Emailer is paying off debt the wrong way


Hey Pete!

“Met” you when you spoke at my company last month …. Great session and my only complaint is that I only wish it would have been longer.

I have two credit cards. Card One, I got when I was an idiot (Aka college) with a $5,500.00 balance. I’m pretty much maxed out on that, paying a little bit above the minimum balance each month. Last night, I performed a plasectomy (I cut the credit card up) because I’d pay my monthly payment, then after I accumulated the 2 or 3 hundred dollars back in my line of credit, I would spend it …. again. Dumb, party of 1. Fast forward to 6 months ago, I got another card, Card Two, mainly because I had a big purchase I had to make and needed to make, hence the card. 10,000 balance. I’ve racked up $8,200. (Mind you, the big purchase was about $4,550 of that $8,200).

Soooooo, my question is this: Would you recommend paying down Card Two and transferring the balance of Card One?? Basically I would be eliminating Card One. I’ve heard keeping the credit card you’ve had the longest open is much better for you in the long run …. Advice?

Minimum payment on Card One: $125.00

Minimum payment on Card Two: $85.00

I’m paying about $150.00 on card one and about $100.00 on card two. Clearly not enough. I’m counteracting the payment with using the card after the payment has been received.

I’m willing to pay a little more … but not much. Maybe $170.00 on card one and $150.00 on card two.

Thanks much!


Hey Amber,


Thanks for your kind words. It was nice meeting you too. Your financial life is at a crossroads. That sounds a bit ominous, but it’s actually quite exciting. You are responsible for getting yourself into debt, which you’ve admittedly accepted. This empowers you to get yourself out of debt. Don’t gloss over this fact. Many people don’t realize they have the ability to get out of debt. They think it’s a 50/50 crap shoot. It’s not. Once you accept responsibility for the debt, then there’s nothing to it but to do it. And you need the right strategy.


You currently don’t have the right strategy.


As it stands now, you are putting $250 a month toward debt that has $210 minimum payments. There are few things to note in regards to your current strategy:


1. You aren’t putting enough money toward your debt pay down. It would well over a decade to pay off your debt at your current pace.

2. You are diluting your efforts by paying more than minimum on more than one credit card. You are just slapping at your debt.

The good news is you committed $320 toward paying off your debt, going forward. You did. It’s in your email. I put it in this blog post. And now thousands of people have read it. You committed to it. The key is to use this $320 in the most efficient way possible every single month. Instead of paying a little bit more on each debt, you should pay a helluva lot more on one debt. This will decrease the balance faster.

There’s a very important reason for this.

Paying off debt can suck. This is because you are forcing yourself to spend less on yourself now, so that you can spend money on your past self. You couldn’t afford those purchases when you made them back in the day, now you have forced yourself to afford them in the now. Yet you really don’t want to deal with it. No one really wants to deal things they couldn’t afford. The second it gets too hard, people generally throw their hands in the air, and sadly, they aren’t waving them like they just don’t care. They’re waving them pissed that paying off debt is so hard.

So here’s the plan. Next month, pay $85 on card two. And then pay at least $235 on card one. Put all extra money you come across toward card one. Bonus? Card one payment. Overtime? Card one payment. Find $20 in your high school letter jacket? Think about prom, and then card one payment.

This will be hard, but the alternatives are awful. You can do this. Just excited about it. One more thing, I’d make an old school “fundraising thermometer” and track your progress toward your debt paydown goal. It always helps.


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