Since graduating high school, I've always had credit card debt. It started as justifying spending more than I made on smaller purchases. As time went on, my credit card balances increased.
And always having credit card debt made me miserable.
As of February 1st, 2019, we paid off our last personal loan! This means we no longer have any revolving credit card balances and personal loans. The only debt we now have is with our mortgage.
To break my propensity to go into credit card debt in the future, I never want to forget what it feels like to have massive amounts of credit card debt. Below are the top ten feelings I'm experiencing now, as we enter the next phase of our lives.
#1: No Longer Feeling Behind
When you have significant credit card balances that carry over month to month, it feels like you are always behind. There are few things less motivating financially than seeing a negative balance.
And once you are used to feeling behind, it becomes easier to justify going into more debt. Each decision to go into more credit card debt becomes easier than the last until you wake up one day with $50,000 of consumer debt, and not sure how you are going to dig yourself out of that hole.
Becoming credit card debt free is like having a massive weight lifted off of your back. Your financial world starts looking different. And it feels fantastic.
#2: No More Wasting Money Paying Credit Card Interest
I've paid thousands of dollars every year towards interest on credit cards and personal loans. This is money that I didn't see. I was paying for the “privilege” in having this consumer debt. And it cost a crap ton of money!
But what benefit did I really get in spending more than I made? The only thing it did was create a perpetual mindset in maintaining large credit card balances and limiting our future options. We helped make a lot of credit card companies rich, instead of adding to our net worth. This is a tragedy because we don't get anything positive from having this debt.
It is like throwing cash out of your car window. Instead of spending money on credit card interest, it feels incredible to decide how to use 100% of your money. It is like regaining control over how you spend our income. Credit card fees seem to merge into your credit card balance, and few people pay attention to how much they are paying on credit card interest every year.
Below is a list of all the interest I paid in 2018 on our credit cards, personal loans and line of credit accounts:
- Wells Fargo Line of Credit: $1,487 (13.5% interest rate)
- USAA Personal Loan: $2,092 (10.94% interest rate)
- USAA Credit Card: $1,400 (11.15% interest rate)
- American Express Credit Card: $477 (19.24% interest rate)
- Chase Credit Card: $35 (19.74% interest rate)
- Citi Credit Card: $91 (17.49% interest rate)
- Total Interest Paid (2018): $5,582
We paid a total of $5,582 in interest on our credit cards, personal loan, and line of credit accounts in 2018! There are a lot of things I could have used that money for.
It is depressing to think about how much credit card interest we paid last year. It is worth mentioning the account that had the best interest rate (USAA Credit Card) still had a tremendous amount paid towards credit card interest ($1,400). This debt was carried over from many years ago, and it feels great to get rid of it finally!
#3: Budgeting Becomes Easier
When juggling multiple negative credit card balances every month, you are trying to pay off; you have to decide what you are going to pay down. Not only does this not bring up very good feelings, but it can be hard to choose which accounts to focus on. Do you pay off the larger balances with higher credit card interest rates, or try to knock off the smaller balances with lower rates?
Either option is not great. Once you get consumer debt-free, you no longer have to worry about revolving negative credit card balances. To make budgeting more manageable, especially if you use a budgeting tool like YNAB and account for every dollar spent, you can set up each credit card to pay off the full balance every month.
The fewer accounts you have to manage and keep track of, the easier it is to balance your budget.
#4: Less Financial Stress
Credit card debt is a financial nightmare because the right choice never feels great. You know you should pay down these balances, and you want to be debt-free. You would instead do other things with your income. But what choice do you really have?
That is why getting debt free becomes vital in relieving financial stress in your life. Once you get those credit card balances paid off, you have more options on how to spend your money. You no longer have to throw your money away paying interest, and you don't have the weight of your credit cards on your back.
#5: Building our Net Worth
Seeing a negative balance get less negative is not as good as seeing a positive number go up. And once you start building your net worth, that number tends to grow at a larger pace with time.
Seeing your net worth increase every month brings up all sorts of positive financial feelings. Instead of your financial “feelers” pointing down, they begin to point up. And things start to look more positive. Your financial situation begins to feel empowering, and you see all the options the future can bring you.
Having a massive credit card burden sucks your life energy. It is like a blood-sucking leech in your life.
#6: We Can Now Fully Fund our Emergency Fund
Not having an emergency fund available for unexpected situations is like walking on a tight rope. It won't take many circumstances to lose your balance and have to go back onto the credit card debt payoff treadmill. People who have an emergency fund report being able to sleep better and have less financial stress in their lives.
Over the next few months, we plan on fully funding our long-term rainy day stash of cash. I'm excited to get to this point because it will be the first time I will have a fully-funded emergency fund. Every day since becoming debt-free feels like we are making real progress towards our goals.
Getting rid of our credit card debt feels like we are finally free to pursue our dreams.
#7: Less Arguing About Money
If you are married and have credit card debt, you know that fighting about money can happen frequently. And these fights are not fun. “Wait, you want to purchase this item? Do you not realize we are paying down $50k in debt? Are you blind?“
Instead of arguing about how we are going to pay off debt and cut back on expenses, it is exciting to think about how we are going to use that freed-up cash in our monthly budget.
Options begin to open up when we don't have to worry about credit card debt. Financial discussions become easier and less contentious.
#8: More Financial Flexibility
Not having to use a large portion of our income to pay down debt is exciting because we now have options on how to use that money. If we decide we want to save for a new vehicle, we no longer have to do that and also figure out how we are going to pay down our debt.
We can pursue more things that were hard to justify while paying down debt. When you have a negative net worth, it is hard not to focus on the bad decisions you made. This becomes more difficult when you realize where you could be if you didn't take on as much credit card debt.
#9: More Job Flexibility
Losing a job and having a large amount of consumer debt can be stressful. In that situation, you are most likely to take whatever high paying job you can get, as soon as possible. When you don't have debt, and especially if you have an emergency fund, the situation becomes less time-sensitive.
Luckily, I love my job, and I am not worried about getting fired. But if that was to change, I know I am not looking at a massive amount of credit card debt I need to continue to pay down. It opens up my options and relieves stress during difficult times.
You also have the opportunity to change jobs, if there is something you would enjoy more even if that means taking a pay cut. Again, it becomes about having more options when you don't have massive credit card debt.
#10: FIRE Becomes Possible
Ultimately being debt-free allows us to pursue what matters most to us. We are not 100% sure what this means for our future, but it would be great to have the option of quitting our normal jobs at some point and having more flexibility with our time.
Instead of focusing on paying off credit card debt, the focus shifts on how we want to use our time. The more options we have in that regard, the better.
Pursuing FIRE looks different for everyone, and we are excited to begin to think about how we want that to look for us.
Having credit card debt is a life sucker. There is nothing about maintaining credit card debt that is enjoyable.
And I'm sick of feeling like we are always behind. I hate seeing negative account balances. Having always to discuss how we are going to cut costs to pay down our credit card debt is depressing. It is not an enjoyable way to live, and I'm no longer making excuses in how that is “normal.” Even if most households have a ton of credit card debt, I'm no longer accepting that has to be how our future looks indefinitely.
The future is now starting to look bright. I'm excited about tomorrow, and each month that excitement grows. We are working towards our long-term future, and not letting our past financial mistakes dictate the choices we have to make now.
Have you struggled with credit card debt? Where are you at in the process of wiping it out?
Chris is a financial blogger who loves to be transparent about money-related issues. He’s paid off massive amounts of credit card debt and is the blog author of Money Stir. His main focus on Money Stir is talking about how money relates to our relationships, personal development, and how to plan for the future we want. He’s been quoted on Market Watch, The Ladders, and other publications.