Proverbs 22:7 ‘The rich rule over the poor, and the borrower is a slave to the lender.’
Becoming credit card free and living life more frugally hasn’t been an easy journey for us. But the option of living life as borrowers, ‘servants to the lender’ and to credit card debt, can’t feel that great either, right? It certainly didn’t feel that great for us. Despite the hardships we faced, we have learnt so much from our mistakes over the last few years and I feel it in my heart that we have become stronger in faith and in character.
We got our first credit card years ago out of absolute ignorance, as unbelievable as that sounds. And yes, we did use it. We also got a second card a few months later. Why? Well, we didn’t apply for the second card: it was offered to us and we accepted it. We knew that interest would accrue on the balances owed but we had no idea how much or how long it would actually take to pay off balances on credit cards by paying the minimum balance each month. We never really bothered to look at the statements much and we continued to rely on the card for emergencies.
At the time, the car we had was really not the most reliable one. It was old and not in the best of shape at all. It pretty much needed spare parts, repairs and towing almost every single month. This was a huge drain on our finances, which we didn’t have. Yes, we owned the car but it was draining us financially every couple of weeks. As a result of that, we didn’t have enough money for a lot of other necessities so we had to resort to using the credit cards, oblivious to the horrendous amount of interest we would be paying with just the minimum repayments at the end of each month. By the time we managed to sell that car, and buy something a bit more reliable, but still second hand, we had credit card debt which we had to face.
We carried on paying the minimum balances each month, all the while thinking very naively that paying the minimum due each month would pretty soon make a dent in the balances we owed. After about 14 months or so, we got an absolute fright when we realised that after all those months of paying and paying, the remaining balance had hardly gone down! In fact, what had gone down was so small that it was laughable! We were horrified. In hindsight, we really were too young and so very naïve. Yes, we should have checked the statements more often and yes, we should have asked around for advice or at least read up a bit about it online. That moment was a real wake up call for us. Experience really is the best teacher, as they say.
And that’s when we started learning a bit more about how credit cards really work. We used an online debt repayment calculator, only to find out to our horror that paying the minimum balance on the one credit card meant that it would have taken us something like 8 years to pay off the total amount, with just about double the amount in interest alone. The second credit card would have taken a lot longer than that; in fact, so much longer that even now when I think about it, I shudder at the thought – 18 years.
It was then that we began to educate ourselves. We read lots of blogs with people’s personal experiences, watched a whole lot of videos online, read up on what financial experts had to say about saving money as well as getting out of debt. It took us a long time to see our situation for what it was. Both my husband and I really liked what Dave Ramsey had to say about the 7 Baby Steps to getting out of debt.
NOTE: I am not affiliated to Dave Ramsey or his products in any way. This blog post simply recounts the details of our personal journey to becoming credit-card free and is not intended to replace Dave Ramsey’s financial coaching or products or courses offered by the Financial Peace University in any way. You can read about Dave Ramsey’s 7 Baby Steps here and about Financial Peace University here.
So we thought we would give that a try. Moving on from step 1, which was setting up a very small emergency fund, we then started paying off the first credit card balance. We paid as much as we could over and above the minimum amount due at the end of the month. We scrimped and saved. We changed our shopping habits (you can read about how I save money on each month here and here. We sold pretty much whatever we had around the house that we weren’t really using. We also learnt, month by month, how to be more frugal in our lives and how to cut down on our monthly expenditure (read about how we did that in my post here).
All of this, and all at once, was a lot of hard work. It was exhausting. It was heart-wrenching at times. We lost hope and motivation so often along the way. Paying off credit card debt was HARD. But we wanted to be free. That was our goal. Large amounts owed on a credit card can be very daunting and the months ahead can seem very long. They certainly felt like that for us. But in spite of that, I can remember even now the biggest smiles on our faces each time we made an additional payment just so that we could check our balance and see the progress we were making! That’s what kept us going, I think (you can read more about how we stayed motivated while paying off credit card debt here).
We were absolutely overjoyed when we managed to pay off the full balance owed on the first credit card in just a year. I say ‘just’ a year because depending on how much debt a person has to deal with, it could take a lot longer than that. We closed that credit card account literally the day after the last payment went in. We just couldn’t wait a second longer to be rid of at least that one chain around our necks. I don’t think I’m ever going to be able to express in words how elated we were that day! It’s certainly a day neither my husband nor I will forget. We were convinced we could even breathe easier from that moment on. It was a small victory but it was a victory for us nonetheless.
Looking back at our journey of paying off our very first credit card, I realise that it was a lesson well worth learning for us. We needed more discipline in certain aspects of our lives: discipline with finances in general, our spending habits, and learning how to be less wasteful with our resources. But, you might be wondering: whatever happened to the second credit card?
For the time being, if you find yourself on a similar journey of paying off credit card debt in South Africa, I would love to connect with you so please leave me a comment below.
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