Are you feeling buried in credit card debt? You're not alone. As of August 2015, the Federal Reserve reports that America's current outstanding consumer debt stands at $918.5 billion. If you're feeling the pinch of rising consumer debt, find some inspiration from these five people, who were able to pay off thousands of dollars and now live free of credit card debt.
Total amount of credit card debt: $22,000.
Payoff strategy: Put side hustle money toward debt, went on an all-cash budget and used a consumer credit counseling service.
Credit card debt had become a money drain for LaTisha Styles. Her wake-up call came when she was in college and was applying for a program to teach abroad.
"Mid-way through the application process, I realized that the expected salary would not allow me to pay my credit card bills. At that moment, I decided that I would no longer be a slave to debt," she says.
Styles, founder of the millennial-focused personal finance blog, YoungFinances, went on an all-cash budget and slashed expenses to conquer her debt.
"It was tough at times -- especially when I had to turn down invitations to go out because I literally did not have the cash. But ultimately, it was worth it," she says.
In order to supplement her income, Styles created a part-time business helping others with their personal finances -- teaching them what she learned the hard way.
"I took that extra money, and the salary that I earned from my full-time job and created a plan to pay off my debt in three years," she says.
John Schneider & David Auten
Total amount of credit card debt: $51,000.
Payoff strategy: Consolidating credit card debt on cards with low to zero interest rates.
John Schneider & David Auten, founders of the debt-focused blog Debt Free Guys, had thirteen years of combined experience in the financial services industry, but still found themselves with $51,000 in combined credit card debt. They admit that they made good money, but made poor money decisions.
Their turning point came after realizing that their dream of homeownership was being delayed because of their debt. In order to get out of credit card debt, they slashed their expenses and significantly decreased their going-out budget.
"We seriously cut back on all unnecessary expenses in every category, and funneled all the extra, unused money to our credit cards," the couple explains.
Before their turning point, they would spend $500 to $1,000 on the weekends to buy clothes, go dancing and hang with friends. After their turning point? They budgeted $75 per week for social fun. For them, really cutting back helped accomplish their dream of debt freedom, which they achieved within two and a half years.
In addition to cutting back, they consolidated their credit card debt using balance transfer cards that offered low to zero (introductory) interest rates. "There were transfer fees, but they totaled less than what we would've paid in interest rates," the couple says. This strategy helped them pay less in interest and put more toward debt.
Total amount of credit card debt: $20,000, though her total debt was $110,000 -- a mixture of car loans, student loans, business loans and collection items.
Payoff strategy: The Debt Snowball method, which focuses on paying off the smallest balance first. This method is good for those looking for small wins and to keep motivation high.
Several years ago Aja McClanahan, founder of the personal finance blog Principles of Increase, realized that keeping up with the Joneses wasn't worth it. Aja realized she couldn't work at the pace required to pay her bills and debt, while trying to raise her two small children.
She and her husband decided to use the Debt Snowball method, focusing on paying off the smallest balance first. "This [paying off debt] was a very mental process for us. So we definitely needed to go for the 'small wins' to get the process going," McClanahan explains.
The couple reduced their costs by cutting out cable and moving to a less expensive neighborhood. They were able to live rent and mortgage free, in a house that was gifted to them by a family member. The catch? It was in an undesirable neighborhood and also needed some renovation. "Fortunately, we had the cash to renovate it and moved in. It's been one of the best things we've ever done," she says.
In addition to these cost-cutting measures, Aja started to sell old items on eBay and Craigslist and put that extra money toward debt. After five years, the couple became debt-free in 2013.
Total amount of credit card debt: $7,000, though he had a total debt load of $52,000, which included a car loan, credit cards and multiple student loans.
Payoff strategy: The Debt Snowball method.
Getting married was the turning point for Deacon Hayes, financial expert at Well Kept Wallet, to getting out of debt.
"We came from different backgrounds and it became apparent that we needed to work on our finances together as a team if we were going to get out of debt," he says. The couple employed the Debt Snowball method to attack their debt. "Once we paid off our first small debt, it gave us the confidence to keep pressing forward," he says.
The couple started going through their budget and making cuts. "I called our service providers and asked for a better deal. I cancelled unused memberships," Hayes says.
In addition, Hayes got a part-time job delivering pizzas, which helped him make extra money a few times a week, on top of his full-time job. Hayes and his wife were able to pay off all of their debt in 18 months.
Total amount of credit card debt: $109,000.
Payoff strategy: The Debt Snowball method.
Brian Brandow, founder of the personal finance blog Debt Discipline, maxed out all of his credit cards and had to tell his family that he couldn't afford to go on the family vacation.
"I knew something had to change. We were making too much money to be living like this. There had to be a better way," he says.
The couple used the Debt Snowball method of paying off the smallest balance first in order to keep motivation high. "We wanted to build momentum to help keep us motivated," he says.
The first thing he and his wife did was cut out luxuries. Once there was no more to cut back on, they worked on increasing their income. His wife went back to work and the couple paid an average of $2,000 per month to become debt free in 50 months.
Dealing with credit card debt can feel like a huge burden, but it's possible to break free. Start by reviewing your budget, slashing expenses and looking for ways to make more money. Even making small changes can have a big impact, so you can be debt free too.
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