My story on how I escaped from the debt hell on my own

February 23, 2011 James Heinsman Hedge Fund News

Debts can be really dark and foreboding and you realize this fact when it’s too late. The same thing happened to me few years ago. Now I am debt free but the situation that I had to face 2 years ago left me very scared. I had a lot of credit cards and used them like a maniac. I used them at every point even for the smallest of purchases. But then I fell into heavy credit card debts. I looked for ways to get rid of it on my own as I had no extra money to spare on the debt relief programs. Read on to know how I got out of this debt.

How did I fall into debts?

Since I had 5 credit cards, I used them for every purchase that I made. The interest rates were 10%, 12%, 13%, 15% and 16%. Initially I used to pay them off whenever I could. It did affect my credit scores but then I thought that if I paid the balance in full, the credit scores will remain high. But due to high inflation in the country, the payments on my credit cards suffered a lot. I lost my job too and I had to forego my credit card payments for few months. But due to the outrageously high interest rates, I couldn’t keep up with the credit card payments. I kept drowning in my credit card debts and had to sell off certain important things to pay my debts but in vain. My lifestyle made me fall into debts.

What did I do to come out of debts?

When I talked to my friends and relatives about the ways to pay off my debts, they suggested me a lot of debt relief programs. But since I had a lot of debts, I couldn’t afford to pay for the fees of the company. I tried getting help and advice from a lot of debt forums and communities. The community members were very helpful and they suggested the balance transfer to pay off my credit card debts. Till that time, I had accumulated $20,000 in 3 of my credit cards. But on the remaining cards I had $45,000 and $50,000. Since I had a lot of outstanding balance on my remaining 2 cards, I went for credit card settlement.

Balance transfer on 1st 3 cards

I got a credit card with 0% interest rate as introductory offer for one year. This helped me a lot as I had made a budget to pay off the $20,000 balance in that year. The total payments (minimum) on my 1st three cards came to $400:

Therefore, after I opted for transfer of balance method and got a card with 0% balance, the minimum balance got further reduced to $250 every month and I was able to get rid of my credit card balance on the 1st three cards.

Credit card debt settlement

Since I had a lot of credit card balance on the remainder of my credit cards, I decided to settle the amount. The total amount that I owed on my last was $95,000 ($45,000 + $50,000). I negotiated with the creditors to reduce the outstanding balance so that I could pay that off fast. They agreed to reduce the outstanding balance by 50% and the outstanding amount came down to $47,500.

I already had a budget that I could follow. I modified that budget every month according to my capability to pay off the debts. At the end of 4 years, I was completely debt free.

So, settlement and balance transfer method both helped a lot when it came to pay off my debts. My credit scores weren’t affected much and now I have a strong savings account. I have just 2 credit cards and I make sure that I pay the balances at the end of every month and I never extend my limit. One of the cards was really old so I haven’t closed that account to keep my credit history healthy. The other card is only for emergencies and I use cash most of the times. I have my spending habit in check and lead a frugal life.

Credit Card Debt, Credit Card Debt Settlement, Debt Story,

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