It started with a guitar and turned into a $20,000 debt: How I paid it off in 8 steps

This article reprinted with permission from nerd wallet. In this series, NerdWallet highlights people’s ways of paying off debt. This month, Kenley Young shares how he combined many debt reduction tools with the knowledge he gained at NerdWallet to eliminate credit card debt.

In the first week of 2022, I ticked off a longtime New Year’s resolution: I paid off the more than $20,000 in credit card debt I’ve owed for about two decades.

It was anything but an overnight success. I only really started to consciously attack my debts in the summer of 2016. More than five years later, when I zeroed my balances on both of these credit cards, it felt like I’d exhausted all the tricks of booking.

“At some point it dawned on me that extreme frugality alone is not enough.”

Even admitting my struggles with debt makes me insecure: I work at NerdWallet so couldn’t have avoided this?

Well, I know more now than I did five years ago, including how difficult it can be to avoid credit card debt when major life events are unfolding.

Here’s how I accumulated my debt, how I attacked it — and the tools that made the biggest difference.

How I made my debt

My debt journey began in the early hours of the morning with an $1,800 Martin guitar that I couldn’t afford. Having justified this purchase with a meager newspaper salary, streamlining travel, furniture, drink rounds and whatnot was no problem.

But guitars and Guinness are one thing (well, two things, technically). Then came the house. The engagement ring. The honeymoon. The vet bills a very sick dog. Cross-country move to Los Angeles for a new job. The LA Rent. The two children. The daycare bills.

I did not have emergency fund— or significant savings — so I leaned into credit cards. I was drowning in debt in an expensive city.

As I dug up

Maybe it was the afternoon I cruised the streets of West LA, scouring gutters for aluminum cans to sell for pennies. But at some point it dawned on me that extreme frugality alone is not enough. The steps I took from there were:

1. Moving to a cheaper state

In the summer of 2016, my family and I moved from Los Angeles – one of the most expensive cities in the world – to Columbia, South Carolina, a city widely considered one of the cheapest in the country.

Before I get too far with this tip, I have to acknowledge my privilege and the fact that not everyone can just pack up and leave town. Uprooting yourself can be painful and prohibitively expensive. Not only did we lose my wife’s $40,000 salary when we left town, but the move itself cost thousands of dollars. We paid for this by liquidating a life insurance policy that my wife’s late grandfather had taken out in her name.

But in the long run it made sense. I had gotten a new, better paying job that allowed me to work remotely. And despite the temporary net loss in household income, we had a soft place to land.

My wife and I are from South Carolina and our families are here. We had a village that helped us get on our feet. For the first eight months we actually lived rent-free with my kind and accommodating in-laws. This is a safety net that not everyone has.

Now that we have our own apartment in Charleston, we’re paying off a mortgage. It just so happens to be $1,000 cheaper a month than our LA rent. These savings in housing costs made the biggest difference, even though our household income had initially shrunk to $95,000.

See also: The 5 Best – and Most Affordable – Places to Live in California and The Best and Cheapest Places to Live in Florida

2. Use of Credit Cards to Transfer Balance

Contrary to intuition, the second most important weapon in my credit card debt-zapp arsenal was…another credit card.

But this one had a superpower: an introductory 0% APR on balance transfers for 21 months. I transferred a large sum from an existing card with a double digit APR so when I worked on this balance for almost two years I didn’t waste any of my payment on interest. It was a move I’ve made repeatedly with similar card offerings.

Some caveats about credit cards with transfer of funds:

  • You usually need at least good credit (score of 690 or higher) to get one. Despite having significant debt, I had never missed a payment and had a long credit history. So my credit scores were in good shape.

  • You can only transfer funds up to the new card’s credit limit, and you usually don’t know what that is until you apply for it.

  • You typically owe a fee, often 3% to 5% of the funds transferred. Therefore, it is counterproductive to “park” debt on these cards — letting it sit there without paying it off until interest rates start to rise again.

also read: Suze Orman says you should do this now if you’re worried about inflation

3. Accept part-time jobs

In another life I was a singer and guitarist in a rock band. We broke up a long time ago, but I’ve stuck to live music as a hobby. I also kept much of the gear that I now use for side gigs.

My typical solo acoustic gig brings in $150-$200, and on a good night tips can add about $75 to my haul. I also set up a digital tip jar so customers who don’t have cash on them can slide me five points through Venmo.

In a good month I book two to four gigs. So, conservatively, that’s at least $300 more per month that I once spent on my debt and now put into a high-yielding online savings account.

(It turns out the guitar wasn’t such a bad investment after all.)

4. Put strokes of luck into action

Tax refunds, Christmas gifts, escrow surplus. You name it – I threw it on my debt.

Of course, as a parent and homeowner, these lucky breaks have all sorts of enticing uses, so prioritization is key. I had many wishes, but the biggest was to get rid of my debts.

5. Renegotiate bills

We bought our house in 2017 and since then I’ve refinanced our mortgage twice and paid off a car loan. That saved us a chunk every month.

But even smaller cuts helped. We gave up cable, found cheaper home and car insurance, got a better deal on our cell phones, opted out of monthly services like newspaper delivery, Sling TV, and more.

Read: “I am a 53-year-old single man with very little savings”: I want to take out a 30-year mortgage but pay it off in 7 years. Is that possible?

6. Pay with cash back credit cards

Yes, credit cards got me into this jam. But my new job taught me a lot about them, and I knew that using cards strategically would bring benefits.

My credit was good enough to qualify for a rewards credit card, which I used for essential purchases like groceries and gas. I paid back everything I put on this new card right away so it wouldn’t increase my debt, and then used the rewards to help pay off what I still owed.

7. Use of Cash Back Websites and Apps

When I found out about “double-dipping” – using a rewards credit card on a cash-back site to earn both the card’s rewards and the site’s rewards – I was hooked.

When I shop online, my most visited sites are TopCashback and Rakuten, but I always check Cashback Monitor’s aggregation page to make sure I’m getting the highest rates.

I’ve also joined a site called MyPoints where you can take surveys or take photos of receipts for points that you can redeem for money. I now diligently keep receipts and submit them to a variety of cashback apps: Ibotta, Fetch and Upside to name a few.

Also, I used an app called Qoins that allows you to round up purchases to the nearest dollar and deposit the difference into an account. At the end of the month, Qoins sends this balance – minus a fee – to your creditors.

Read: Personal savings will be depleted as Americans deal with blisteringly hot inflation. People are being forced to make “difficult choices.”

8. Sell unwanted items

A tried-and-true way to make a quick buck? Selling some stuff on Craigslist. I focused on popular and high-margin items, mainly electronics and music equipment, but also children’s toys and bicycles. Some boy out there now has a decent guitar that she can smash to pieces on stage one day.

And it wasn’t just merch I was unloading. Many holiday seasons, I received a gift card for a store I rarely visited. It’s the thought that counts, of course, but on many occasions my main thought has been, “If only I could liquidate this thing.”

Good news: many online exchanges will let you sell unwanted gift cards for cash, although you will not receive full face value.

See: Three expert tips for a successful and profitable flea market

What now?

After eliminating credit card debt, I can focus my resources on other things. My wife and I create a monthly budget and track our expenses. We set goals for travel, DIY, investing and saving.

Our discussions are not always easy. Talking about money – especially debt – is rare. But I found that confronting my debt and being honest with myself made the process easier.

More from NerdWallet

Kenley Young writes for NerdWallet. Email: Twitter: @@kenleyyoung. It started with a guitar and turned into a $20,000 debt: How I paid it off in 8 steps

Brian Lowry

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