Howdy! Sorry I'm late getting this Q&A Monday post out, but I'm sinking into the “I'm being so lazy and it feels so good” trap at this little vacation at my mom's house in Oregon.  Needless to say, I'm slow out of the gate. Oops. But I couldn't let the day go by without posting another FABULOUS reader question, late or not! (P.S got questions for me? Drop them HERE!) Today I'm answering a question that I get ALL the time about…duhn duhn duuuuuuhn…

How to afford paying off credit card debt, regardless of how much money you make or how much debt you're in! From

How to afford paying off credit card debt.

“How do you find money to pay off debt…when you're in debt in the first place because you don't have enough money to cover everything??” “How do you find room in your spending to pay down debt quickly? At the rate we're going it will take us 40 years!” “I don't see how it's possible to pay off debt, we live paycheck to paycheck as it is and hardly have enough just to cover our bills.”

I know it seems daunting, and I know it seems impossible…but trust me…IT'S NOT. We paid off over $10K on one credit card in just one year, bringing home less than $3K/month on the months we could bring home a paycheck at all (read our story HERE). Oh, and since we're on the topic of CC debt, be sure to check out “How to pay off credit card debt” in this other Q&A. Ok, Here's how to AFFORD getting that debt paid off, and how to work it into your budget:

Watch the video online or click and watch below:

See? When you break it down, it's actually pretty simple. Here's a review of the 9 steps to paying off credit card debt FOR GOOD, and how to work paying off debt into your budget:

1. Stop using your credit cards.

Don't pile debt on debt! Fill a bathroom Dixie cup with water, and literally freeze your cards in the freezer if you have to. But move to cash-only or pre-paid debit cards (that don't pull from your bank account if you over-draw) until you get your credit cards under control.

2. Cut back spending

Debt is like weight. You put on weight because you are consuming more calories that you burn, which leads to excess fat/weight. It's the same with money – if you spend more than you make, it piles up as debt and takes lots of effort to get rid of, just like weight. The only way to get rid of debt is to spend less!

As a rule, you should ONLY spend only 70% (or less) of what you make. What do you do with the other 30%? Simple. 20% should go into savings each month (10% into emergency savings, 10% into regular savings – read all about the 7 bank accounts your family should have for info), and 10% should go to donations or tithing (what goes around comes around), or if that's not your thing, you should at least invest it and make your money work FOR you.

3. Find your actual TAKE-HOME income

You might think you know what your “income” is…but do you know what you actually TAKE HOME each month? The number you need is your income AFTER taxes and withholdings (401K, takes, health insurance, etc); so it should be the amount that is actually deposited into your bank account after everything is automatically withdrawn.

4. Find your monthly living expenses total

For this you need to separate your spending into 2 categories: NECESSARY expenses, and UNNECESSARY expenses.

Necessary expenses:

  • Utilities (gas, electric, including gasoline)
  • Bills (debt payments, mortgage, car payment, rent, alimony, medical bills, health insurance unless it's automatically deducted from your paycheck)
  • Groceries ($100 per person in your family per month, including food, shampoo, toiletries, dog food, diapers, etc. See how I grocery shop for details on this)

Unnecessary expenses:

  • Shopping (clothes, home decor, gifts, crafting, hobbies, DIY, makeup/beauty items, etc)
  • Entertainment (eating out including coffee/drinks and fast-food runs, movies, vacations, subscriptions/memberships to things, dirt biking/boating, etc)
  • Memberships/subscriptions/lessons/extracurriculars (gym memberships, diet food/coaches, sports for kids, dance, piano lessons, etc)
  • Services (car washes, babysitting, lawn mowing, cleaning services, dog grooming, pedicures/spa treatments, hair cuts/color, etc.)
  • Excessive or unnecessary cars or mortgages (more than 1 car? Huge house with a high payment when you could be fine in a smaller rental for a while? Dig deep here!)

Yes, we probably think of hair cuts and maybe even clothing as “necessary”. But it's not. You COULD do a hair cut yourself. Or live with an overgrown cut for a while. Or wear clothes that are a few year old. Sure, it probably wouldn't be fun and maybe you'd look scraggly for a while. But the only things that are necessary are the things that would affect your health/life, and your shelter.

How to pay off credit card debt regardless of how much debt you have or how much money you make.

5. Cut out ALL unnecessary spending. Yes, ALL.

Now, this is where many people stop reading, thinking “ha! right. Not in your life, missy.” “Not worth it.” “Why would anyone do that to themselves?” “What kind of life is that?” “I'd rather take the debt” “That is beyond extreme” “Yeah, like anyone would actually do that” “I only have a little bit on my credit card, I'd rather take the slow route than get rid of all the fun in life.” “There's no way we could do that, our lives would crumble!”

Look, guys, I'm going to get real with you for a minute here. If you have a balance on a credit card – large or small – it's because you are being irresponsible with how you spend your money and it needs to stop. TODAY. I'm sorry, don't hate me for saying it like it is- but it's true. We were in major CC debt once, remember? So I'm talking to myself here too, you know!

Sure, sometimes unforeseen circumstances happen and you have to live off of cards because of an emergency, I know how that goes. God bless credit cards for that exact reason! But whether it was from an emergency or from overspending, it doesn't matter! You have a civil and family responsibility to get REAL. You are in DEBT. You are spending more than you MAKE. You are in TROUBLE. You need to fix this FAST.

So now, let's go back to what I said above about cutting the unnecessary spending. Will it be hard? Yes. Is it no fun? The worst. Will you cry? Yup. I cried a lot. But is it worth it? Well, obviously. But more than that it's NOT A CHOICE ANYMORE. This is something you MUST do. It's a natural consequence of leaving a balance on your card. You over-spend, eventually (meaning NOW) you have to pick up the mess.

What's your plan otherwise? Live with debt for the rest of your life? Let it pile up, hoping you'll win the lottery or make more money? Ignore it and plan to deal with it later? Ignore it for your entire life and let your kids/family pick up the pieces when it falls on their shoulders eventually (which it will…it doesn't just go away)? Think about all the alternatives for a second, then come back and let me know if you have a plan that will work, other than what I said above.

Now, let's try this again…

“Totally. I see where you're coming from. Totally sucks, but let's do this.”

Aaah. Much better. Moving on…

Now, I understand that what I'm asking you to give up will be really really hard. But guess what?

It won't be forever.

Not if you do it right and DON'T get into debt again, that is. In fact, the more you sacrifice and the faster you commit to it, the sooner it will all be over! Sacrifice is giving up something GOOD, for something BETTER. Yes, it will sting now. But it's all for a BETTER life on the other end! I don't know about you, but I'll take BETTER over GOOD any day.

Look, just trust me on this one…

We had over $10K on just one credit card, and my husband was bringing home less than $3K per month on the months when he actually brought a paycheck home. We had a new baby and lots of bills. But we sold our car (yes, we really did – saved us over $500/month!), we stopped eating out, we sold our furniture, started making gifts for people rather than buying them (and lots of other money-saving tactics) and BAM. Out of debt in just one year. Was it a hard year? Well…not really, actually. It was an adjustment, sure. But once we made the decision to stop betting BY and start getting AHEAD, it was exhilarating! Every time we paid off a debt, bill, or saw the numbers in our savings accounts growing, it fueled our fire. It's like losing weight – it hurts to get on the treadmill at first. But then your mind and body get used to it and get invigorated by it, and it becomes a new source of happiness. That year was one of the happiest years of our lives, actually.

But looking on the other end of all that sacrifice? Now we have a gorgeous 5,200 sq foot home, I drive a great car, and I'm able to get my hair professionally colored again all because we were patient and did what we did when we needed to do it, then learned to save up, be patient, practice some delayed gratification, and now do things the right way which will benefit us for rest of our lives.

Just get creative

Instead of getting your hair colored, do it yourself at home! Instead of paying for entertainment, find all the free things your community offers and take advantage of that! Want an iPad? Enter contests until you win one! You don't have to GIVE UP everything in life, you just need to get creative and do it right!

6. Set a tight “living expenses” budget and stick with it

You need enough to cover your necessary expenses, but really, as much money as you can physically spare should go toward debt. So set a tight but reasonable budget and DON'T GO OVER IT! See the simplest budgeting technique ever for a simple way to do this.

7. Take “unnecessary spending” money + all extras and put it toward debt

ATTACK. THAT. DEBT! The reason you're cutting back is to cut out the debt as quickly as you can! If you only have $1K – $2K or less on a card, it might only take you a month or two! If you have $50K on a card it might take you a few years. Just remember, the more money you find to put toward the debt, the faster it will be gone!

How to pay off credit card debt, for GOOD, regardless of how much debt you have or how much money you make.

8. Once the debt is paid off, put the money into savings

You need 6-12 months living expenses in your savings accounts. Once your debt is paid off, don't rush back into spending your money, hang in there just a little longer and put it into savings first! Then, next time you run into a financial hiccough you can pull money from savings in an emergency instead of going into debt. It will protect your family and will allow you to be self-reliant instead of relying on debt (which, if you ask me, is completely unreliable).

9. Be patient and get used to living within your budget for at least 6 months before increasing spending.

Patience, patience. That's all I can say. If, the moment your debt is paid off and your savings is built up, you jump back into spending all your money, you'll fall into the same trap again. Ease into it. Give yourself a solid 6 months of waiting altogether, or at least slowly increasing your budget BIT BY BIT to make sure you don't go overboard.


WHEEW! I know that seems like a lot, but YOU CAN DO IT! Thanks for reading/watching, and good luck!



If you’re new here, welcome! You can get all my budgeting and finance tips, and my secret sauce in my fun-to-watch video program Budget Boot Camp! You have nothing to lose because if you don't save or earn at LEAST what you paid for it, I'll give your money back. So use the code FCFBLOG at checkout to get an extra 10% off, and give it a try!