You probably think the hardest part of paying off debt is making enough money to pay off the debt. This simply isn’t true. There’s plenty of money to be made in this world. You just have to put in the work. Having tried (and failed) many times to pay off our own debt (more on that here), I can tell you the hardest part of the journey to debt freedom is being disciplined enough to close the credit cards and never go into debt again.
Dave Ramsey, America’s Trusted Voice on Life and Money, is a radio host and financial mentor to millions. He teaches seven steps to financial freedom. They are as follows:
Seven steps to financial freedom…sounds good, right? It sounds amazing! But the first two steps can be very tough to do when you’re living paycheck to paycheck, behind on rentm or even worse, about to be evicted or foreclosed on. The hardest part of paying off debt isn’t actually paying off debt. It’s saying goodbye to that INsecurity blanket of credit cards.
Hardest Part of Paying Off Debt
We’ve paid off many, many debts in the past. We’ve even cut up our credit cards. We just paid off SEVEN credit cards last month. We had a large windfall of money and decided to throw it all towards our snowball. A debt snowball is a method of debt repayment in which the debtor lists each of his/her debts from smallest to largest (not including the mortgage), then devotes extra money each month to paying off the smallest debt first while making only minimum monthly payments on all of the other debts. Basically, it’s listing your debts, smallest balance to highest balance and then paying as much as you can to the smallest balance until you’re able to eventually pay everything off (one at a time, adding to the snowball).
Let me tell you what’s going to happen when you have a MASSIVE win at paying off credit card debt. Aaron and I paid off our credit cards and the following WEEK, we received four convenience checks. They each had different terms, so if we wanted to, all we had to do is write a check and we’d be right back in debt.
Thanks, no thanks. I was honestly waiting for that last statement to come in. You know….the one with the tacked-on accrued interest that they almost always refuse to waive, even though you just paid off a boatload of debt with them! I immediately called that particular credit card company, and in a matter of 5 minutes, had $12,000 worth of credit cards closed. Man, that was hard! But I know it was the right thing to do to keep us on the path to debt freedom.
Before you tell me all about how closing these accounts will have a negative impact on your credit score, I will go ahead and put this out there. I agree with you. My FICO score dropped four points from closing those accounts. And if you’re following what Dave Ramsey teaches, you don’t worship the almighty FICO anyway. If you’re looking for a way how to build your credit score without a credit card, be sure to check out my other blog. 🙂