Hey BP I want to share my story of how I paid off $11,000 dollars in CC debt over a 27 month period, all while not paying any interest, and while traveling the world.
When I graduated from medical school in 2015, I did not have any credit card debt. In school, I was always given a lump sum from my student loans every 6 months, so I would put everything on a credit card then pay it off in full at the end of the month. This made sense since I knew I could pay it off, I earned cash back rewards, and my cash earned interest while sitting in my savings account. It also made it easier to keep track of expenses.
Then came graduation...no more loan money, and no more stipend from my scholarship. I had to go two months without any cash, and in that two months I took a celebratory trip to Hawaii, moved all of my belongings from Oregon to North Carolina, boarded my dog for a really long time, and had to put stuff in storage. I also closed on my house, and then needed to buy a bed, mattress, couch, and some chairs. Needless to say, I racked up A LOT of debt in a very short time span. About $10,000 to be exact.
I was starting out life in residency with this hanging over my head, and I wanted nothing more than to pay it all off, ASAP. But without a lump sum of cash, I couldn't do this. I got my first paycheck and threw $400 dollars at the debt of my $1300 paycheck. I left just enough to pay the mortgage, student loans, insurance, and groceries. My mistake was that I was STILL USING ANOTHER CREDIT CARD for all of my day to day expenses. I kept track in excel as one card was being paid off, the debt on the other was rising. Every month I was paying $800 in CC debt, and instead of my debt going down, it was going up. Within six months, my debt had gone from $10,000 to $11,000. My strategy clearly needed to be re-evaluated. Also, the zero percent interest introductory period was coming to an end, as well as the "no fee for the first year" on my american airlines CC.
At the same time as my debt was swelling, I also was looking at going to Europe in a few short months, as I was the maid of honor in my best friends wedding. I figured I would need about $3000 for the trip, and I didn't want to put in on a credit card. With the amount I was paying, I knew it would be literally impossible to save enough in time for the wedding. And that is when I turned to house hacking. I started off just listing one of my spare bedrooms on airbnb. Then, my second guest ever brought a prostitute over (different story) so I almost quit. But I am glad I didn't because I started to host some of the most amazing people! And I realized there is niche in my town for traveling nurses. People would stay for 13 weeks, and I only had to turn the room over once. They paid by the month, and it was steady income in my busy schedule as a resident. Plus, they would even walk the dog and sweep the kitchen. I had found my money making niche that I needed to save for the wedding. All of my airbnb money went toward saving for trips. All in all I made about $10,000 a year renting out my two spare bedrooms at $650 a month each. Plus, as a bonus, I made some really great friends. Not to mention that there are amazing tax benefits (again another story).
Now that I knew how I would save for the wedding, I needed to come up with a way to get rid of this debt. My boyfriend at the time and I agreed for our new year's resolutions, we would STOP using CC's altogether. If we didn't have the cash, we wouldn't buy it. That is when I really started to see a change. When the zero percent interest ran out on the cards, I had paid down $5500 of the $11,000. Knowing that interest payments of 23% would kill my progress I did a balance transfer. The first card I applied for had a 21 month zero interest on balance transfers. They only approved me for $2000. The next card I opened had a zero interest for 18 months, and they only approved me for $2000. I called the second card up since I already had a credit card with them, and they let me transfer $3500 using the available credit from the other card all at zero percent interest for 18 months.
Next, I divided what was owed by the amount of time available and set up auto payments. For the next 18 months I paid $500 a month until all the debt was paid off. My last payment went through of March of this year and I was down to zero! It felt so good to get that all paid off.
The best part is that since I was house hacking, I still went on several overseas trips. I went to Austria, Mexico, Uganda twice for medical missions, took a selfie with a giraffe in Kenya, swam with dolphins in the India ocean off the coast of Zanzibar, was touched by a silver back gorilla in Uganda, went on a safari, went to Haiti for a mission trip, and went to Bali to see on of my best friends get married. I visited my parents in Colorado, and went to Key West with my best friends. I could not have afforded to go all over the world while in residency if it were not for the beauty of house hacking.
For those of you swimming in debt, I just want you to know, if you make a plan and stick with it, you can pay it off too! It takes a long time, but with perseverance and a plan, you can be debt free. And with the beauty of passive income, you can also enjoy your life and chase your passions.
Thanks for reading guys!
I just wanted to say congrats on paying off your CC debt. I know the feeling of paying off CC debt and finally being debt free. I did the same thing you did and played the balance transfer game. I just kept transferring my balances to 0% interest cards until it was all paid off. Paid 0 interest during that time.
I liked how you turned to renting out your extra bedrooms to help you achieve your goals and speed up the process. I didn't even think of that when I was paying off my CC debt.
Now that you paid all of that off, you can focus on building wealth and now have the flexibility of doing whatever you want to do. That is awesome!
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