- We decided to get some advice from a financial planner , and he told us exactly what to do: Transfer our balances to a 0% interest credit card and make a plan to pay them off before the promotional interest rate period ends.
- We opened two cards and transferred $20,000 of debt but we didn't pay them off before the year was over and ended up having to pay hundreds of dollars more in interest.
- If we'd done what the CFP suggested, those cards would have been paid off in 12 months and we'd be almost free of consumer debt.
- A financial planner can help you set up a debt-payoff plan. Use SmartAsset's free tool to find a qualified professional today
ADVERTISEMENT
A financial planner told me how to pay off my credit card debt in 12 months, and his advice would have worked — if I'd listened
My husband and I have made some mistakes with money in the past, including racking up $30,000 of credit card debt.
couple meeting with financial planner
Two years ago, receiving an overdraft alert for my checking account wasn't a rare occurrence. My husband had a well-paying job, but two things kept us from being financially healthy: We had two kids in daycare, which cost us $1,500 a month, and we had $100,000 in debt $70,000 in student loans and $30,000 on credit cards.
No matter how hard we tried, it seemed like we couldn't make a dent in the credit card balance . On top of our normal bills, we paid several hundred dollars a month in interest. It was so discouraging to log into our credit card accounts and that see the balance was the same as it was a few months ago, even though we were sacrificing a lot to make the payments.
We tried our best not to be overwhelmed by the liability looming over our heads, but we also knew we needed a new strategy. We considered selling our house and moving into an apartment, but we didn't want to uproot our two sons (we had already moved a few times).
ADVERTISEMENT
One night at dinner with a friend, we mentioned that we needed to tighten up our budget and get more aggressive with our debt. He referred us to one of his close friends, a certified financial planner (CFP), and encouraged us to set up a meeting.
Meeting with our CFP
Our first meeting with the CFP was at our house. We told him right off the bat that we had a lot of debt, and that we were doing everything we could to pay it down. I'll admit: I was a little bit nervous, because I thought he was going to recommend something really drastic, like selling our home or taking the kids out of daycare (which meant I wouldn't be able to work as a freelance writer).
His advice was a bit surprising. He encouraged us to open up two more credit card accounts. He recommended a 0% interest account for me, and another for my husband, and that we transfer as much of our interest-accumulating balance to those accounts as we could and pay them off within the year.
A financial adviser can help you pay off debt fast and grow your money. Find a qualified professional near you using SmartAsset's free tool
ADVERTISEMENT
The next day, we scoured the internet for the best 0% interest cards on the market, and we settled on Bank of America Mastercards, which offered 0% APR for the first year and then shot up to anywhere between 14 and 24%. We were each approved for a $5,000 limit, which meant we could transfer a total of $10,000 from our other cards.
The CFP wisely suggested we check our current credit cards to see which had the highest interest, and move accordingly. We opted to transfer a balance from a Chase Visa and split it between our two new cards. The whole process took about a week.
We didn't pay off the cards in 12 months
While it was beneficial for us long-term not to accumulate interest for a whole year, our financial situation didn't take as big of a turn as we would have liked. Some unexpected medical bills (and, honestly, unwise, unbudgeted spending) came up, so we didn't pay off the credit cards during the first year like we planned.
In retrospect, we should have set up a second meeting with the financial adviser to come up with a strict budget that would have ensured we would have at least paid those two credit cards off before the interest spiked. That's the catch with 0% cards: They lure you in and then increase interest drastically and we fell into the trap.
ADVERTISEMENT
Two years later, both of the Bank of America cards are paid off. But we did spend a year with 23% interest, which ended up costing us hundreds more dollars.
We're in a much better place now we've paid off a total of $26,000 in credit card debt on a few different cards, which we were able to do because I made more money as a writer and my older son went to kindergarten, which saved us $600 a month on daycare expenses.
In an ideal world, we would have paid off the credit cards sooner so we wouldn't throw money away on interest. I'd still recommend the CFP's advice to anyone with as much credit card debt as we had, but with the caveat that it's crucial to come up with a budget and prioritize the 0% interest cards before they end up costing more money.
Financial advisers can give amazing advice, but it's only beneficial if you keep up your end of the deal.
Think a CFP could help you get out of debt? Use SmartAsset's free tool to contact a qualified professional today
ADVERTISEMENT
See Also:
- Here's how a trust fund works to shelter your assets, distribute income, and manage taxes during and after your lifetime
- 3 pieces of advice a 64-year-old retiree says would have made retirement easier had he known at 35
- I thought I knew enough about money to handle my family's finances, but a financial planner showed me 4 blind spots
JOIN OUR PULSE COMMUNITY!
ADVERTISEMENT
Eyewitness? Submit your stories now via social or:
Email: eyewitness@pulse.ng
ADVERTISEMENT