Months using ReadyForZero: 9
Accounts paid off: 1 of 4
“ReadyForZero makes it dead simple. Just enter all your info, and they tell you exactly what to do… Knowing exactly how far I’ve come, and when it will all be over is a big help that keeps me pushing forward!”
We’ve been on a roll lately when it comes to talking with awesome ReadyForZero users who are kicking butt, taking names, and paying off their debt like crazy. If you haven’t read our recent profiles of Katrina or Jared yet, check them out.
Today we’re profiling Tiffany, a ReadyForZero user in Maryland who has paid off more than $8,000 in credit card debt. When we talked to her, we found she had learned some valuable lessons about how to get out of debt, so we wanted to share her experience and her advice with you.
Tiffany said she originally got in debt the way so many people do. “Really, I just fell into the ‘spending more than I have’ trap.” She described how managing her finances became more complicated when she got married. Initially, she and her husband made the decision to use credit cards instead of debit cards because they were worried about how to coordinate their spending with a shared debit card account.
As the self-described Chief Financial Officer of her household, Tiffany wanted to make sure they would not incur overdraft charges or fees. “So what happened is we both charged to a credit card that I planned to pay off every month,” she explained.
“Then the end of the month would come and the bill would come and I’d go ‘Oh, wait a minute, we charged $4,000 and can only afford to pay $3500 or we’re not going to be able to pay the rent.’ So then that $500 one month became $1,000 the next month and just sort of kept going from there.”
That sounds like something we like to call ‘balance creep.’ It’s what happens when you spend slightly more than you can pay each month, and suddenly your total balance has grown more than you could have ever imagined, like a baby monster that hides in your attic until it’s big enough to scare the daylights out of you. So the first thing Tiffany taught us was this:
Lesson 1: When you get married, make a plan to ensure that your combined expenses are less than what you both can pay
Before she found ReadyForZero, Tiffany and her husband tried various plans for paying off their credit card balances.
“I’ve been trying to get out of debt for – I don’t even know how long at this point – I think for about 10 years. And basically what would end up happening is I would come up with one plan but it would be extreme and I wouldn’t be able to follow through with it, or I would just go back to making minimum payments on things.”
She tried using spreadsheets, but there was no way to see the impact of their interest rates without causing herself a major headache. “It would have a pie chart of how much I had paid and how far I had to go to get it paid off… but I wasn’t sure how to calculate in all the interest and everything like that.”
Let’s call that…
Lesson 2: Spreadsheets alone won’t save you
When she came across ReadyForZero, she felt more relaxed almost immediately. “What was nice, and what made me say ‘I’m going to do this and I’m going to use your site to do this’ is just that it really is absolutely dead simple.
“You log in, you say ‘these are my accounts,’ it syncs everything up for you, and you say ‘here’s how much I can afford to pay’ and it shows you exactly what to do.”
Whereas before, it was stressful to keep track of her plan, with ReadyForZero she didn’t have the hassle of crunching the numbers herself every month. It automatically showed her the progress she was making and told her how much to pay toward each account every month.
“I’m motivated by having a clear plan,” she said, “so I wasn’t constantly trying to figure out if I was doing it the right way or anything like that.”
Lesson 3: Use ReadyForZero! (We couldn’t forget that one, could we?)
Once Tiffany and her husband were able to focus on the amount they needed to pay each month, they started paying off their debt faster than you can say ‘I do.’ Not only have they been sticking to their plan, but they’ve also been making extra payments.
For example, they decided to use the majority of their tax refund earlier this year to pay off credit card debt. How did they have the willpower? Tiffany said they decided in advance that they would use a small portion of the tax refund on something fun and send the rest to pay off their balances.
“We basically put the plan in place and said that’s what we’re going to do. As soon as that money came in the door it went right back out to the cards, so I barely had time to think about doing anything else with it.”
Hmm, that sounds like it might be…
Lesson 4: When a large chunk of money is coming (via tax refunds, bonuses, etc.) resolve to send it directly to pay down your balances
But also remember that you’re more likely to stick with your plan if you allow yourself some “fun” spending money every once in awhile, like Tiffany did. By doing that, you’ll avoid feelings of bitterness regarding the sacrifices you have to make to save money.
Lesson 5: Allow yourself to have some fun (just don’t splurge on expensive purchases!)
As she’s gone through this process of paying off her credit cards, one of the most frustrating things Tiffany has learned is that you have to be very careful when dealing with large financial institutions. She told us how Bank of America caused her some major headaches. “What happened was I called them for something else, and somehow in this conversation they lured me into revising my credit limit.”
When this happens, a bank usually looks at all your credit usage and then decides whether to change the amount of credit you have. In Tiffany’s case, they took the opportunity to cut her credit drastically. “They announced to me that they had reduced my limit to within $500 of the total that I had on every card. So I went from using 50% to 97% of all my available credit, like overnight.”
Tiffany’s been very careful about keeping her credit score very high (“even with all the debt, as I was making minimum payments, I would never ever ever pay late,” she said). But with her credit limit cut almost in half, her credit score was suddenly in jeopardy. She is now determined to keep paying down her balances so that she can protect her good credit.
It was a hard way to learn…
Lesson 6: Be wary of letting your bank review your credit limit
Now Tiffany is using her credit score as another motivating factor, and she’s on a path to paying off her debt sooner than she once imagined. She’s been using the new ReadyForZero that we launched in October, and she was one of the first to link up a mortgage and a car loan immediately after the launch.
Does she like the look and feel of the new site? “I do, actually! It looks a lot cleaner.” We’re happy that she’s enjoying the new site and we feel confident that she’ll be seeing her progress bars fill up in no time. Hopefully you’ve learned a bit from hearing her story! Let us know if you have your own story to tell – we’d love to hear it.
This article is part of our Credit Card Debt Resource Center. If you’re looking for additional information about credit card debt, be sure to pay a visit!