How To Pay Off $18,000 In Credit Card Debt

Don Cobler used to get up before the sun and go to work. He’d get home long after dark, then he’d do it again the next day. And the next and the next.

“I was slowly killing myself,” he said.

Call it Death by Debt. Like millions of Americans, Cobler found himself buried in credit card bills. As hard as he shoveled, he could not dig himself out the hole.

“I just got in over my head and couldn’t pay it all off,” Cobler said.

Four separate credit card bills would come in the mail every month. Cobler would wince as he looked at the numbers. They added up to $18,000 and weren’t getting any smaller since all he could do most months was pay the minimum balances.

Things got worse when Cobler and his wife decided to open a video rental store in Fort Gibson, Oklahoma.

It was a side business for Cobler, who was a materials manager at a hospital. The venture struggled and Cobler started paying bills with credit cards, hoping the business would turn around. It never did and his marriage ended up in divorce.

“We bought the business and it didn’t work out,” he said. “And the marriage just went south.”

He’s not alone. Financial problems are the third leading cause of divorce in America, according to a study by the Institute for Divorce Financial Analysts.

One thing Cobler didn’t get rid of in the divorce was his debt. He was saddled with all $18,000 from the credit cards. They had varying interest rates that essentially stuck him on a debt treadmill.

Cobler said he scrimped and cut back on all unnecessary expenses. He even got a job at a fast-food restaurant, which was not exactly the kind of thing a 50-year-old wants to do.

The alarm clock would go off early and he’d go to work at the hospital. He’d get off about 5 p.m. and head to the fast-food restaurant, where he’d work until the midnight closing.

The 80 hours a week of labor paid the bills, but didn’t produce enough for Cobler to put much of dent in his debt. He knew he needed help, but wasn’t sure where to look.

Then, while going through the mail, he found an ad from InCharge Debt Solutions about debt consolidation. Cobler called InCharge Debt Solutions, which set up a debt management plan that would help him get out of debt and get him a lot more sleep.

A credit counselor reviewed his financial situation and explained the options. They agreed the best course was a bill consolidation plan in which InCharge would work with the credit card companies to lower interest rates.

Instead of paying separate bills each month, Cobler made one payment to InCharge. It not only simplified things, the monthly payment was appreciably lower due to the reduced interest rates.

“It was $478 a month,” Cobler said. “I know it by heart.”

The counselor didn’t sugarcoat anything. Cobler was told his debt elimination plan would take four years to complete. He couldn’t use any credit cards, and a monthly fee was part of the debt consolidation program.

“I initially didn’t understand why I had to pay that,” Cobler said. “But as I went along, I became very appreciative and couldn’t begrudge them any part of that money. They saved me so much more than I spent.”

Between that guidance from InCharge credit counselors and Cobler’s dedication, the debt was paid off six months early.

Toward the end of the plan, Cobler got remarried. He and his new wife were in good enough financial shape to buy a house and car.

And his fast-food job? Cobler gladly retired from that.

“It’s great,” he said. “Like I said, I was killing myself working two jobs. I have a sleep debt I’ll never get back.”

But he has no more credit card debt, which makes for very pleasant dreams.

If you’re among American consumers nursing a record amount of credit card debt – and working feverishly to get out from under it – here are some tips to help you eliminate that debt.

1. Make a List of All Your Credit Card Debts

You can’t get where you’re going if you don’t know where you are. Establish your starting point by listing all your credit cards (even those with zero balances), and the amount owed on each.

To get an even better fix on your situation, create a spreadsheet with additional columns for each card’s interest rate, the closing date, the due date, minimum payment, and how long it’ll take to pay off the debt by making only minimum payments.

Take advice from Scott Lieberman, founder of Touchdown Money.

“For $18,000 worth of credit card debt,” he says, “the very first thing someone should do is make a comprehensive list of all the credit card debts, including balances, interest rates, and minimum payments.”

Now you have a detailed map from which you can develop your strategy.

2. Make a Budget

Once you’ve established the size of your challenge, the essential tool in your successful game plan is a proper budget. That is, a spending plan for a specified period of time (usually a year) that accounts for estimated income and expenses.

If you don’t have one, create one. If you have one, review it and, where possible, revise it.

Let’s establish this upfront: Attempting to win the lottery is not a reasonable financial rescue plan. Instead, getting out of debt requires a steady, systematic approach. Honestly drawn and properly applied, that’s precisely what your new (or improved) budget will do for you.

“A practical way to budget when trying to get out of debt is to make conscious decisions to avoid new debt,” Lieberman said. “Use cash or debit for purchases to prevent further accumulation of debt. The envelope method, where you put cash into envelopes for things like groceries, is an invaluable tool that helps put a tangible aspect on the money you do have.”

Indeed. A budget helps create, and — faithfully followed — enforce financial stability. It will also show whether you have leftover income that can be used to attack credit card debt.

3. Create a Strategy to Pay off the Debt

Anyone finally confronting a crisis of debt wants the same thing: Make it go away, fast. In that light, attempting to pay everything everywhere all at once is a strategy … but it’s probably not the best one.

Two proven strategies take their names from the Far North: Debt snowball and debt avalanche.

With the debt snowball, you build momentum and a winning spirit by paying the minimum on your larger debts, but putting your extra cash toward the smallest balance. Repeat until you’re debt free.

With the debt avalanche, you arrange your balances by interest rates; the highest gets your extra cash while the others get minimum payments.

4. Pay More Than Your Minimum Payment

As noted above, the key to getting out of credit card debt is by applying as much of your budget as possible to pay down balances. This means at least one card every month will get a payment higher than the minimum.

The lower the principle, the less you’ll pay in interest charges, and the faster you’ll eliminate the balance.

5. Set Achievable Goals

As you embark on your expedition, make certain you have established SMART goals. That is, goals that are specific, measurable, achievable, relevant, and time-bound.

“A SMART strategy is invaluable when tackling debt,” Taylor Kovar, CEO at Lufkin, Texas-based Kovar Wealth Management, said. “It provides a clear roadmap and keeps you accountable. For instance, if you owe $18,000, a realistic goal might be to pay it off in 24 months.

“That’s specific, measurable, assignable to your monthly budget, realistic, and time-related. It breaks down a daunting task into manageable chunks.”

SMART goals keep you from making stuff up as you go along. Yes, there are bound to be surprises and setbacks. But with SMART goals, you’ll be guided back to your path by the qualities — clarity, motivation, and focus — that breed success.

6. Consider Debt Consolidation

Another strategy for attacking fat credit card balances with high interest rates is by gathering them under a single umbrella at a lower interest rate, also known as debt consolidation.

By wary, Kovar advises.

“Debt consolidation can be a double-edged sword,” he said. “On one hand, it can simplify payments and potentially reduce interest rates. On the other, it can be a band-aid solution if spending habits aren’t addressed.

“Before considering consolidation, ensure you’ve addressed the root causes of your debt and have a clear repayment plan in place.”

The most traditional way of accomplishing debt consolidation is through a personal loan. Depending on your credit score, you could be able to move all of your credit card debt into a single new loan (with a single payment on a single date each month) at an extremely attractive interest rate.

Another method for consolidating debt is by scoring a zero-interest credit card that offers a balance-transfer option. In late summer of 2023, plenty of companies were offering balance transfer credit cards with zero interest for 21 payment periods.

7. Seek Credit Counseling

The steps and strategies listed above are proven and achievable. But they require commitment and discipline to succeed.

If you suspect you could benefit from getting coached up by outside counsel, consider following Don Cobler’s lead.

Credit counseling showed him a better way to financial health, and it may have saved his physical being in the process.

A consultation with a credit counselor from InCharge Debt Solutions is free and without obligation. From your expert, you will learn which strategy fits your situation best, and maybe even get immediately on the road to the Land of Zero Debt.