I don't want
anyone to directly compare their situation to mine. I think when it comes to personal finance, it's important to remember that it's all about concepts, and strategies. Everyone's income, and expenses, and situations are very different. Those amounts will vary wildly, but when it comes to debt pay off. The strategies are all
pretty much the same. If you are trying to get out of debt, I hope that this video is somehow helpful, or maybe a little inspiring for you, and if you're not in
debt, congratulations. Maybe this video will help
you learn from my mistakes. Anyway, let me give some
backstory into my situation. How did I get into $10,000
of credit card debt? So I made this video back in March to publicly announce my
debt pay off journey, and specify exactly how much money I owe. In addition to my credit card debt, I also owe now about
$18,000 in student loans. By the way, I chose to tackle
credit card debt first, because the interest rates are higher. My credit card interest
rates averaged about 20% while my student loan
interest rates are about 4%. so I'm 24 now, and I have considered myself
to be financially independent pretty much from age 19 when
I moved out of the house, and went to college. But even before that, since I was 16 I've been working, I bought my own first car, paid for insurance, gas,
everything, paid my phone bill, Ms. 16 year old independent. Once I got to college though, my biggest problem was that I just was not making enough money to keep up with my expenses, and that is when I started
to rely on credit cards to kind of bridge that gap, and obviously we know those balances can grow really quickly. I used to work regular minimum wage jobs, you know, in food service, childcare, work study jobs on campus. I made about $15,000 in 2016, and then in 2017 I studied
abroad, and couldn't work, and then that summer I
worked at a summer camp, which did not pay much. It's more of an experience, and in 2017 I only earned $5,000. I honestly don't even know how I survived. So while studying abroad, my room, and board was covered by student loans, and I got a small stipend, but I did end up adding about
$1,400 to my credit card by the end of my semester,
and time traveling. Shortly after that summer, I also had to spend $2,000
on emergency dental work, yay to being uninsured. No, that was not fun, and I also decided to drop
$2,000 on SmileDirectClub to straighten my teeth. I definitely did not have the
money for that at the time, but I was just sick of being
insecure about my teeth, and honestly now very worth it to me. I'm glad I did it then, but then of course studying
abroad was amazing, but it also costs a lot of money, and it definitely added
to my student loan debt, and my credit card debt, but again, I think it was worth it. I mean, I would not regret
that experience ever. So yes, looking back about $5,500 of my $10,000 credit card debt happened in just 2017, I had always been conscious of my debt, and I always made my payments
on time every single month, but by like early 2018 I was 22, and I just still wasn't
earning very much money. Actually before this year, I had never earned more than
$22,000 in a year before taxes, and my credit card payments were annoying, of course, but I was kind
of used to just paying them, and I had no idea how much
money I was actually wasting. I did the math just
recently, and in 2018 alone, I paid $1,587 in interest
across four cards. Want to know how much I earned that year? Just about $20,000 before taxes. So the amount of interest that
racked up on my credit cards was over 12% of my entire annual income. That is insane. Clearly I needed to pay this off, and I knew that I was not gonna
live with this debt forever. So now I'm gonna tell you a
few basic steps for paying off credit card debt, and what my actual process was like. Step one, you've got to
get serious, and commit. This is honestly the hardest part. A lot of us can live with debt. Why is my shirt doing this? That's really annoying. A lot of us can live with debt, and kind of push it to the back
of our minds, and ignore it, but it is so important to finally realize that
you are done with this, and you are gonna start
seriously working to pay it off. The reality is debt pay off
does not happen passively. You know, making minimum
payments for years is going to cost you so
much more in interest. The best way to pay off
debt is to pay it off as aggressively as you can. So I think it's important
to let your friends, and family know that
you're on this journey, and maybe they can help
hold you accountable. Maybe you just want them to understand why you'll probably be saying no to spending money in certain ways. It helps to have people around
you supporting your process. For me, I just announced it publicly, which you definitely don't have
to do if you don't want to, but you know, I'm a YouTuber, and I like to share my life
with the world, and overshare, and that's what this
video is doing as well. Next, I would definitely
recommend balance transfers. Use those to take advantage of lower, or 0% interest rates for a
certain number of months, sometimes up to like 18 months. Using balance transfers
wisely will obviously save you a lot in interest. Plus it kind of gives
you like a target date to encourage you to pay
that off before the lower, or zero interest rate ends. By the way, I don't have time to explain everything in detail, so if there's anything in this video that you are confused about, or want to learn more about, I will be linking some educational resources in the description. So yes, I did do a few balance transfers, so I did benefit from
lower interest rates, and sometimes zero interest
for a limited time, but it's crazy that I've still racked up that amount of interest,
even with balance transfers, I don't want to do the math on
how much it would've cost me if I didn't, but it would not be pretty. Second major tip, you
must track your income, and expenses religiously. So I actually made
another video about this. I was talking about what it's
like being self employed, and paying taxes yourself, and what my kind of budgeting,
and tracking routine is. So if you're interested, check it out, but the thing is I actually
enjoy this process now. Like I used to be one of
those people who was scared to even look at my bank account, and now I check it like weekly at least. I always know what I have spent, and I know what I'm gonna
spend in the next month, and that makes me feel more secure, and I don't feel like I'm drowning. Third tip, of course you have
to pay more than the minimums. They're kind of two main strategies when it comes to paying down debt. There's the debt snowball,
and the debt avalanche. The debt snowball, basically you would list all of your debts from smallest to largest. You would pay the minimum
on everything of course, but then any extra payments would go to the smallest amounts, and then once you pay that off, you would move on to the
next smallest amount. It's like a snow ball. This one is satisfying, because you at least get to start off, and get the ball rolling,
knocking things out, even if they are your smallest accounts, and then the debt avalanche
would be focusing on the highest interest rates first, knock out whichever account
has the highest interest rate, and then move on to the
next highest interest rate. So I actually think I did
kind of a combination of both. Obviously, generally I chose
just credit cards first, because of the higher interest rates rather than my student loans, and then I did pay off
some smaller accounts, like if I had an account with just a few hundred
dollars in the balance, I pay that off, but then I basically ended
up with two credit cards that each had about $4,000
to $5,000 on their balances, but anyway, the most important
thing in paying off debt is that you need to
somehow find extra money to be able to throw out those payments, whether it's an extra $50, $100, $500, whatever you can spare, you need to put it
towards your debt first. Basically, if I ever had a certain amount in my checking account,
say over like $2,000, I would take everything over that amount, and put it toward debt. So where do you find that extra money? Well, there are two basic strategies. Either you can cut your spending, or you can make more money, and of course you could do both. For me, I've definitely gone
down the make more money route. I explained that in the past, I simply was not making enough
money to cover my expenses, let alone have extra
money to pay towards debt. So I knew that one way or another, I would need to make more money. I'm still of course very
mindful of my spending, but I do not have like a strict budget. I still travel, because I have to fly across
the country to see my family, and that's kind of non-negotiable for me, and I do like to treat myself
in other kind of smaller ways, but there are some financial
gurus who will tell you that you need to cut out
everything in your life that is not a necessity. Like Dave Ramsey will tell
you to eat beans and rice, rice and beans. Other gurus will tell you
that your $5 daily coffee is ruining your finances. The thing is for some people being extra, strictly frugal can work, but for me, I knew that if I cut out
everything that brought me joy, and tried to live on
a super strict budget, I would just end up miserable, and I would hate the process, and if anything that
might cause me to fail, I definitely could have
cut down on certain things, but I probably would have
only paid off my credit cards like a month early, and to me that just
wouldn't have been worth making the whole process less enjoyable. I mean, let's face it, paying off debt is not fun. You've got to get through it somehow, and you've got to make it
something that you can sustain in the long run. Like I like my Regal unlimited movie pass. I like gonna Starbucks a
couple of times a week, but at the same time I don't like go out. So I save a lot of money that I otherwise would spend on entertainment, or drinks. This is why it's important
to look at your spending, and look at your budget, and figure out what works for you. What are your priorities, what are the things that you're
willing to spend money on that make you happy, and what things are you
willing to cut back on? But anyway, yes, in my
situation, increasing my income was a hugely essential element. Make more money. It's that easy, isn't it? No, YouTube is definitely unpredictable, and I'll admit that a lot of
my increased income this year has come from just being lucky, and a couple of videos
doing really well randomly. So if you want to support me, you can like, and comment on this video so that the algorithm will bless me. And if you're enjoying this video, I mean you could subscribe. Seriously though. Having YouTube be like my only source of income is interesting, because it does fluctuate wildly. Some months my only paycheck is my big Google AdSense payment, and then other months I'll get AdSense plus maybe
sponsorship paychecks. So based on my earnings in the first few months of this year, I had estimated that I was gonna make maybe $40,000 this year, which is about $3,000
a month before taxes. And remember I have to pay taxes
plus self employment taxes. So my taxes are higher
than if you had a job that takes your taxes out for you, but I have had some better
than average months, which have raised my income,
and now I'm estimating that I'm gonna make
over $60,000 this year, which averages to about $5,000
a month again before taxes. Overall, it's very cool. I mean, again, I've never made more than like $20,000 a year. So I'm like, wow, making that coin, throwing it to the banks. I love it. I should never dance again. Here's the big question a lot of you guys asked on Instagram. Of course, this depended on how much money I made each month, because it fluctuated. Some people can do what's
called a zero sum budget where literally every
dollar in your paycheck is accounted for, but because I don't get regular paychecks of the same amount, I can't
really do a zero sum budget. I have to look at not
only this month's income, but next month's income, and try to make sure that I will have enough
money to pay my bills. So I've brought up some examples for you. If I were to make it $3,000 pretax, that would be about $2,250 after taxes. My regular expenses like rent, other discretionary spending bills come out to about $1,800 a month, and my minimum payments
of debts earlier this year when they were at their largest, we're about $285 for student loans, and then $300 for credit
card minimum payments. So that's about $600 in debt payments, but if you do the math on
that $2,550, minus $1,800, minus $600, that wouldn't be enough. So in months like that, what I would have to do is underpay, or under save for my quarterly taxes, and then hope that I'd be
able to make it up in a month where I made more money. So if I were to make $5,000, I would pay approximately
25% toward taxes. I don't know my exact tax rate, but I use QuickBooks, and it just tells me how much
I need to pay each quarter. So then after taxes I would have $3,750, and then after my bills, and discretionary spending, I would have about $1,800 left, which is about half of
my after tax income. So then I would pay again those minimum debt payments about $600, and then I would still
have about $1,200 extra to put toward a credit card that month. I hope this is making sense. So I've reviewed all of my
tracking, and everything, and I've tried to figure out
kind of what my trajectory of debt payments was like. Basically, most of my
debt payment progress has happened since June, and I've been able to make
a few big chunk payments to slowly knock down my
balances month by month. These were my total credit
card balances by the end of each of these months, June was still at $10,000
so even from March when I made that first video to June, I didn't really make any progress. Then July I was at
$4,100 so I made a huge, huge, huge chunk that month, somehow. August $3,100, September $2,965,
and finally October, zero. That's still very surreal for me to say. Like I'll see it when I believe it, or I'll believe it when I see it, and I have seen it, and I guess I still don't believe it. I'm not making sense. So anyway, that pattern of debt payment probably looks quite erratic, but what happened was I was
so excited about paying more toward my debts that I was
kind of neglecting my taxes, my quarterly estimated taxes. So I was paying too much toward my debt, and not saving enough for my taxes, and I realized that about
halfway through the year I was like, okay, I've got to pause the extreme payments, focus on catching up on my
taxes, and then continue. So that's what I did. It's so hard to pay
your own taxes yourself. Like when it's taken out of your paycheck, you're like, okay, fine,
but to do it yourself, to get that money in your
bank account, look at it, and go bye to 25% to 30% of you. Kind of breaks your heart every time, but you got to do it. You don't want to be screwed
when it comes to tax time. We are responsible tax payers here, and by the way, from now on I am actually going to put aside, or just send a payment every single month rather than waiting until
the actual quarterly due date just because it'll be a lot easier on me, and of course now my
credit card debt is gone. Every time I say that I could
like tear up a little bit, because it's just, it's
been with me for so long. My debt and I have just
been so interconnected. No, really it's, I'm very proud of myself. Can I tell you guys a secret? My hype song regarding
my debt payoff journey is "Gimme" by Banks. Listen to it. It's about getting what
you want, what you deserve, and I've listened to it a
shameful amount of times fantasizing about this
moment, and here I am, $10,000 in debt lighter,
and it feels great, and I just cracked my hip. (distorted music) Oh yes, I did the math again on how much interest I have paid so far in 2019 for my credit cards, and that amount is $838
just January to September. That's insane. It is so nice to know that
I will no longer be wasting about $100 a month just
on credit card interest. So now I have more questions
that I got on my Instagram. Oh my God, I'm gonna, this shirt. Am I sweaty? Is that sweat? Yeah, it is. I'm unraveling. I'm supposed to look put together. I have questions for my Instagram. Let's continue. How do you resist lifestyle inflation? Basically, when you
start to earn more money, it is very, very, very
tempting to spend more money. How do you resist? Especially when you've been on a budget, you're like, oh, now I have
a little bit more money. Maybe I can go shopping. Maybe I can buy that thing I've wanted. It is so tempting, and it's honestly so easy
to spend that money away, rather than putting it toward your debt. So obviously for me, something that's helpful again
is when my paychecks come in, a portion goes to taxes, a portion goes to debt, and then I only leave myself with the amount that I actually need. So I'm kind of taking my
own money away from myself before I can spend it on anything else, but also, I will admit I have
been spending a little bit more than I used to. I have still been traveling, I've bought some more clothes, usually only about $100 a month, or less. You know, it's fall. I had to buy new things, but again, generally, my spending has not increased too much, and my income has increased substantially. Maintaining of that bigger gap
between what my expenses are, and how much money I'm making
is obviously the difference. How do you stay motivated
during your debt payoff journey? For me, I love to watch, and consume a lot of financial content, and of course tracking
my spending does help me. In terms of financial content, I watch The Financial Diet, Aja Dang for her college
debt payoff journey. Sarah Nourse makes a lot
of finance related videos about how to be responsible, how to save, great stuff. Occasionally I'll watch a
little bit of Dave Ramsey if I want some, like honestly, if I want to see people who
are in like a much worse situation than me. That's when I watch Dave Ramsey. I also watch a lot of those
like Millennial Money, like how people spend
their money type of videos, because now I have become obsessed. I want to know how much money people make, how much money they spend
on different things. Do you have debt? What kind of debt? How are you handling your debt? I've become incredibly nosy when it comes to personal finance. I wish I had x-ray vision just
to see into people's budgets, but yeah, mostly I stay motivated just by keeping my financial goals in the forefront of my mind. Constantly thinking about them, constantly seeing how I'm doing, and of course every time that
I paid off a credit card, or another balance, it's
a satisfying feeling, and it keeps you motivated to continue. What did you find was the most
helpful way to think about the process of paying off debt? To me, I just had to remind myself that the longer I take to pay this off, the more it's going to cost me. It is not fun to throw
thousands of dollars at debt, but I have to remember I've
already spent that money, and now that spending is
costing me this amount of money in interest every month. So I'd like to stop wasting that, and just get it over
with a rip the bandaid. Don't put this onto future you, okay? Because past you already did that, and think about how mad we are at her. No, I like her. I'm really getting lost. Big question, am I saving
wow paying off debt? No, I am not. To me it just doesn't make
sense for me to try to save while I'm paying interest. I would rather put as much money as possible toward those debts, get rid of them, and then
focus this hard on saving. It is important though to
have an emergency fund. So I really should, you know, take some time to build up a few thousand dollars for that, but I'm not gonna be
starting my retirement fund, or any serious saving until
my student loans are gone, or at least mostly gone. We'll see. I don't know. I feel like I just want to get rid of the
student loans altogether, and then move onto the next thing. It feels like a clean break. What is next? I was just saying exact same strategy, but with my student loans, and specifically I'm gonna try to pay off my parent plus loans first, just to help my parent's credit, so that they don't have
to worry about it anymore, and then I will focus on my own loans. So I've got updates on that too. I've actually already paid a good amount of my total student loan balance off, and I didn't even really realize it, and my current school, because I transferred, my current school's financial aid package covers the entire cost of my tuition, and fees, and everything. So I have not had to take
out additional loans, and that has been major. If I had stayed at my first university, I would have graduated last year, but I also would have graduated
with over $40,000 of debt. So progress, I did actually specifically pay off a Perkins loan. It only had about $500
left on the balance, and it was like a separate
thing to the rest of my loans, so I just wanted it gone. So I paid that off. The total for all of my
student loans were $27,405. Back in March the total was $20,747. So now I'm at $18,606, hell yeah. It seems a little bit crazy to cheer for that amount of debt. It's still a lot, but seeing that I've already just paid off $10,000 in credit card debt, and that I've almost
already paid off $10,000 of my student loans is amazing to me. That is really exciting, and I do want to be proud of myself, and see how far I've come, and I'm just gonna keep on trucking. How has your credit score changed? I literally just paid off
the last balance of my cards like two days ago, so I
don't think my credit score has been updated since then. But I did use the Credit
Karma simulator thing, and it says that my score
will go up to about 750-ish, and I can't actually remember
what my credit scores have been in the past. I feel like they were in the good range, so I think maybe it's gone
from like a 650 to like 750. I'm very happy with that. I'm a big geek about my credit score. I want excellent. I want to hit 800 baby. We're gonna get there someday. Did you still use credit
cards while paying them down? Yes, I did. It sounds kind of counterintuitive. I have a Starbucks card, and I have an Amazon
card, so I did use those, because they're only for
like small purchases, and the rewards are
kind of worth using it, but no, for most of this year, I pretty much paid everything
with my debit card. And now, recently I've actually gotten a new airlines reward credit card, so I'm trying to transition
to using credit cards, the smart way where you use
them to max out rewards, and then pay them off in full every month, and don't pay interest. So yeah, some people when they
pay off their credit cards, kind of want to cut them
all up, and burn them, and never use them again. I can see how people
might need to do that, or might feel like that's
better for them, but for me, I think I can responsibly use them, and not get carried away. I want to take full advantage of the possible rewards, you know? But I do find it intimidating to think of paying off an entire month's spending all at once. So what I like to do is I
kind of pay off my credit card balance like every week, or two. That might seem like overkill,
but to me that's easier, and then what I look
at my checking balance, it's more realistic rather than having a lot
of money in my checking, and be like, oh cool, I have money, and then looking at my
credit card balance, and being like psych, that's
all go into my credit card. So yeah, and last question, what do you recommend for younger people regarding credit cards, and student loans? So I have given a good bit of
advice to my younger brother, because he's currently
a sophomore in college, and generally I would recommend
that like 18 year olds get their first credit card. I know some people are scared of it because they think
they're gonna max it out, or I don't know, you might, but I think that for the sake
of your average credit age, it's best to get a credit
card as soon as you can as an adult just to
start aging that credit. But also I think it is important to learn how to use it responsibly, learn about credit, understand how you can
use it to your advantage, and then of course I would
recommend if young people are getting credit cards to actually pay them off, unlike myself, don't make my mistakes, but again, I don't really
regret a lot of my spending, because so much of it was
just necessary for me. I had no other options. When you're 19, and not making much money, and you need to pay for bills, and you need to buy food, and you're not relying on your parents, and you're not taking any
money from your parents. I mean, what can you do? Sometimes you're desperate. So that's what I did, and I don't know what I would've done if I couldn't have used my credit cards. I wouldn't have had any
other options really. But that is why as soon as I was able to, I started this journey of
aggressively paying them off. So rather than ignoring my credit cards for another five years, I have taken these steps to make up for my past
irresponsibility, or mistakes. Hello? I know there would be
some people who'd be like, why would anyone ask for your advice if you're the one who was the idiot who got into $10,000 of debt? And my response to that is like, I think everybody makes
financial mistakes. If you don't, I guess you're lucky, and maybe you have a lot of guidance, but a lot of us don't
have a lot of guidance, or we are in desperate situations, people who are in poverty, or who are living paycheck to paycheck, they don't have a lot of options, and that's why a lot of people
have to rely on credit cards, and other things that are not
the best financial decision, but sometimes it's all that you have. Yeah, but my point was just that just, because you've been bad
with money in the past doesn't mean that you cannot learn, and ended up really good with money. So Chelsea from The Financial
Diet would be a great example. She used to be terrible with
money, and now she's a boss, and she's leading a literal
financial company, so... So then when it comes to student loans, I've actually started
a whole list of tips, and things that I would recommend
when it comes to students making choices about their loans. Should you take them out? How much is okay to take out, et cetera. So if you guys are interested in a video about student
loans, let me know. I would probably make it
like a hybrid of this video, and Internet Analysis. Make it more like student
loan facts, and information, and plus tips, not the
title, but you know. Anyway, wow, here we are. Thank you guys so much for watching. Again, if you want to
continue supporting me, and my channel, and my
debt pay off journey, just keep watching my videos, give me likes, give me comments. It helps the algorithm like me, and recommend me a bit more. If you want to follow me on Instagram for some mediocre pics, you can do that. If you want to follow me on Twitter for some political Tweets, and occasional memes, you can do that, and just stay tuned for my next video. Okay, thanks, bye. (upbeat cheerful music)
