How to Pay Off All Your Credit Card Debt FAST

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- You might have had fun putting those purchases on your credit cards, but not as much fun taking them off. But I'm here to show you how to pay off your credit cards and all of your debt, and how to stay motivated along the way. (upbeat music) We talk a lot about living debt-free on this show, but you may be asking yourself, "How do you get there?" Well, getting out of debt, it takes a lot of work, a lot of sacrifice, and a lot of intentionality. So, long story short: It's not going to happen overnight. But just imagine what your life could look like without payments: to actually have money saved in the bank, owning your stuff versus it owning you, and no more paying for things that you've done in the past. And the great thing is, that life is possible. So, in this episode I'm going to show you the proven plan to get out of credit card debt, and all other debt for that matter. We're going to bring someone on and hear their debt-free story and talk through how you can stay motivated and encouraged on your journey. So, to kick us off in this episode, let's talk about how do you get out of debt? Because there are multiple ways people say you should get out of debt. One of those ways is debt consolidation. Nope, not a good idea—just going to tell you. Because here's the deal: debt is not a math problem, it's a behavior problem. And many people who actually use debt consolidation end up in more debt, because they've just moved their debt around and they don't address the real issue of what got them into debt in the first place. So it's not fixing the problem, it's just masking it. And as one psychologist put it, "Debt consolidation seems to create the psychological effect of making you feel like you have zeroed out." So then borrowers just start spending up again (sighs). Don't want that, so no bueno to debt consolidation. Another way people say you should pay off debt is highest interest rate to lowest interest rates. And that's not a great idea either, because again, this is not a math problem. "But Rachel, mathematically it would be correct to pay off the highest interest rate first." Yes, but if we we're doing math, we wouldn't be in credit card debt people, okay? So, it's not a math issue. By paying your debts off smallest to largest, regardless of the interest rate, you're going to get some quick wins. And we find that people get out of debt faster, not by the highest interest rates, but by paying off the smallest debt—which is the debt snowball. That's right, this method is proven that people get out of debt the most efficient way. And the debt snowball is this: where you list out all of your debts, smallest amount to largest amount— again, regardless of the interest rate. Pay minimum payments on everything and you pay off the smallest debt first. Once that's paid off, you take all the payments you were throwing at that, you roll it over to the second smallest debt, and once that's paid off you have payments from the smallest debt and the second smallest debt together, because they're paid off, and you roll it over to the third smallest debt. And you keep going and going and going, and throughout this process you're going crazy. You're selling stuff. You're getting an extra job. You're looking at your budget, and you're cutting stuff out. I mean you are making sacrifices through this process because you will find that the deeper you are willing to sacrifice your lifestyle, the faster you will be out of debt. So, I want you to be intense. Actually, I want you to be gazelle intense. (light music) So you may be asking yourself, "What is gazelle intensity?" Well, my old pops, old Dave Ramsey, coined the phrase. And it's a great one, because the picture is brilliant and it sticks in your mind. But in Proverbs 6 it says, "If you have signed surety, my son," which means you've gotten yourself into debt, "do this." "Deliver yourself like a gazelle from the hand of the hunter and a bird from the hand of the fowler." And I love that because you think about it, deliver yourself like a gazelle from the hand of the hunter. So think about the cheetahs, the lions—all the predators that are after the gazelle. And you watch it play out, even on the Discovery Channel. And you watch that gazelle outmaneuver, outrun their predator. And you see the intensity, because it is life or death. So when Scripture says that this is what you do to get out of debt—it is life or death—you go crazy. So, gazelle intensity is that you are nuts. Everyone around you is like, "What are they doing?" I mean you are selling stuff. You're working hard. You're sacrificing to get out of debt. Because I can tell you, it's easy to wander your way in. It is hard to wander your way out. So, what does gazelle intensity look like? Is it going to Hawaii or on vacation while you still have credit card debt? (buzzer sounding) Not gazelle intensity. No, no, no. Instead, if you spent thousands of dollars not on a vacation, but putting it towards your debt over the year . . . (dinging) Gazelle intense. Buying a grande, nonfat, vanilla chai, no-whip, heated to 113 degrees with Stevia and a dash— not a full pinch—of cinnamon? (buzzer sounding) Not gazelle intense. Coffee from home? (dinging) Gazelle intense. Going to your favorite concert, and out to dinner, and out after with friends, and Ubering all around town over the weekends? (buzzer sounding) Not gazelle intense. Staying home or going to your extra job? (dinging) Gazelle intense. See, intensity! Being intense about this, because the average person getting out of debt, using the debt snowball, being gazelle intense, pays off all of their debt in 18 to 24 months. So, yes, is there sacrifice involved? Absolutely. But I can tell you, you can still enjoy your life while your getting out of debt. I always think about Rosanna and Jeremy who were on the show a few months ago, and they were actually in the process of getting out of debt, but they had so much joy. And they talked about how much more fun that life is when they have to plan for things. And like, everything they do with their kids, you know, it's experiences, and sometimes it's free stuff. But they're like man, it's so much better than this life they were living that went from credit card bill to credit card bill. So it may seem like a lot, but just think about it. 18 months ago was February of 2018. Go back to your pictures on your iPhone— like look and see, oh my gosh, it's amazing. Time goes so fast. And again, paying off all their debt in 18 to 24 months—that's the average for all debts. That includes student loans and car loans and yes, credit cards. So, when you're on this process— this journey of getting out of debt—I will tell you, the heart issues are a real thing. And so contentment is something that you have got to learn, because contentment will get you through this process. So, if you've not checked out my Contentment Journal, make sure to click the link in the show notes, and make sure you are doing that. So, as you're doing all this work— and it's a lot of hard work to take care of your family and give them a better future, it's so great. But I really want to make sure that your family is taken care of over the long haul and that you have life insurance. One misconception about life insurance is that it's really expensive, and honestly that's true with whole life insurance, but not term life. It's actually really inexpensive and what I want you to have. So, in fact, the average 35-year-old couple can pay as little as $38 a month combined, and that would get them half a million dollars each in coverage for 20 years. But, you're not going to find that just anywhere, so that's why I use and recommend Zander Insurance. They shop around for you to get you the best possible rates. And you guys, don't wait—do it now. Go to zanderinsurance.com and get started today. It will give you so much peace of mind. All right, up next I want to introduce you to someone who is gazelle intense in paying off credit card debts, and so I can't wait for you to hear their story. (sad music) - I felt hopeless, disappointed in myself. - I felt like trapped, like a rat in the wheel. That I knew that we needed to do something, but I had no idea where to start. - We had about $40,000 of credit card debt. We just thought credit card debt was something we were going to have our whole lives. At first, you know, we each had a credit card. And a lot of it was we didn't have a lot of money. So that was—we used that as income. That was to pay for groceries. And anybody that would give us some credit to buy some stuff that we needed, we had it. It just seemed like something that was normal, that everyone did, so we just kind of followed along. - So one day I listened to The Dave Ramsey Show for the first time and his message clicked with me immediately, and I came home. Russell and I had a difficult conversation. We ordered the book and read it, and we were able to work through some things, and then it was all from there. And when we discovered this program and realized how stupid we had been, and we got on track, it was rough on the kids— rough on both of them. Especially our son, because he was a freshman in college and he wanted to do fun college things, and we had to tell him no. - The same thing with our daughter, you know. We were always go out to eat on the weekends, and that was just something that she looked forward to. And we had to say, "No, we're cooking again at the house." Going through this and our children seeing what we went through, I feel like they will have learned and even not get into this situation that we did. - Before, we didn't live on a budget, and if we wanted to spend something, we spent it. If we wanted to go out to eat, we went out to eat. And now that we live on a budget and everything is intentional, we have so much more freedom. - [Both] We're debt-free! (cheering) (applauding) - Thanks, guys, so much for being here and coming on the show. - Thank you for having us. - Yeah, absolutely. And you guys are here in Nashville because you just did your debt-free scream. - That's right. - Yes. - Yeah, okay. So how much debt total was paid off? - About $84,000. - $84,000—how long did it take you guys? - 22 months. - 22 months—right at two years. $84,000. Okay, and how much of that was credit card debt? - $40,000. - $40,000, okay - Yes, it was at least half of it. - Okay, so I'm like so curious. Okay, so how many credit cards did you have that totaled $40,000 of debt? - Right, so we had a Visa and a Mastercard that had most of it on there, but then we also had five or six cards from different stores that had $1,000 here, $1,000 here. - Totally, yes. So when you have $40,000 of credit card debt specifically, a lot of people get credit cards because they think okay, well my necessities—I have to have a credit card to survive and to pay the bills. Some people use it and they just overspend— they live way beyond their means. So what kind of boat would you guys be in? Both of those, like— - Both. - What did you put— yeah, what did you put on the credit cards? - Initially, when we started out, we were very young. We had our son young and we needed it for necessities. We needed it for groceries, just to survive. I mean I think you stated it as it was our extra income. - Yes, yes. - If you will. - Yeah. - And then once we got to a point where we didn't need them anymore, we had had them for so long that that was an option to get whatever we wanted quickly and without planning for it. - Totally. Yeah. Which is so normal, right? I mean, that's how so many people live. So when you bought things like a new mattress or furniture and all of that, did you know going into those purchases, like, we're not going to be able to pay these off at the end of the month? Because some people say, "Well I have a credit card. I'll just pay it off at the end of the month." Did you have that mind-set? Or did you think, okay, we're buying things that we clearly are not going to be able to pay off, but we're okay with that? - I think we were okay with it. - Yeah. - We were fine with oh, we'll take two years to pay it off, or three years to pay it off. - Yes, totally. So you lived in this cycle with credit cards for how long, would you say? - Our entire marriage up to that point. So we'll be married 20 years next month so— - 17 years, probably. 17 or 18 years. - Yes, okay. So 17 years of kind of this habit, right? Of this being part of your life. What was the moment that you said, "I'm done. I'm so tired of seeing these credit card bills. I'm so tired of being in debt. I've had it." What was that moment for you guys? - Yeah, it was right before Christmas in 2016 that we had that difficult conversation. We got it all out there on the table. It was a very difficult conversation. - Yeah, I was going to say—I mean that's scary you guys. - It was scary. - Yeah, for a lot of people, they just like . . . Ignorance is bliss in a sense, and they just know they have all this stuff, but pulling it out and actually looking at the numbers— it's really, really scary. So, how did that go? You said it was tough, but talk to me about that. - It was. It was. (laughing) - Were there tears? Was there yelling? Like, I mean all of it. - There was. There was tears. There was yelling. It was probably the most epic fight I think we've had in our marriage. - [Rachel] Wow. - And yet, if money can destroy a marriage, and I think, I think ours was perhaps on that path. So I think this really saved our marriage. - Wow, yeah. Well, Russell, I think this is such a great point. Because especially with couples, when you're not communicating about money, naturally one person kind of just takes on the responsibility of the money, and the other one doesn't. And so the person that's responsible, it's a very lonely place, because it's like you're the one— all the responsibility is on you. It feels heavy. It feels like this burden, because you're like, "I'm the only one that knows this." And so, did you find that it was this lonely place, and you felt that burden lift when you shared this with her? - Oh definitely, yes. It was weight of my shoulders and my chest when we finally knew exactly where we were. - Yes, so good. So what would you say to someone who's hearing the story— because there's a lot of people watching this—hearing, "Wow, they got out of all their debt, including all this credit card debt, and they're not living with credit cards." But they are sitting there thinking, "But you have to have a credit card. It's 2019. You still have to have a credit card." What would you say to them? - No, you absolutely do not have to have a credit card. A credit card is this chain around your neck that prevents you from using your income for the joy of life, for generosity to others. It's just not something you should do to yourself. - So those out there watching that are in the middle of their debt-free journey— they're paying off debt. Because there's a lot of people watching on Baby Step 2— the majority of people are. What would you say to help them stay motivated? That you're like, "Okay, we know it's hard, it can be a long process." But what could they do to stay motivated? - I would say my biggest motivation was that goal. That picture in my head of where I wanted to . . . How I was going to celebrate getting through that. - Yes, that's so good, so good. What about you Russell? - Yeah, I mean, the same thing. I mean, just knowing that when we were done, we were going to have that freedom, and how good it was going to feel. And, you know, when we got to Step 3 and we started building our emergency fund, just seeing some extra money go in the bank and it sitting there and you can look at it—that was a nice feeling too. - Oh, so good. Oh, it totally is, yes. Give me an adjective of before, like how you felt, until sitting on this couch right now being completely debt free with money saved now in the bank with the emergency fund. What would you say? - I feel like a completely different person. I can't imagine going back to the way we were living before. That would be waking up in a nightmare. The freedom we have now, living on a budget, knowing that when we do something, when we spend money, it's intentional. It's so freeing. - It's so freeing, and I love that, because it's the tried and true picture of the idea that being in control gives you that freedom. A lot of people think, well living my life with credit cards and doing whatever I want, whenever I want it, that doesn't end up in freedom, it ends up in stress and bondage. I know you guys experienced that. And so, I think that was so well said. Well, thank you guys so much for being on. I really appreciate you sharing your story. - Thank you. - Thank you. - All right guys, coming up next we're going to talk about 10 ways for you to stay motivated while you get out of debt. (upbeat music) All right, as you're getting out of debt it can be a long process, so you have to stay motivated. So here are 10 ways for you to stay motivated while you're paying off debt. Number one: Track your progress. Seriously, it's so important to see your progress visually. So I've created some free goal trackers you can download for each of the debts that you have. Just click the link in the show notes so you can download those. Number two: Remember your why. Why are you doing this? Is it for your kids? Is it for your future? Is it because you want to go on great vacations every year after you're out of debt? Like what is it? What is your why? That keeps you motivated. Number three: Dream about retirement and the future. Because just think, if you're not making the sacrifices now, 65-year-old you does not want to make those sacrifices. No, sacrifice now. So, dream about the future. Number four: Set small rewards. This is really true, especially with student loan debts. Student loan debt—there's always, it's a ton. So maybe you break it up and you say, "Okay, every $15,000 I pay off, you know, I do something kind of fun in the middle of it." So sometimes you have to have those small rewards throughout this process. Number five: Remember how far you've come. The trackers are going to help with this. But look back and just remember: Okay, if we've done it, if we've made it this far, we can keep going. We can keep doing this. Number six: Make sure you have someone in your life who loves you enough to hurt your feelings and keep you on track. If you have all "yes" people around you and you're like, "Oh, I really want to buy this new sweater." And they're like, "Yeah, do it." No, no, no. Get that girlfriend out of here. You need the girlfriend you call and you're like, (inhaling) "I really want to buy that J.Crew sweater." And she's like, "Listen, you can buy it next year. Just hold off." That's who you need. Number seven: Check your budgets. I love this. I've gotten in the habit of doing this. I check EveryDollar almost every day. Just look at the progress, and just to see how we're doing monthly with our money. And the same is true when you're getting out of debt. Number eight: Plan for one fun, cheap or free thing that you can do once a week. This is big, because in this process of getting out of debt there's a lot of things you can't do. So find something that you can do. Number nine: Quit the comparisons and do a social media purge. Yes, we love our fashion bloggers and our lifestyle bloggers, but sometimes you may need to unfollow them. Because they may have stuff that you just simply are not going to buy. So, why tempt yourself? Do a little purge if you need to. And number 10: Surround yourself with people who are encouraging or who are also on the same journey as you. And a great way to do this is to join a Financial Peace University class. This is our nine-week class. It walks you through the whole Baby Steps in getting out of debt, budgeting, insurance—like everything you need to know is there, and you're actually with a group of people. So, click the link in the show notes to sign up for a class. All right you guys, this was so fun. I loved this episode, talking about getting out of debt, and especially credit card debt. Living without credit cards—we can do this. So I hope you feel super inspired to be gazelle intense at paying off that debt. Now, if you've not yet subscribed to my podcast, make sure you do that because we have some really fun bonus material that comes out there. And as always, for you, make sure that you take control of your money and create a life you love.
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Channel: The Rachel Cruze Show
Views: 154,697
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Keywords: How to Pay Off All Your Credit Card Debt FAST, how to pay off credit card debt, how to pay off credit card debt fast, how to pay off credit card debt with low income, how to pay off credit card debt with no money, how to pay off credit card debt faster, debt, credit card debt, how to pay off debt, credit card, money, credit, budget, debt free, pay off debt fast, pay off debt, debt snowball, budgeting, credit cards, personal finance, paying off debt, snowball, get out of debt
Id: kCt3ypKyrlE
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Length: 19min 25sec (1165 seconds)
Published: Mon Aug 19 2019
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