by Hope
I am so excited to being on my way to getting to really tear into my debt. But I do believe I need to prioritize paying back my personal loans first, then the credit cards. However, I’ve found a TikTok creator (not an affiliate link, just a link to the TikTok creator’s profile) that gave me a different way of looking at credit card debt. One that I enjoy.
And I thought I would try out her perspective on my existing credit card debt. Now she’s all about paying off the debt, but also takes into consideration the method and how it affects your credit score. (I used to be very concerned about my credit score, but since I have a house and a car and plenty of credit card debt, I don’t really think about it very often.)
I think her method fascinates me because it’s kind of like a game, and we all know I love money games and keeping this journey interesting.
Credit Card by Percentage
| Card | Limit | 89% | 69% | 49% | 29% | 9% | February, 2024 Total |
|---|---|---|---|---|---|---|---|
| CC - Wander | $1,650 | $1,451 | $1.139 | $809 | $473 | $149 | $1,735 |
| CC - USAA | $5,000 | $4,450 | $3,450 | $2,450 | $1,450 | $450 | $4,966 |
| CC - Amazon | $1,500 | $1,335 | $1,035 | $735 | $435 | $135 | $1,481 |
| CC - Sams | $1,000 | $890 | $690 | $490 | $290 | $90 | $1,133 |
| CC - Frontier | $3,700 | $3,293 | $2,553 | $1,813 | $1,073 | $333 | $3,676 |
| CC - Apple | $500 | Paid off every month | |||||
| Total CC Debt | $11,419 | $8,867 | $6,297 | $3,721 | $1,157 | $11,971 | |
Let’s Talk About It
My take away from this is that instead of focusing on paying off one card at a time. Perhaps I should focus on paying down every one of my credit cards to each percentage level. Focus on one, then another until they are all at the next lowest level, and then start the cycle again.
I guess the question I have to ask myself is would that be as motivating as just paying one off at a time? Seeing them all go down pretty steadily versus just one at a time? And does one way versus the other make much financial difference?
What are your thoughts?
Hope is a creative, solutions-focused business manager helping clients grow their business and work more efficiently by leveraging expertise in project management, digital marketing, & tech solutions. She’s recently become an empty nester as her 5 foster/adoptive kids have spread their wings. She lives with her 3 dogs in a small town in NE Georgia and prefers the mountains to the beaches any day. She struggles with the travel bug and is doing her best to help each of her kids as their finish schooling and become independent (but it’s hard!) She has run her own consulting company for almost twenty years! Hope began sharing her journey with the BAD community in the Spring of 2015 and feels like she has finally in a place to really focus on making wise financial decisions.
Hope, I’ve been following you for years, and while you definitely have been through a lot that has made you stronger, I stay engaged in your story solely because it’s entertaining. I know you won’t even publish this comment, maybe you’ll read it though. You are on the verge of being homeless, you wouldn’t even have heat if it wasn’t for daddy. Stop picking things that you “enjoy” and get REAL.
I am glad you find me entertaining. That’s how I first found this blog as well.
My question for you would be, do you not think you are more apt to stick with things if you enjoy them? They challenge you?
I LOVE playing with the numbers, exploring and creating different Excel sheets. And with no kids as home, I have alot of time on my hands, even balancing multiple jobs. So I found this very interesting from alot of perspectives.
And it would present a “challenge” to figuring the numbers out. Just saying. But I’m glad you are here and I hope my “turn around” over the next 6 months entertains you as well.
You are right, I have had a lot of struggles and alot of help over the years. I am so grateful.
Hope, have you ever been evaluated for ADHD? You mentioned Gymnast has it, and it’s highly heritable. The problem with playing with numbers and forecasts and ADHD is that after you’ve done the thinking and planning, it feels like you’ve finished the work. And of course, you haven’t even started. It is precisely the wrong way to approach it.
Honestly, the only thing that worked for me was getting a legitimate consolidation loan at a lower interest rate so I could actually make progress over the long term, making more money, and putting aside an emergency fund.
I’ve tended to always focus on paying off the highest interest rate first, as that’ll make the most sense from a total cost of debt perspective. Dave Ramsey’s snowball method is effective from a motivation perspective, and you could also prioritize paying off the cards with the highest minimum payment which benefits your cash flow.
The credit card utilization method seems like a constant recalculation game that doesn’t net much for wins.
That final sentence was what I was wanting to know. Does paying off a larger portion of more cards each month make financial difference versus just being a method for increasing your credit score more rapidly.
I think Dave Ramsey’s way to respond to this would be “If were ever about math, you wouldn’t have been in debt in the first place.” Financially and mathematically, credit cards don’t make sense. You need a win, and that’s why his ‘pay off the lowest balance’ first tactic is so popular. It creates momentum. Don’t spend hours trying to figure out how to save ten cents of interest.
Most of your credit card debts are low enough that you should be able to tackle them pretty quickly one at a time over just a couple months. This doesn’t have to be a game, just pick one (I feel like the lowest so you feel that sense of accomplishment) and move on. You’re making this harder than it needs to be.
I really encourage you to check out cash stuffing if you enjoy games and challenges!
Personal finance TikTok isn’t a bad place, however I think it’s time you’re honest with yourself. You have a contract for 36k. After 6 months, you will be in the exact same place. If you pay off a card, you can close it and avoid the temptation of spending on it. Your actions have shown that you are not a credit card person, you have little to no self control with money. Every debt that is gone lowers your monthly expenses and lowers the amount you need to come in each month to stay afloat. Your credit isn’t a concern – you’re closer to bankruptcy or your children or parents supporting you than being in a situation where your credit matters.
Yes, my point exactly. This method doesn’t make $ sense unless you are considering your credit score which I am not.
I would honestly focus and keeping your balances below the limit, and snowballing them. Is there a reason you continue to use the Apple card, with all the other debt you have? I understand you pay that off every month, I think I just don’t understand why have that balance at all.
I’d pay off your smaller cards and close them as you go, keeping one or two of your oldest cards open. If you don’t care about credit score then don’t even entertain this idea – even if you do I’m not sure I see the benefit.
I’m debating whether this is appropriate to say but I suppose you can not approve the comment if you choose. It seems like Vicki’s ADHD diagnosis and treatment have significantly improved her ability to make good decisions. I wonder if it would be worth it for you to explore whether there is anything similar going on for you. It seems like you get very excited about making a plan but have a hard time following through long term.
Personally, I feel this method you describe is a lot of work with no reward at all. In fact, I see it as very risky because it keeps all of your credit cards “alive” which increases the odds of using them in times of want.
Instead, I would consider one of two approaches to paying off your credit cards, and closing them once paid off:
1.) Pay extra on the cards with the highest interest rates. This leaves more cards active, but it also makes sense financially because you are eliminating your highest costs first.
2.) Pay extra on the cards with the smallest balances. This approach won’t be the most cost effective in the long run, but it would be motivating to quickly eliminate a bunch of cards – and when paid off and closed it reduces the risk of relapsing and using them!
I think the focus should be on clearing the highest interest rate one first. And a continued focus on permanent long term employment again, and rebuilding the emergency fund. I know since you’re in a smaller town it is difficult with job hunting, but I am hopeful that permanent gainful employment is coming your way again!
I find this silly. It just leaves lots of cards still open with available credit. For someone who has admitted they will spend extra money in their account. This type of paydown is a terrible idea. In general, financial advice on tiktok is not always sound advice, it’s made for the sole purpose of being clickbait.
I get that you want debt payoff to be exciting. But it’s not. It’s boring and a long slog that seemingly takes forever. You need to reframe it and make budgeting and saving money automatic and status quo. You’ll stick with it better in the long run if it is a habit and mindset instead of chasing the dopamine of a payoff schtick.
Make a budget. Send extra money to your debts as it is available. And stay the course.