Success Story: Paying off $20,000 in credit card debt

Monique Harps picture

Monique Harps was a college student in Washington, D.C., in 1999, when she applied for her first credit card.

She initially charged small items like schoolbooks and dinners out but was soon using plastic to pay for plane tickets home at the holidays and spring break trips.

By 2005, she was maxed out.

“I did all I could, including cashiering at Walmart on weekends, to keep the creditors from calling,” says Harps, who was in graduate school in Fort Worth, Texas, by then.

Despite her efforts, the balances on her credit cards didn’t decrease much. And when they did, she quickly accumulated fresh debt, including financing a three-week, post-graduation road trip on the East Coast in 2007.

Before settling in Tulsa, Okla., for her current job as a supply chain analyst with an airline, she even lived off her credit cards and remaining student loans for two months.

Then, while settling into her first adult apartment, she opened a credit card with a furniture store — and added $3,700 to her debt load.

“This was the last time I used a credit card,” she says.

Soon after that purchase, Harps’ co-worker recommended The Total Money Makeover by personal finance author and radio show host Dave Ramsey.

She says it helped put her financial situation into a simple, manageable perspective.

Harps began by listing her debts from smallest to largest and then started paying them off in that order, following the “debt snowball method.”

If you just look at the math, Ramsey acknowledges that it makes the most sense to pay the bills charging the highest interest rate first.

"But what I have learned is that personal finance is 20% head knowledge and 80% behavior," Ramsey writes on his website. "You need some quick wins in order to stay pumped enough to get out of debt completely."

Harps started with $20,000 in debt on five credit cards.

She established a budget to figure out what her expenses were and figure out what she could cut.

A few of the measures she took were extreme, such as not having cable television or Internet access at home and not having a data package on her mobile phone.

Harps watched over-the-air channels and surfed the Web for free at her local library.

She also limited “play” money to just $50 a month, which she used for cheap movies, local fairs and meals out with friends — using coupons, splitting entrees or ordering soup or a children’s meal.

Finding free entertainment and events helped keep her out and about and stretch her play budget. “There is always something to do if you’re willing to step out of your comfort zone,” she says.

All of the money she saved was redirected to pay off her credit card debt.

But Harps found that cutting expenses was only part of the equation. She had to increase her income, too.

Harps started by selling things she owned and no longer needed on eBay, and then she began buying and reselling cheap brand-name clothing.

She babysat, worked part time at Macy’s and donated plasma weekly for $50.

“I also applied birthday and Christmas gift money, my income tax return and quarterly bonus to my credit cards,” she says.

Soon, her debt began to decrease, and her excitement grew with each credit card she paid off. In just over a year, Harps was free of credit card debt.

Two years later, she still doesn’t use credit cards, continues to monitor her spending and is working on paying off her student loans early.

“Now, my spending is based on how much I value something,” Harps says. “I’m very frugal, but I splurge when it matters.”

While she continues to live without cable television and shop for store brands at the grocery store, she splits Internet service with a roommate and adds natural and organic foods to her cart.

Harps has also realized that experiences are important to her and has saved for international trips to India, Brazil and St. Croix. In addition, she donates regularly to a friend’s mission trip in the Middle East.

Living a financially responsible life is “empowering,” Harps says. “Once you know where your money is going and have a plan for the future, you realize you are financially capable of almost anything.”

Her tips for getting out debt:

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