May 10

How I Paid Off My Credit Card Debt While Living in a Pricey City

Annah*, 31, got into debt to the tune of $5,435 right after college by using her brand-new credit card to treat herself and her friends. Because she was living in San Francisco, an expensive city, and not making much money at her dream job as a writer at an alt-weekly, she had to figure out exactly how to pay off her debt — which bubbled from $1,500 to over $5K over the course of a couple of years. Things didn’t start to improve until she committed to pay off her credit card debt by taking a second job.


Here, she shares her story, including the lessons she’s learned to make sure debt doesn’t happen to her again.



The Stats:
Highest Amount of Debt: $5,435

Amount of Time to Pay it Off: 7 months

Credit Cards: 1

Income (at the time): $32,000

Income (now): $100,000



How I got here

I stayed away from credit cards all throughout college. My dad had warned me that I could easily overspend with a credit card and I didn’t really see the need to get one, anyway. With the help of my parents, two part-time jobs, and a couple of grants, I graduated from college debt-free. I felt very lucky and maybe a little cocky — after all, I managed to get out of college with a clean balance, what couldn’t I do?! The second I landed my first job, I signed up for a credit card and was approved for a $1,500 limit. My salary was meager, but I reasoned that a credit card was necessary because I was a career woman and deserved nice things!


For instance, didn’t I deserve a cocktail (or three) to celebrate my career kick-off? My second week on the job, I took my friends out to celebrate the start of my baller new career and promptly spent about $250 on margaritas. To this day, I’m not exactly sure what I was thinking, other than I was finally an adult and felt like adults did things like buy rounds of drinks for their friends to celebrate big occasions. I loved being able to cover the tab, and felt like I’d be able to pay it down quickly. However, my bad decisions quickly spiraled from there — a new dress for client meetings, a blowout for a date, and many more margs. Soon, I’d spent my limit.

Avoiding the issue

After I reached my limit, the credit card was useless to me. More than useless — it felt like a weight on my shoulders. The bills kept coming. For a while, I paid the minimum each month, because that was all I could afford. With an interest rate of 22 percent, the balance grew–and more quickly than I ever anticipated. Since paying the minimum is not the greatest way to handle things if you want a dwindling balance, my debt started to grow.


Even though I could no longer use my card, I was still paying into it month after month. It felt like such a waste to me — I was paying for experiences I already had and felt like there was little to look forward to. And then I moved and forgot to update the forwarding address. That’s when I stopped paying the bill altogether. I can’t explain why I did this other than that I was very young and very good at avoiding things. Soon, I forgot that the debt existed at all. It seems impossible to imagine doing that now, but it’s what happened.



The turning point

Three years later, I was moving on up in life. I got promoted to an editor position and got a small pay bump to go along with it. I was applying for a new apartment so I could finally live on my own (#goals). When I put in an application on my dream apartment — a one-bedroom in a dreamy old Victorian in the lovely Noe Valley area of San Francisco — my application was denied, and I found out my credit score was terrible. Upon digging further, I learned the score was so low mainly because of my unpaid credit card bill.


At the time, I didn’t understand how debt could affect other aspects of my life, and I was heartbroken. I owed over $5,000, and if I didn’t pay it off, I’d never be able to move, or do lots of other things I wanted to do in life, like buy a car, house, and other rites of passage. I felt terrified and trapped.



The strategy

Once I gathered myself together, I started to think through my options. My salary still wasn’t nearly enough for me to pay it off, and because I felt extreme shame and embarrassment that I’d let it get so out of control, I didn’t feel comfortable turning to anyone else for help. It seemed like the only option was to get another job. I took on a part-time job as a barista in the evenings and on weekends. It was hard to pull up to the coffeehouse after a full and exhausting day at my main job, knowing I had six hours of standing on my feet in front of me, and I didn’t get to see friends and family for what felt like months.


Still, as I paid down the credit card debt, I felt so much better — my stress headaches even began to let up. It made all the missed meals and celebrations worth it. I also knew that in a way, I was lucky; plenty of people had much higher debts than mine and were having an even tougher time paying them off. Thinking about that gave me some perspective. And after about seven months, I’d fully paid off and closed the card.



My life now

Today, I have two credit cards, and I monitor my accounts like a hawk. I pay them off in full each month and carefully track my spending. Although I make considerably more money now, I am much more careful than I was when I racked up those debts. I don’t avoid money issues, I confront them head on — I check my bills religiously and always pay them on time. I know the alternative, and where that can lead. And I know I never want to feel out of control of my finances again.



My Debt Lessons

1)Budget, budget, budget 

Create a spreadsheet of money coming in and going out so you know you have enough to cover everything.


2) If your credit card becomes a problem, get rid of it (even temporarily) 

If you regularly find yourself going over your spending limit, it’s best to toss the card than to continue the madness. When you’re more stable, you can come back and try again.


3) Set aside a little money each month for fun 

One of the things I turned to credit cards for was fun extras — now, I just set aside a little from each paycheck for treats like margs!



*Name has been changed


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