Financial Feminist - Pay Off Your Credit Card Debt FAST (Bonus)

Starting point is 00:00:00 This video can help you pay off your credit card debt by the end of this year. Hi, I'm Tori. I've helped over 5 million women be better with money. And today we're talking about credit card debt, how to get out of it, how to stay out of it, and the five tools that you need in order to sustainably pay off your debt in a way that doesn't make you hate your life. First, I got to explain how credit card debt works because it's very unique compared to the other kinds of debt. And it's probably what's keeping you in that cycle. is not understanding how it works. Just like every other kind of debt,

Starting point is 00:00:33 credit card debt is made up of two different things, your principal and the interest. Your principal is the original amount of money you took out. So if you put $1,000 in a credit card and didn't pay it off, that's your principal, that $1,000. The interest is what it's charging you to be in debt. It's the cost of putting money on the credit card and not paying it off. The first reason that credit card debt is different

Starting point is 00:00:56 is that interest rates are really, really high. The average student loan rate in the country right now is anywhere from like 4 to 7%. The average mortgage right now is 6 to 7%. But the average credit card is 22% interest. So we're seeing interest rates that start at 15% for credit cards and go all the way up to 30% interest. This is why credit card debt feels like you're drowning is because the interest rate is so high. The second reason credit card debt is different is that it compounds, meaning that your

Starting point is 00:01:28 interest earns interest, earns interest. Another reason why you're trying to dig yourself out of the hole, but the sand keeps falling in. And the final reason credit card debt is different to that other kinds of debt is it not only compounds, it compounds daily. So not only is your interest earning interest, but every day you stay in credit card debt, it gets harder to get out of. So that's why you need to take action on your credit card debt today. Let's talk about the five ways you can actually pay your debt off. Number one, in addition to your payments that you're making already, add any additional extra money to just the principal balance. So what I mean by this is if you're paying $200 a month on your credit card bill already,

Starting point is 00:02:07 and you get an extra $50, you don't go out to eat once, you get money on your birthday, and you have $50 extra, we don't want to just put it towards the general cost of the debt because it's the principal and the interest, right? We want to make sure the principal goes down. Because if the principal goes down, we save money. We're not paying as much in interest. So you're going to call your credit card company and see if you can do this. See if you can just contribute that extra $50 towards lowering the principal amount. Number two, this is my favorite

Starting point is 00:02:37 strategy, especially if you have $10,000 plus dollars worth of credit card debt or if you've been in debt for a long time. We're talking six months, a year, multiple years. Consolidate your debt. The reason consolidation is so impactful, especially with the tool we recommend, flinked down in our bio, is that consolidation is going to allow you to make one flat monthly fee where the interest does not compound, and it definitely doesn't compound daily. We are seeing members of our community save hundreds, if not thousands of dollars in interest and cutting their loan time in half using this method. Because if the interest is a lower interest rate, we're seeing people go from that 22 or

Starting point is 00:03:27 24% interest to 12% interest or 10% interest. You're not only saving a ton of money. You're saving all of that interest, but you're also saving so much time on your loan. You're paying your credit card debt off rather than in four years in two or in a year and a half. The consolidation to what we recommend has a five-star rating on nerd wallet, and it also doesn't impact your credit at all to just check. So every single person watching this video, check to see if you qualify. And if the interest rate is lower than what you're paying right now and the terms are more favorable, it might be a really good idea to get this loan. Terms apply. It's different for every single person. But again, you can check down below without hurting your credit to see if this

Starting point is 00:04:10 makes sense for you. Number three, call and negotiate your interest rate down. If you want a similar strategy, but with less of a guarantee, you can call your credit card company and see if they will lower your interest rate for you. We've seen tons of people in our community be successful in taking their interest rate from that 25% to maybe 22%. And I know you're thinking, okay, that's not a lot. Why would I do that? Well, you're saving money on interest. So here's your script. You're going to call and you're going to mention some sort of financial hardship. Maybe it is losing your job. Maybe it's being impacted just by the cost of everything right now in inflation. And you're going to ask them if there's anything they can do for you. So this is

Starting point is 00:04:48 my financial hardship. This is the way I've been impacted. Is there anything you can do for me to help lower my interest rate. If they say no, you're going to politely ask again, you're going to say, is there anything you can do to help me navigate using this credit card more successfully and see what options they give you. Number four, you knew this was coming, but I need you to audit your budget. One of the hardest things to do is get out of credit card debt while you're putting yourself back into it. We need to understand what we're actually spending our money on and making sure that our spending aligns with our values. So I need you looking at your numbers. I need you looking at your budget to determine, yep, these are the things I value. These are the things I can

Starting point is 00:05:23 afford. These are the things I need to cut. And finally, number five, I'm going to teach you how to properly use a credit card so that this doesn't happen again. One, we're spending within our means and we're paying off our debt every single month in full and on time. We also want to do our best to keep our balance under 30% of our total credit line. So if your credit card offers you a $10,000 credit line, we want to be spending $3,000 or less, per month. Why? Well, it's going to boost your credit score. Because part of your credit score is what's called your credit utilization rate. If you're utilizing 30% or less of your total credit, it's going to increase your credit score. These are five ways to help you pay off

Starting point is 00:06:02 your credit card debt by the end of this year. And one of my favorite fixes for immediate relief is checking to see if you qualify for loan consolidation. You can find all of the info down below. Thank you for being here. And if you liked this video, I would love for you to subscribe. we have so much free content around how to save your first 100k, how to pay off credit card debt, student loan debt, as well as how to invest in a sustainable way. We'll see you back here soon. Thank you for listening to Financial Feminist, a Her First 100K podcast. For more information about Financial Feminist, Her First 100K, our guests and episode show notes,

Starting point is 00:06:36 visit Financialfeministpodcast.com. If you're confused about your personal finances and you're wondering where to start, go to Her First100K.com slash quiz for a free personalized money plan. Financial Feminist is hosted by me, Tori Dunlap. Produced by Kristen Fields and Tamisha Grant, research by Sarah Shortino, audio and video engineering by Elisa Midcalf, Marketing and Operations by Karina Patel and Amanda LaFew. Special thanks to our team at her first 100K. Kaelin Sprenkel, Masha Bakkeyeva, Sasha Bonar, Ray Wong, Elizabeth McCumber, Daryl Ann Inman, Shelby Dukloose, Megan Walker, and Jess Hawks. Promotional graphics by Mary

Starting point is 00:07:14 Stratton, photography by Sarah Wolf, and theme music by Jonah Cohen Sound. A huge thanks to the entire her first 100K community for supporting our show.

Financial Feminist - Pay Off Your Credit Card Debt FAST (Bonus)

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