Financial Feminist - 211. How to Pay Off Credit Card Debt

Episode Date: January 30, 2025

If you’ve been struggling to break free from credit card debt––you’re in the right place. In this episode, I’m diving deep into one of the most commonly requested topics: the ins and outs of credit card debt. We’ll uncover how sneaky interest rates can chip away at your hard-earned money every single day and explore powerful strategies to help you tackle that high-interest debt so you can finally breathe easy. As someone who’s dedicated to helping women save money, invest, and feel financially confident, I firmly believe that understanding your debt is the first crucial step in breaking free from it. When we take back control of our finances, we collectively fight the patriarchy—by making ourselves richer, savvier, and fully in control of our money.  Resources mentioned: Check to see if you qualify for my partner personal loan recommendation (doesn’t hurt your credit score! Terms apply: https://soficreator.pxf.io/c/1408818/2083784/25681?adcampaigngroup=lending&adnetwork=brand Our favorite travel and cash-back credit cards, plus other financial resources: herfirst100k.com/tools Read transcripts, learn more about our guests and sponsors, and get more resources at https://herfirst100k.com/financial-feminist-show-notes/211-how-to-pay-off-credit-card-debt/ Not sure where to start on your financial journey? Take our FREE money personality quiz! https://herfirst100k.com/quiz Looking for accountability, live coaching, and deeper financial education? Check out our exclusive community, The $100k Club: https://herfirst100k.com/100k-pod Special thanks to our sponsors: Squarespace Go to www.squarespace.com/FFPOD to save 10% off your first website or domain purchase. Rocket Money Stop wasting money on things you don’t use. Cancel your unwanted subscriptions by going to RocketMoney.com/FFPOD. Quince Get cozy in Quince's high-quality wardrobe essentials. Go to Quince.com/FFPOD for free shipping on your order and 365-day returns. Netsuite Download the CFO’s Guide to AI and Machine Learning at NetSuite.com/FFPOD. Gusto Run your first payroll with Gusto and get three months free at gusto.com/ffpod. Indeed Hiring? Indeed is all you need. Get a $75 sponsored job credit to get your jobs more visibility at www.indeed.com/ffpod. Public Fund your account in five minutes or less at public.com/ffpod and get up to $10,000 when you transfer your old portfolio. (see disclosures: https://herfirst100k.com/financial-feminist-show-notes/211-how-to-pay-off-credit-card-debt/) Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi, I'm Tori Dunlap. Welcome to Financial Feminist. And on today's show, we are talking about credit card debt, how it works, the strategies to pay off debt faster and how to stay out of it for good. Let's get started. Hi, team. Welcome back to the show. If you are new here, welcome. My name is Tori. I'm a New York Times bestseller and author. I fight the patriarchy by making you rich. And we teach women all over the world how to save money, pay off debt, start investing, start businesses and feel financially confident. Because we know that a financial education is our best form of protest. And if you're an oldie, buddy, goodie, you knew that already.

Welcome to the show. I'm excited to have you here as always. This is a commonly requested topic. We have done a lot of episodes on the show about debt and how it works and how to pay it off. But specifically, credit card debt is one of those things that feels completely overwhelming, very, very difficult to navigate, and also like a slippery slope that you constantly are falling into, right? It's like you're digging yourself out of the hole and the sand keeps falling in the hole at the same time.

So we're going to dive deep on credit card debt today, exactly what it is and how it works because you may think you know how it works, but they're kind of sneaky. The credit card companies are a little sneaky. So we're going to talk about the structure of credit card debt. We're gonna talk about how to pay off debt in a way that's sustainable, that doesn't make you hate your life, that doesn't make you sacrifice everything

that you've ever loved. And we're also going to talk about, okay, when you are finally out of credit card debt, how do we stay out of it for good? But first a word from our sponsors. we stay out of it for good. But first, a word from our sponsors. This episode of Financial Feminist is sponsored in part by Squarespace, Quince, Gusto, Rocket Money, Public and NetSuite.

Build a beautiful website to get your message out into the world with Squarespace. Squarespace was the first purchase I ever made for my business way back in 2016. And it's still my number one recommendation for business owners or individuals building a website. Go to squarespace.com slash ffpod to save 10% off your first website or domain purchase. Treat yourself to everyday luxury at an affordable price with Quince. I just bought myself a new winter coat from Quince and not even with a gift card, with my own hard-earned money because that's how much I love him. Go to quince.com slash ffpod for 365 day returns plus free shipping on your order. Did you start a subscription during the holidays to watch that one TV show or movie that you just couldn't find anywhere else

and then you just got the bill because you forgot to cancel? Well, Rocket Money's got your back. Cancel your unwanted subscriptions by going to rocketmoney.com slash FF pod. Take the headache out of payroll with Gusto. Get three months free when you run your first payroll at gusto.com slash FF pod. Take the headache out of payroll with Gusto. Get three months free when you run your first payroll at gusto.com slash FF pod. Fund your account in minutes at public.com slash FF pod and get up to $10,000 for transferring your old portfolio.

Download the CFO's guide to AI and machine learning at netsuite.com slash FF pod. Calling all sellers. Salesforce is hiring account executives to join us on the cutting edge of technology. Here, innovation isn't a buzzword. It's a way of life.

You'll be solving customer challenges faster with agents, winning with purpose and showing the world what AI was meant to be. Let's create the agent first future together. Head to salesforce.com slash careers to learn more. We have so much info,

including our exclusive debt master classes over in our membership program, the 100K club. We have already so many wins from people who are starting to pay off their debt, who are saving their first couple thousand dollars or who are even halfway already to their first hundred K goal. So if that's of interest, we have an annual subscription as well as a monthly subscription that is cheaper than a gym membership. You can go to herfirsthundredk.com

slash 100 K dash pod. And we'll also post the link down below in the show notes. If you want to take this education further. Let's first talk about generally how debt works. I actually know from research for my book, Financial Feminist, that the number one reason women go into debt is that they don't understand how a loan works. It's not that they're dumb.

It's not that they're uneducated. It's that literally no one's ever sat down and taught them. And so I need to explain to you first how any kind of debt works in order for you to get a plan. We can't create a plan until we understand what's actually happening. So debt is made up of two basic components. The first is the principle. That is the original amount of money that you took out. So if you get a student loan, for example, and that student loan is $30,000, that is the principal. If you put $1,000 on a credit card and you do not pay it off, that is the principal, right?

The principal is the original amount of money that you took out as a loan or took out in debt. The second component of debt is what's called interest, right? Because they're not just going to give you this amount of money for free. So they're asking for an exchange for this lending of money. They're going to charge you interest on top. Now, this is the part that most people don't fully understand, is that if you put a thousand dollars on a credit card, for instance, that interest is going to accumulate in a different way than your interest on a student loan

or your interest on a car loan or a mortgage or something else. There's three basic components of interest. First is the rate of the interest. So your average student loan is anywhere from four to seven percent. We're seeing more on the seven percent as of this recording. But the average credit card interest rate is twenty two percent and it caps at about thirty percent. So that's a lot more expensive, right? There's some debt like mortgages, student loans that have lower interest rates.

It still seems overwhelming, of course, right? So it makes the debt seem less overwhelming, or at least it's more manageable because that interest rate isn't as high. But when it comes to credit cards, that interest rate being 18%, 20%, 25%, 30% is really, really high. And that interest rate is getting charged

for any type of loan against that principle, right? Because that is the cost of getting that loan. That's the cost of getting that money. The second thing you need to think about when it comes to interest is how this interest is accruing. So like, what is the rate that this interest accrues at? For some loans, this interest is every year.

For some loans, like credit cards, this interest applies every single day. So your interest is not just applied once a month, once a year. Every single day that you owe a credit card company money, you are going to pay interest. And finally, you need to understand how the interest accrues. So not just what the interest rate is, when it happens, but also how often it happens. There's some debt, usually a mortgage, for example, that has what's called simple interest. Simple interest means, for easy math, right,

a thousand dollars, 10% interest, you're only paying a hundred dollars. But compound interest is where debt starts to get really, really sticky. Compound interest, just like compound interest with investing, which is positive, it accrues every single time. So it can be great if you with investing, which is positive, it accrues every single time. So it can be great if you're investing,

which means your interest is earning interest is earning interest, but if you have debt that is compounding interest, that is a fucking slippery slope because your interest is earning interest is earning interest. The best part, and I mean best sarcastically as possible here about credit cards is that

the interest is high. It's a high interest rate. It is a daily interest rate. And it's compounding. So every single day, your interest earns interest on yesterday's interest. Take a shot every time I say interest, but you get it. Now, I'm saying this to you not to freak you out, not to scare you, not to shame you,

but because you might not understand that this is what's going on. In fact, again, back to the research I did for my book, most people don't, most women don't. So we have to start understanding why credit card debt can be so dangerous and also why it feels so insurmountable. Because it's not just interest getting charged once a year,

it is interest getting charged every single day that earns interest off of yesterday's interest, and it's a really, really high rate. So one of the things I talk about with paying off any kind of debt, and we have a whole chapter in my book about paying off debt, is that if we can pay down the principal, you're going to spend less money in interest. Right? If we can pay down, let's say, that original thousand dollars that we put on a credit card, well, then we're not getting charged as much interest. The interest doesn't have the

ability to accrue at the same way or in the same way so that your overall balance gets to go down. So one of the tips I have in my book, and we have a whole script on how you can do this, is calling whoever your debt is through, whoever your debt provider is through, and seeing if you can apply additional payments just to the principal. So if you can lower the principal, right, that means you're paying less debt overall. However, a lot of credit cards don't let you do this.

They don't let you just pay to the principal, and especially not your monthly or your minimum payment, right, that's going to the general pot. That's going to your principal and your interest. So this is why, another reason why credit card debt can be so, so dangerous and also feel really, really overwhelming. You might be asking yourself,

why do I have a credit card at all then? Or maybe I'm listening to this and I'm so scared of going into debt that I've never signed up for a credit card. Well, there's many reasons to have a credit card. And again, a metaphor I use in my book is a credit card is a really great tool. It's like a knife. Like knives, we use every day to cut vegetables for ourselves, right?

But they can also slice your finger if you're not using them properly, if you don't have the proper knife skills. So credit cards, when used responsibly, are a fantastic tool to build credit. They are the best tool available for you to build your credit score when you are using your credit responsibly. They're also more secure than a debit card. The credit card provider is actually paying for that security as well as the merchant is paying to have a more secure transaction for you.

And also, let's say somebody gets access to your checking account or knows your PIN, they can hypothetically completely wipe out your account. Credit cards have so much fraud protection and security built into them. So if I get a charge that wasn't mine, all I have to do is dispute it and I don't have to pay for it. And finally, and I've talked about this a lot on my social media and on Instagram and TikTok, is that I get so much free shit with credit cards. I have traveled and lie down flat business class seats to Europe. I have stayed in incredible five-star hotels for free. I can get upgrades at hotels or on airlines using these points.

I get TSA pre-check. I get lounge access. I get additional car insurance when I rent a car. So there's so many incredible uses for credit cards. However, when not used responsibly, when mishandling the nice, it can cut you. And so when we're thinking about properly using a credit card before we even get into credit card debt,

we need to be spending within our means and paying it off every single month, making on time in full payments. This is going to be very obvious to some of you, but I literally saw a TikTok the other day where this girl, she was probably in her early 20s, and I clearly never had somebody sit down with her and teach her how to credit card works. And that's okay,

most people don't. She was like, how am I in credit card debt? I've been paying my minimum payments every single month. But it's saying now that I'm in like credit card debt and have been for a year. If you put $1,000 on a credit card, your credit card company, and this is where the sneaky thing comes in, your credit card company, and this is where the sneaky thing comes in, is going to say, oh, you just have to pay 100 bucks of that. Don't worry. Just minimum payment, 100 bucks. You put $1,000 on it, but no, we're only going to ask you for 100 bucks. Okay. Let's say you pay 100 bucks. Well, you're in $900 a debt now. That's the thing that they don't necessarily completely tell you, at least not explicitly

like that, because they make money when you're in debt. They make money by being a little bit veiled and a little bit sneaky. So for those of you listening, you're like, yeah, that's pretty obvious. I can't just put $1,000 in and only have to pay for 10% of it. But a shocking amount of people believe, cool, this is a great tool. I'll just use this. And then you go into debt. So pay off your credit cards in full, so that full thousand dollars, and pay them on time to avoid late fees. We also want to look for credit cards that we're actually going to use. Even if it's

the best deal you've ever seen with a credit card, like, you know, Southwest has a great deal on their credit card, but you never fucking fly Southwest. That is a waste of a credit card. We have the favorite credit cards I use and recommend at herfirsthundredk.com slash tools, the travel credit cards I use, the cash back credit cards I use. So you can head on over to that link and see and maybe sign up for yourself. Finally, the other responsible thing we can do with credit cards and as a way to increase our credit score is by keeping debt under 30% of our credit utilization across all your cards. Credit utilization is exactly what it sounds like. How much credit are you using? And if you can keep that under 30%, but really if you can swing it under 10%, you're gonna have a very, very good chance

at getting a higher credit score. And fun fact that even Kristin doesn't know, Kristin, my credit score dropped 60 points in the past month. You know why? Because my credit utilization went up and it dropped like maybe 80 points. It was something crazy.

My credit score is now at like 706 when it was like 780, 790. And it was because I did a bunch of donations at the end of December and was just like, boom, boom, boom, boom, boom, bunch of money. Yay, end of year. And then my credit score was like, boom, boom, boom, boom, boom, bunch of money, yay, end of year. And then my credit score was like, what are you doing? You're using way more of your credit than you used to.

So, whole other episode about it, we've done episodes about credit score, we have a section in my book about it, but this is the importance of monitoring your credit, right? Because if I were to, let's say, decide I'm going to buy a house right now, I would be paying more in interest because my credit score isn't as high. Hiring is really hard. Finding the right people at the right time, making sure that they are the right fit for your organization.

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Just go to indeed.com slash ffpod right now and support our show by saying you heard about Indeed on this podcast. Indeed.com slash ffpod. Terms and conditions apply. Hiring? Indeed is all you need. It's January. It's new year, new you time.

And if you want to start a business this year, if that's one of the big things on your to-do list, on your New Year's resolutions, is to finally start that business, well, you need a website. And that's where Squarespace comes in. Squarespace was the first tool I ever invested in for our own business,

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So you can spend more time working on your business. So if you need a website, you want to use Squarespace. It's easy to use, it has beautiful features, and you don't need to know how to code at all. Head on over to squarespace.com for a free trial. And when you're ready to launch, go to squarespace.com slash FF pod to save 10% off your first purchase of a website or domain. 10% off your first purchase of a website or domain. So we talked about how debt works, how credit card debt works, how to use a credit card responsibly. Let's talk about how we actually get out of credit card debt if we do find ourselves here. If we are the person who is overwhelmed with credit card debt, it was the slippery slope

and we were red in that sled, and suddenly we're at the ground and going, oh my God, how do I get out of this? Let's talk about what you can do. When it comes to actually paying off your credit card debt, one of the most common mistakes I see is this. Because you're overwhelmed and because you're freaking out about your debt,

you make one of two mistakes, or maybe both of them. One, you focus on debt payoff before saving your emergency fund. Or two, try to half-ass a bunch of things as opposed to whole-assing one. So let's talk about the emergency fund versus debt thing first. Why, why Tori, do you believe that you need an emergency fund first? Well, a couple things. One, I need you to have a safety net should an emergency happen because I don't want you going into debt or into more debt trying to pay for an emergency. This is where the debt cycle becomes really, really gnarly, is if you're in debt already and you're trying to pay it down and you don't have anything in savings

or even like a small amount in savings that you know is not gonna cover you, and then you lose your job or you get laid off, your dog gets sick, you have an unexpected medical bill, your car gets impounded, something crazy happens that you did not expect. And always something crazy happens that you do not expect. Then what's happening is that you are continuing the debt cycle. You are going more into credit card debt

or going into even more expensive credit card debt on a different credit card with a higher interest rate because you don't have enough money to cover that expense, that emergency. So that's the first thing. We are prioritizing an emergency fund to, duh, but protect ourselves in case of emergencies. The second reason we're prioritizing an emergency fund is because we believe in prioritizing your mental health here at Financial Feminist. And there is something so peaceful about going to bed at night, knowing that no matter what happens tomorrow, you are financially covered, at least for a period of time, right?

And it is so important to think about your mental health and think about you making sure that you know you're good because you're more likely to overspend if you don't feel secure. You're more likely to make poor decisions if you don't feel secure. So we need to make sure that our head can hit the pillow at night and we're sleeping good knowing that we're covered.

And finally, women especially, I need you to have fuck off money. If you are in a relationship that no longer respects you, if you are in a job that no longer respects you, if you're in an apartment that no longer feels safe, if you need to get out of a situation, I need you to have the money to do that. The reason that I was able to quit my like second

toxic job was because I had an emergency fund. I was so anxious. I was crying every single day. This is the boss who told me 10 days in that she was worried she regretted hiring me. I talk about this in told me 10 days in that she was worried she regretted hiring me. I talk about this in the intro of my book. It was awful. It was terrible. And the day I walked out there, walked out of the job and had quit, oh my God, it was the best day ever. I spent all of Christmas. I remember staying, we were away for Christmas, me and my family, and I was like

in their computer room at the hotel trying to do this like task, this huge project that she had assigned me on Christmas day. I just felt awful. I felt awful about myself. I felt awful about my situation. And I realized, oh shit, I have enough money to leave. I have an emergency fund. I didn't have millions of dollars at that point, not even close. I didn't even have my first 100K yet, but I had enough money to leave that situation. And it felt incredible. And I never want you to be in a situation

that you don't want to be in because you can't afford to leave. So that's one mistake I see, as people get stressed out with debt and they just dive right in, but then when an emergency happens, they don't have anything to cover themselves with. And the other mistake, that half-assing a bunch of things

as opposed to whole-assing one, is if you have multiple kinds of debt, even multiple credit cards with debt on them, it is very easy to say, okay, I'm gonna take my limited resources and I'm gonna do a little bit here, and a little bit here and a little bit over here. The problem with doing that though is to quote Ron Swanson, you're half-assing a bunch of things as opposed to whole-assing one. We want you whole-assing one. We want all of your focus

on one thing so that you can check that box and you can move on to the next. So how do we actually pay off debt? And specifically, how do we actually pay off credit card debt? Well, there's two strategies. And yes, they were coined by Dave Ramsey. I hate it. I hate that I get to credit him and get to use his little nomenclature, but this is where we're at. The two methods are snowball and avalanche. This is little nomenclature, but this is where we're at.

The two methods are snowball and avalanche. Snowball means that you are focusing all of your effort on paying down the debt with the lowest balance. Let's say we have one credit card with $10,000 of a balance on it, $10,000 in debt rate at 25% interest. And then let's say we have an additional credit card at 18% interest, but $5,000. So the snowball method would say, pay down the 18% interest credit card first, because it only has a $5,000 balance. Now, you can do whatever the fuck you want.

Personal finance is personal. If you feel like, you know what, that's better for me, it's going to get me that W under my belt. It's going to feel good. And that's going to be the dopamine and the motivation to keep going is getting that done faster. Great. That's okay. However, I personally like the avalanche method better. The avalanche method is paying off the one with the highest interest rate first. Why? Well, because that's the one that's costing you the most money. That 25% interest is costing you more money,

especially because it has a higher balance in this case, than the one with 18% interest. And if we can save money and interest, great. That's fantastic. You get to save money. So no matter which one you choose, just focus on one. Don't try to dilute your efforts. Don't try to, again, half-ass two things, whole-ass one thing.

The how to pay enough debt is shockingly simple. It is. It's the consistency that's difficult. The how is not just putting money towards your monthly or your minimum payments, but putting any additional money that you can towards your debt. And especially if you can just do it toward the principle, amazing. That's it. But the hard part is the consistency. The hard part is doing it every single month, potentially for years.

When people talk about drowning in debt, it's not because they don't have the manual to pay it off, although I think of course education helps. It's probably why you're listening to this. That's why you engage with my work. But it's really about the consistency. It's about staying consistent. It's about progress over perfection. And it's about just slowly, slowly chipping away

at your debt balance. And preferably without going into more debt while you're trying to do it. Because like I said before, really hard to dig yourself out of a hole that sand is also still falling into. So if you're right in the midst of that feeling, the, you know what, I am so overwhelmed by this and I feel like I've tried everything and I'm slowly chipping away, but it keeps accumulating, it keeps compounding and it doesn't feel like

enough, I do have a solution for you. Let's talk about personal loans. Personal loans allow you to borrow a lump sum of money to pay off multiple debts. You then pay off the loan in fixed monthly installments over a set period of time. This is usually two to five years. So it is another kind of debt, but let me tell you why and how it's different.

The incredible thing about personal loans is one, that fixed monthly payment. It is fixed, it is digestible, and folks from our community who have already done this, who have taken out personal loans to pay off their credit cards, have cited that they finally feel like they can breathe again because it's digestible, it's specific, and they have a plan. The second incredible thing about personal loans is that you can take a bunch of different

debt, right, if you have multiple credit cards with debt on them, and you can combine it into one monthly rate. So we can whole ass many things, as opposed to just whole assing one or half assing many. It's Ron Swanson's dream. But the best thing for me about personal loans is that the interest rate is different and better than credit cards. Remember at the top, we explained credit cards, the interest rate is not only compounding, but it compounds every single day.

That means if you are in credit card debt every day that goes by, you are earning interest on that debt. You are spending more money being in debt. Personal loans, however, charge you simple interest. That's the take out $1,000, only pay 10%. That's what we're talking about here. It does not compound and it's one simple interest rate, it's one fee. Personal loans make your debt a hell of a lot more manageable, a hell of a lot more focused for your debt payoff journey, and a hell of a lot less expensive. The final thing that we love about personal loans

for people with credit card debt is that the interest rate is usually way lower. So as opposed to 25% interest on your credit cards, you can pay 10% interest or 12% interest. It's typically three, five, sometimes 10 or more percentage points less in interest than you were paying on your credit cards. The powerful thing about personal loans,

lower interest rates, personal loans are coming with much lower interest rates than credit cards. Two, the type of interest, it's not compounding every day. It is fixed, it is simple interest. There's also fixed payments. So there's no variable interest. You're knowing exactly what you're gonna pay each month. And there's one payment.

So there's one single loan repayment that simplifies your finances. Things to consider before a personal loan. We have our recommendation for a personal loan provider down below, but before you check that out, some things to consider before getting a personal loan. One is your eligibility. Providers are not going to typically provide you with a loan if you have a low credit score. Why? Because you are more risky to them. When a loan provider gives you money, they want to know

that you're going to pay it back. And the way the system works right now is the credit score is the big determining factor. They don't want you taking on more debt if they feel like you're not going to be able to handle it, or if they feel like this isn't the best solution for you. Eligibility includes your credit score, your income, and what's called your debt to income ratio. This is going to affect not only do you get approved for a personal loan, but also what the interest rate is. And the debt to income ratio is exactly what it sounds like. How much debt do you have versus what do you bring in every year? The second thing with a personal loan is the fees. You want to watch out for any sort of hidden fees, including origination fees, which are just like the start of the loan. My least favorite fee

is that some personal loan providers will charge you an additional fee for paying off your personal loan before the terms are up. So if your personal loan is three years and you pay it off at two and a half, you might have to pay a fee. That's bullshit. The one that I recommend does not have that fee because that's a bullshit fee in my opinion, and I don't want you paying that fee. And finally, something to consider is what are the loan terms?

If you're about to take on a personal loan that is not that much better than a credit card, it's only like an interest point away. It's 1% difference. It might not be the most advantageous thing. Or if you find yourself going to have to pay this loan off forever and ever and ever and ever, and you do think you can maybe pay your credit cards off, right? Probably not a good idea to take out that personal loan. If you're a small business owner, the last thing you want to do is payroll.

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for Gusto is worth the price. It is unlimited payrolls for one monthly price, no hidden fees and listeners get three months free once they run their first payroll. Go to gusto.com slash FF pod to sign up. Try three months free at gusto.com slash FF pod. That's gusto.com slash FF pod. If you're serious about investing, you need to know about public. What sets public apart is how they give you the tools to make informed investment decisions. Their built-in AI tool called Alpha doesn't just tell you if a certain investment is performing well, it tells you

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Brokered services for us listed registered securities options and bonds and a self-directed account are offered by Public Investing Inc Member FINRA and SIPC complete disclosures available at public.com slash disclosures Finally before you do any sort of finagling your debt if you do not have a plan and you're just getting a personal loan or any of the rest of these to like kick the can further down the road so that you don't have to fucking deal with it,

you've like ostriched yourself so far in the sand that you're like, oh, this will be a staples that was easy button and it'll buy me more time and you're not even going to think about it. That's not the solution here. We have to do things that make our debt cheaper and make our debt more manageable, while also understanding that we still have to pay it. Those things are not mutually exclusive.

You have to make debt more manageable. And also, you're not off scot-free. It's not a get out of jail free card. I wish it was, but that's not how this works. Before we understand if a personal loan's right for us, if any of the rest of this is relevant, using a personal loan to pay off your credit card debt is so effective, and we've already seen it in our community.

It's saving people thousands of dollars in interest, and it's making their debt more manageable and they feel finally some hope again. But it's crucial to avoid accumulating more debt after or during the debt payoff process. If you are currently living above your means and you didn't save that emergency fund first, right, and you haven't actually taken your personal finance education seriously, and you're just fucking like raw dog in life right now, and then you're like, I'm going to get a personal loan. It's going to fix everything. You haven't changed any of your financial habits.

Nothing is going to change in your life unless you change it. And again, you're using it as a temporary band-aid solution, and that's not going to be effective long-term. We want to focus on building those good financial habits, paying your credit cards off in full every single month, on time, not overspending our money, making sure we have an emergency fund and doing our best to build our savings so that we're not dependent on expensive debt

like credit cards to bail ourselves out later. And finally, just tracking our money, knowing what's coming in, knowing what's coming out, and actually investing in your financial education. Showing up, listening to the show, reading my book, engaging with your money. Again, personal loans are an incredibly powerful tool, and we haven't really talked about them on the show yet. I wanted to highlight them in this episode specifically about credit cards

because they're so effective when used correctly. We have the one we recommend, we already vetted it for you, link down below. This is our partner recommendation. Again, some terms apply, it's gonna depend on your credit score, it's gonna depend on your eligibility, but please go down below.

And checking to see if you qualify does not affect your credit score at all. So anybody who has credit card debt, you can go down below, you can click the link and you can see if you qualify. What personal loan should not be used for? Obviously, this episode is mostly about credit cards. But if you're thinking, oh, should I take out a personal loan to pay off my student loan? No, probably not. Should I take out a personal loan and consolidate my credit cards with my student loan, with my mortgage, with something else? No, no. Because like we were talking about at the beginning, every kind of debt is different. The interest is different, it accrues differently, the cost is different, right? And as soon as you lump

all of your debt together, all of your debt is the same. So only use a personal loan for something like credit cards that are really expensive and that compound your interest every single day. One of the best things you can do, however, to pay off that debt quicker is to call your credit card provider and ask them to lower your interest rate. Because if we lower the interest rate,

even if it's from 25% to 22%, well, we're saving 3% interest, but 3% interest every single day on the 3% interest we were charged yesterday and the day before that and the day before that. So if we can lower our interest rate that we're paying, we can potentially save money and also feel a little bit more comfortable of like,

okay, this is a nice win, this is a nice W and I can keep going. We have a script if you're nervous about how to phrase this or how to ask this in my book, but you're calling your credit card provider and you're citing some sort of reason why they should lower your interest rate. I'm going through some sort of financial hardship or the flip side, which is like, I am been

really financially responsible up to this point. We had an emergency happen and I would really love a lower interest rate because I'm seeing your other competitors reflect that lower interest rate. The final thing I want to touch on before I round out this episode, debt feels like a personal failing. If you are in debt, especially credit card debt, it feels like shit. You feel like it's your own fault. You feel like it's, again, some sort of personal defect or failing.

And it is so easy to believe that if you are in debt, that you are a bad person who has made countless unforgivable mistakes about your money. And you know me, I am not the personal finance expert that's going to make you feel shamed or judged about your debt. There is light at the end of the tunnel. There is an incredible amount of freedom that comes with you slowly, but surely, and consistently chipping away at your debt. And the more shame and the more anxiety and the more fear

you force yourself to think about and believe, the harder this journey gets. Tough love is not a real thing. You do not need to be condescended to in order to get out of debt. You don't need to be shamed in order to get out of debt. Psychologically, shame is the worst teacher and tool for accomplishing our goals.

So I'm gonna give you a hack I use instead. This is straight from chapter three of my book. This is straight from a previous episode, but let's set some goals. When you're thinking about goal setting, your goals need to be three things. Specific, timely, and mission driven. So it can't just be, I want to become debt-free

or I want to get better with money because that has no measurable, quantifiable result. So getting out of debt and focusing on that as a goal might look like I will pay off all of my credit card debt by the end of 2025. That is specific and timely. It is a specific thing you're doing, paying off all your credit card debt by the end of this year. That is timely. You either know by the end of 2025 that you did it or you made some good progress, right? But the thing a lot of people miss is that mission-driven aspect. Because, as I've proven

to you, debt and getting out of it is actually not difficult on paper. The how is not difficult. The why is the hard part. The consistency, the showing up, the doing it over and over and over and over again. That is the hard part. So you need to give yourself a reason to care, a reason to keep paying off your debt even when it feels hard. So this goal that is specific and timely, I want to pay off all my credit card debt by the end of this year, so that I can finally feel financially free

and that I don't owe anyone anything, right? That's the why. The why can be, so I can finally start saving for this other goal because I'm not putting my money towards debt anymore. The goal can be, I am paying off this amount of debt so that I can better provide for my family, so that I can show up for myself and my friends,

and I can take that beautiful trip that I've always wanted to take, right? This is unique to you, but you need to give yourself a why and a reason to care because if you don't, when things get hard, when shit hits the fan in a couple weeks or two months or even two years, when you have a financial setback, when you start asking yourself, why the fuck am I doing this? You know why. You know why.

And my favorite, favorite hack to help your goal setting actually happen, to make your planning actually successful is to write down your goals as if they've already happened. So as opposed to, I'm going to pay off my credit card debt by the end of this year so that I no longer have debt hanging over me and I can afford my life. Instead, think about it in the past tense. Something like, it feels so good to be in 2026 and to not have credit card debt anymore. Why do we do this? Well, it convinces our brains that we can do it. We've already done it.

If we've already done it, then we know we can do it. Anderson Paak has this great quote in one of his songs, "'If I know I can get it, I've already had it.'" And that's what we're doing here. This is the hack I have used with every single goal that's happened in my life. We literally recorded it yesterday. It will not be out by this time, but keep a lookout for it.

I was lucky enough to be on the We Can Do Hard Things podcast with Glennon Doyle and Abbie Wambach. And I have wanted that, guys. Oh my God. I have wanted this goal for years, for literal years. And I've been emailing and calling and texting people and pitching myself and hearing no,

no, no. And finally I got the email to be on. And do you know what I was doing in my journal that entire time? It felt so good to be on the We Can Do Hard Things podcast. I was writing that a year ago. Before my book even came out, I was writing.

I'm so thankful to be a New York Times bestselling author. Before this podcast was even released, I was writing, it feels so good to have a top 40 money podcast. Now, little did I know that it would debut as the number one money podcast and the number one business podcast in the world. But this is what I'm talking about. If you can convince your brain, you know what? We can do this because we've already done it. Then it puts you in that visualization state where you're like, yeah, this is what my life can look like when I finally achieve this goal.

So if you are on a credit card debt payoff journey, know that I am here with you every single step of the way. And what I want you to do is I want you to share this episode right now with a friend or a coworker or someone else who you also know is on this journey to. Because we know it makes the journey a lot easier when you got a friend with you. And of course, we have all of the resources I mentioned. The link to the personal loan recommendation, the link to the other episodes about debt, the links to the master classes and the 100k club, the link to my book with an entire chapter about debt payoff, they're all linked down below. I appreciate you being here as always, Financial Feminists.

I am so proud and honored to be here for you, to be able to champion you. Go pay off your fucking credit cards and we'll see you back here very soon. Thank you for listening to Financial Feminist, a Her First 100k podcast. Financial Feminist is hosted by me, Tori Dunlap, produced by Kristin Fields and Tamesha Grant. Research by Sarah Shortino, audio and video engineering by Alyssa Medcalf, marketing and operations by Karina Patel and Amanda LeFeu. Special thanks to our team at Her First 100K. Kaylen Sprinkle, Masha Bakhmakeva, Taylor Chil, Sasha Bonar, Ray Wong, Elizabeth McCumber,

Claire Karonen, Darrell Ann Ingman, and Megan Walker. Promotional graphics by Mary Stratton, photography by Sarah Wolf, and theme music by Jonah Cohen Sound. A huge thanks to the entire Her First 100K community for supporting the show. For more information about Financial Feminist, Her First 100K, our guests, and episode show notes,

visit financialfeministpodcast.com. If you're confused about your personal finances and you're wondering where to start, go to herfirst100k.com slash quiz for a free personalized money plan. If 2025 is the year that you are committing to finally getting your financial shit together, you're probably a little daunted by doing it by yourself.

I certainly didn't get to my first 100k alone, and you shouldn't either. I've helped over 5 million women on the path to their first 100k, and you are next. For the first time ever, I am teaching the strategies that have helped countless women save, pay off debt, and grow their net worth, but really we're talking feeling happier, healthier, and more fucking powerful. Introducing the 100K Club, our exclusive community for financial feminists like you who want to change their financial future. In the 100K Club, you'll get in-depth teaching and live coaching from me

alongside every template I use in managing my own money, plus a community of other financial feminists to keep you accountable. You're going to learn the exact strategies to save money, pay off debt, improve your money mindset, increase your net worth and more, which alone that's worth it. But you're also getting access to the Her First 100K Template Vault

full of done for you templates and downloads to help you navigate each stage of your 100K journey. As an annual member, you're also going to unlock the Masterclass and Event Vault full of past live coaching recordings and other special bonuses. You're gonna earn back thousands of dollars by learning how to get discounts on purchases

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at $47 per month. Go to herfirsthundredk.com slash 100k dash pod, or click the link in this episode's description to learn more. Once you're not changing, you're choosing, and I'm so excited for you to choose your path to financial independence this year in the 100K Club. See you there.