🔍
How to Pay Off All Your Credit Card Debt FAST - YouTube
Channel: The Rachel Cruze Show
[0]
- You might have had fun
putting those purchases
[2]
on your credit cards, but not
as much fun taking them off.
[5]
But I'm here to show you how
to pay off your credit cards
[7]
and all of your debt,
[9]
and how to stay motivated along the way.
[11]
(upbeat music)
[24]
We talk a lot about living
debt-free on this show,
[27]
but you may be asking yourself,
"How do you get there?"
[30]
Well, getting out of debt,
it takes a lot of work,
[33]
a lot of sacrifice, and
a lot of intentionality.
[35]
So, long story short: It's
not going to happen overnight.
[38]
But just imagine what your life
[40]
could look like without payments:
[42]
to actually have money saved in the bank,
[45]
owning your stuff versus it owning you,
[47]
and no more paying for things
that you've done in the past.
[51]
And the great thing is,
that life is possible.
[54]
So, in this episode I'm
going to show you the proven
[56]
plan to get out of credit card debt,
[59]
and all other debt for that matter.
[61]
We're going to bring someone on
and hear their debt-free story
[64]
and talk through how
you can stay motivated
[67]
and encouraged on your journey.
[69]
So, to kick us off in this
episode, let's talk about
[72]
how do you get out of debt?
[74]
Because there are multiple
ways people say you should
[77]
get out of debt.
[78]
One of those ways is debt consolidation.
[80]
Nope, not a good
idea—just going to tell you.
[84]
Because here's the deal:
debt is not a math problem,
[87]
it's a behavior problem. And
many people who actually use
[90]
debt consolidation end up in more debt,
[93]
because they've just
moved their debt around
[95]
and they don't address the real issue
[98]
of what got them into
debt in the first place.
[100]
So it's not fixing the
problem, it's just masking it.
[102]
And as one psychologist put
it, "Debt consolidation seems
[106]
to create the psychological
effect of making you feel like
[109]
you have zeroed out."
[111]
So then borrowers just start
spending up again (sighs).
[115]
Don't want that, so no
bueno to debt consolidation.
[118]
Another way people say
you should pay off debt
[120]
is highest interest rate
to lowest interest rates.
[123]
And that's not a great idea either,
[124]
because again, this is not a math problem.
[127]
"But Rachel, mathematically
it would be correct
[129]
to pay off the highest
interest rate first."
[131]
Yes, but if we we're doing math,
[133]
we wouldn't be in credit
card debt people, okay?
[134]
So, it's not a math issue.
[136]
By paying your debts
off smallest to largest,
[139]
regardless of the interest rate,
[140]
you're going to get some quick wins.
[143]
And we find that people
get out of debt faster,
[145]
not by the highest interest
rates, but by paying off
[149]
the smallest debt—which
is the debt snowball.
[153]
That's right, this method is
proven that people get out
[157]
of debt the most efficient way.
[159]
And the debt snowball is this:
[161]
where you list out all of your debts,
[163]
smallest amount to largest amount—
[165]
again, regardless of the interest rate.
[167]
Pay minimum payments on
everything and you pay off
[169]
the smallest debt first.
[171]
Once that's paid off,
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you take all the payments
you were throwing at that,
[173]
you roll it over to the
second smallest debt,
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and once that's paid off
you have payments from
[178]
the smallest debt and the
second smallest debt together,
[180]
because they're paid off,
and you roll it over to
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the third smallest debt.
[182]
And you keep going and going and going,
[184]
and throughout this
process you're going crazy.
[186]
You're selling stuff.
You're getting an extra job.
[188]
You're looking at your budget,
and you're cutting stuff out.
[191]
I mean you are making
sacrifices through this process
[194]
because you will find that
the deeper you are willing
[197]
to sacrifice your lifestyle,
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the faster you will be out of debt.
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So, I want you to be intense.
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Actually, I want you to be gazelle intense.
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(light music)
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So you may be asking yourself,
"What is gazelle intensity?"
[216]
Well, my old pops, old Dave
Ramsey, coined the phrase.
[221]
And it's a great one, because
the picture is brilliant
[224]
and it sticks in your mind.
[225]
But in Proverbs 6 it says,
[227]
"If you have signed surety,
my son," which means you've
[229]
gotten yourself into debt, "do this."
[232]
"Deliver yourself like a gazelle
from the hand of the hunter
[235]
and a bird from the hand of the fowler."
[237]
And I love that because you think about it,
[238]
deliver yourself like a gazelle
[240]
from the hand of the hunter.
[241]
So think about the cheetahs,
the lions—all the predators
[243]
that are after the gazelle.
[245]
And you watch it play out,
even on the Discovery Channel.
[247]
And you watch that gazelle outmaneuver,
[250]
outrun their predator.
[252]
And you see the intensity,
because it is life or death.
[255]
So when Scripture says that
this is what you do to get
[258]
out of debt—it is life
or death—you go crazy.
[262]
So, gazelle intensity is that
you are nuts. Everyone around
[264]
you is like, "What are they doing?"
[266]
I mean you are selling
stuff. You're working hard.
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You're sacrificing to get out of debt.
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Because I can tell you, it's
easy to wander your way in.
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It is hard to wander your way out.
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So, what does gazelle intensity look like?
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Is it going to Hawaii or on vacation
[282]
while you still have credit card debt?
[284]
(buzzer sounding)
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Not gazelle intensity.
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No, no, no.
[287]
Instead, if you spent thousands
of dollars not on a vacation,
[290]
but putting it towards
your debt over the year . . .
[293]
(dinging)
Gazelle intense.
[295]
Buying a grande, nonfat,
vanilla chai, no-whip,
[298]
heated to 113 degrees
with Stevia and a dash—
[301]
not a full pinch—of cinnamon?
[303]
(buzzer sounding)
Not gazelle intense.
[305]
Coffee from home?
[306]
(dinging)
Gazelle intense.
[308]
Going to your favorite
concert, and out to dinner,
[311]
and out after with friends,
and Ubering all around town
[314]
over the weekends?
[316]
(buzzer sounding)
Not gazelle intense.
[317]
Staying home or going to your extra job?
[321]
(dinging)
Gazelle intense.
[322]
See, intensity! Being intense about this,
[325]
because the average person
getting out of debt,
[328]
using the debt snowball,
being gazelle intense,
[331]
pays off all of their
debt in 18 to 24 months.
[334]
So, yes, is there sacrifice involved?
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Absolutely. But I can tell
you, you can still enjoy
[340]
your life while your getting out of debt.
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I always think about Rosanna and Jeremy
[344]
who were on the show a few months ago,
[346]
and they were actually in the
process of getting out of debt,
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but they had so much joy. And
they talked about how much more
[352]
fun that life is when they
have to plan for things.
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And like, everything they do
with their kids, you know,
[357]
it's experiences, and
sometimes it's free stuff.
[360]
But they're like man, it's
so much better than this life
[362]
they were living that went
from credit card bill
[364]
to credit card bill.
[365]
So it may seem like a lot,
but just think about it.
[368]
18 months ago was February of 2018.
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Go back to your pictures on your iPhone—
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like look and see, oh
my gosh, it's amazing.
[375]
Time goes so fast. And again,
paying off all their debt
[380]
in 18 to 24 months—that's
the average for all debts.
[382]
That includes student loans and car loans
[384]
and yes, credit cards.
[387]
So, when you're on this process—
[388]
this journey of getting out
of debt—I will tell you,
[391]
the heart issues are a real thing.
[394]
And so contentment is something
that you have got to learn,
[398]
because contentment will get
you through this process.
[400]
So, if you've not checked
out my Contentment Journal,
[402]
make sure to click the
link in the show notes,
[404]
and make sure you are doing that.
[406]
So, as you're doing all this work—
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and it's a lot of hard work
to take care of your family
[411]
and give them a better
future, it's so great.
[413]
But I really want to make
sure that your family
[415]
is taken care of over the long haul
[417]
and that you have life insurance.
[419]
One misconception about life insurance
[421]
is that it's really expensive,
[422]
and honestly that's true
with whole life insurance,
[425]
but not term life.
[426]
It's actually really inexpensive
[428]
and what I want you to have.
[430]
So, in fact, the average 35-year-old
couple can pay as little
[434]
as $38 a month combined,
and that would get them
[438]
half a million dollars each
in coverage for 20 years.
[442]
But, you're not going to
find that just anywhere,
[444]
so that's why I use and
recommend Zander Insurance.
[447]
They shop around for you to
get you the best possible rates.
[451]
And you guys, don't wait—do it now.
[454]
Go to zanderinsurance.com
and get started today.
[457]
It will give you so much peace of mind.
[460]
All right, up next I want to
introduce you to someone
[462]
who is gazelle intense in
paying off credit card debts,
[466]
and so I can't wait for
you to hear their story.
[469]
(sad music)
[472]
- I felt hopeless, disappointed in myself.
[475]
- I felt like trapped,
like a rat in the wheel.
[479]
That I knew that we needed to do something,
[481]
but I had no idea where to start.
[485]
- We had about $40,000 of credit card debt.
[488]
We just thought credit
card debt was something
[490]
we were going to have our whole lives.
[491]
At first, you know, we
each had a credit card.
[493]
And a lot of it was we
didn't have a lot of money.
[496]
So that was—we used that
as income. That was to pay
[498]
for groceries. And anybody
that would give us some credit
[501]
to buy some stuff that we
needed, we had it.
[505]
It just seemed like
something that was normal,
[507]
that everyone did, so we
just kind of followed along.
[509]
- So one day I listened
to The Dave Ramsey Show
[512]
for the first time and his
message clicked with me
[516]
immediately, and I came home.
[519]
Russell and I had a
difficult conversation.
[522]
We ordered the book and read
it, and we were able to work
[526]
through some things, and
then it was all from there.
[529]
And when we discovered
this program and realized
[533]
how stupid we had been,
and we got on track,
[536]
it was rough on the kids—
rough on both of them.
[540]
Especially our son, because
he was a freshman in college
[543]
and he wanted to do fun college things,
[545]
and we had to tell him no.
[547]
- The same thing with our
daughter, you know. We were always
[550]
go out to eat on the weekends,
and that was just something
[553]
that she looked forward
to. And we had to say,
[555]
"No, we're cooking again at the house."
[558]
Going through this and our children seeing
[560]
what we went through, I feel
like they will have learned
[563]
and even not get into this
situation that we did.
[565]
- Before, we didn't live on
a budget, and if we wanted
[568]
to spend something, we spent it.
[570]
If we wanted to go out to
eat, we went out to eat.
[572]
And now that we live on a budget
[576]
and everything is intentional,
we have so much more freedom.
[582]
- [Both] We're debt-free!
[584]
(cheering)
(applauding)
[588]
- Thanks, guys, so much for
being here and coming on the show.
[590]
- Thank you for having us.
[591]
- Yeah, absolutely. And you
guys are here in Nashville
[593]
because you just did
your debt-free scream.
[596]
- That's right.
- Yes.
[597]
- Yeah, okay. So how much
debt total was paid off?
[599]
- About $84,000.
[600]
- $84,000—how long did it take you guys?
[603]
- 22 months.
[603]
- 22 months—right at two years. $84,000.
[607]
Okay, and how much of that
was credit card debt?
[610]
- $40,000.
[611]
- $40,000, okay
- Yes, it was
[612]
at least half of it.
[613]
- Okay, so I'm like so curious.
[615]
Okay, so how many credit cards did you have
[618]
that totaled $40,000 of debt?
[620]
- Right, so we had a Visa and a Mastercard
[622]
that had most of it on
there, but then we also had
[624]
five or six cards from different stores
[626]
that had $1,000 here, $1,000 here.
[629]
- Totally, yes. So when you
have $40,000 of credit card debt
[634]
specifically, a lot of
people get credit cards
[636]
because they think okay, well
my necessities—I have to have
[639]
a credit card to survive
and to pay the bills.
[642]
Some people use it and
they just overspend—
[644]
they live way beyond their means.
[645]
So what kind of boat would you guys be in?
[647]
Both of those, like—
[648]
- Both.
- What did you put—
[649]
yeah, what did you put
on the credit cards?
[651]
- Initially, when we started
out, we were very young.
[653]
We had our son young and we
needed it for necessities.
[657]
We needed it for
groceries, just to survive.
[660]
I mean I think you stated it
as it was our extra income.
[664]
- Yes, yes.
- If you will.
[665]
- Yeah.
[666]
- And then once we got to a
point where we didn't need them
[669]
anymore, we had had them
for so long that
[672]
that was an option to get
whatever we wanted quickly
[675]
and without planning for it.
[677]
- Totally. Yeah. Which
is so normal, right?
[678]
I mean, that's how
so many people live.
[680]
So when you bought things
like a new mattress
[683]
or furniture and all of
that, did you know going
[685]
into those purchases, like,
we're not going to be able
[687]
to pay these off at the end of the month?
[688]
Because some people say,
"Well I have a credit card.
[689]
I'll just pay it off at
the end of the month."
[691]
Did you have that
mind-set? Or did you think,
[693]
okay, we're buying things
that we clearly are not
[695]
going to be able to pay off,
but we're okay with that?
[698]
- I think we were okay with it.
[700]
- Yeah.
- We were fine
[701]
with oh, we'll take
two years to pay it off,
[703]
or three years to pay it off.
[704]
- Yes, totally. So you lived
in this cycle with credit cards
[706]
for how long, would you say?
[707]
- Our entire marriage up to that point.
[709]
So we'll be married 20
years next month so—
[713]
- 17 years, probably.
[714]
17 or 18 years.
- Yes, okay.
[715]
So 17 years of kind of this
habit, right? Of this being
[718]
part of your life.
[719]
What was the moment that you
said, "I'm done. I'm so tired
[722]
of seeing these credit card bills.
[723]
I'm so tired of being in
debt. I've had it."
[727]
What was that moment for you guys?
[728]
- Yeah, it was right
before Christmas in 2016
[733]
that we had that difficult conversation.
[736]
We got it all out there on the table.
[739]
It was a very difficult conversation.
[741]
- Yeah, I was going to say—I
mean that's scary you guys.
[742]
- It was scary.
[743]
- Yeah, for a lot of
people, they just like . . .
[745]
Ignorance is bliss in a
sense, and they just know they
[748]
have all this stuff, but pulling it out
[750]
and actually looking at the numbers—
[751]
it's really, really scary.
[753]
So, how did that go?
[755]
You said it was tough, but
[756]
talk to me about that.
- It was. It was.
[758]
(laughing)
[759]
- Were there tears? Was there yelling?
[760]
Like, I mean all of it.
- There was. There was tears.
[762]
There was yelling. It was
probably the most epic fight
[765]
I think we've had in our marriage.
[767]
- [Rachel] Wow.
[768]
- And yet, if money can destroy a marriage,
[771]
and I think, I think ours
was perhaps on that path.
[777]
So I think this really saved our marriage.
[779]
- Wow, yeah. Well, Russell, I
think this is such a great point.
[781]
Because especially with couples,
when you're not communicating
[784]
about money, naturally one
person kind of just takes on
[788]
the responsibility of the
money, and the other one doesn't.
[790]
And so the person that's
responsible, it's a very lonely
[793]
place, because it's like you're the one—
[795]
all the responsibility is
on you. It feels heavy.
[797]
It feels like this
burden, because you're like,
[799]
"I'm the only one that knows this."
[800]
And so, did you find that
it was this lonely place,
[802]
and you felt that burden lift when you
[804]
shared this with her?
- Oh definitely, yes.
[805]
It was weight of my shoulders and my chest
[808]
when we finally knew
exactly where we were.
[812]
- Yes, so good. So what
would you say to someone
[815]
who's hearing the story—
because there's a lot of people
[817]
watching this—hearing,
[819]
"Wow, they got out of all
their debt, including all this
[821]
credit card debt, and they're
not living with credit cards."
[824]
But they are sitting there thinking,
[825]
"But you have to have a
credit card. It's 2019.
[828]
You still have to have a credit card."
[829]
What would you say to them?
[830]
- No, you absolutely do not
have to have a credit card.
[834]
A credit card is this
chain around your neck
[838]
that prevents you from using your income
[842]
for the joy of life, for
generosity to others.
[848]
It's just not something
you should do to yourself.
[851]
- So those out there watching
that are in the middle
[854]
of their debt-free journey—
they're paying off debt.
[856]
Because there's a lot of people
watching on Baby Step 2—
[858]
the majority of people are.
What would you say to help
[861]
them stay motivated?
[862]
That you're like,
[863]
"Okay, we know it's hard,
it can be a long process."
[865]
But what could they do to stay motivated?
[868]
- I would say my biggest
motivation was that goal.
[873]
That picture in my head
of where I wanted to . . .
[878]
How I was going to celebrate
getting through that.
[880]
- Yes, that's so good, so good.
[882]
What about you Russell?
[883]
- Yeah, I mean, the same thing.
[884]
I mean, just knowing that when
we were done, we were going to
[887]
have that freedom, and how
good it was going to feel.
[891]
And, you know, when we got
to Step 3 and we started
[894]
building our emergency fund,
just seeing some extra money
[896]
go in the bank and it sitting
there and you can look
[899]
at it—that was a nice feeling too.
[900]
- Oh, so good. Oh, it totally is, yes.
[904]
Give me an adjective
of before,
[908]
like how you felt, until
sitting on this couch right now
[910]
being completely debt free with
money saved now in the bank
[913]
with the emergency fund.
[913]
What would you say?
[914]
- I feel like a completely
different person.
[918]
I can't imagine going back to
the way we were living before.
[926]
That would be waking up in a nightmare.
[928]
The freedom we have
now, living on a budget,
[933]
knowing that when we do
something, when we spend money,
[936]
it's intentional. It's so freeing.
[939]
- It's so freeing, and I love
that, because it's the tried
[942]
and true picture of the
idea that being in control
[945]
gives you that freedom.
[946]
A lot of people think, well
living my life with credit cards
[949]
and doing whatever I
want, whenever I want it,
[951]
that doesn't end up in
freedom, it ends up in stress
[953]
and bondage. I know you guys experienced that.
[954]
And so, I think that was so well said.
[956]
Well, thank you guys so much for being on.
[958]
I really appreciate
you sharing your story.
[960]
- Thank you.
- Thank you.
[961]
- All right guys, coming up
next we're going to talk about
[963]
10 ways for you to stay motivated
while you get out of debt.
[966]
(upbeat music)
[974]
All right, as you're getting out of debt
[976]
it can be a long process, so
you have to stay motivated.
[979]
So here are 10 ways for
you to stay motivated
[981]
while you're paying off debt.
[982]
Number one: Track your progress.
[985]
Seriously, it's so important
to see your progress visually.
[988]
So I've created some free
goal trackers you can download
[991]
for each of the debts that you have.
[993]
Just click the link in the show notes
[995]
so you can download those.
[996]
Number two: Remember your why.
[998]
Why are you doing this?
[999]
Is it for your kids?
Is it for your future?
[1002]
Is it because you want to go
on great vacations every year
[1004]
after you're out of debt?
[1005]
Like what is it?
[1006]
What is your why?
[1007]
That keeps you motivated.
[1008]
Number three: Dream about
retirement and the future.
[1011]
Because just think, if you're
not making the sacrifices now,
[1015]
65-year-old you does not
want to make those sacrifices.
[1018]
No, sacrifice now.
[1019]
So, dream about the future.
[1021]
Number four: Set small rewards.
[1023]
This is really true, especially
with student loan debts.
[1026]
Student loan debt—there's
always, it's a ton.
[1028]
So maybe you break it up and you say,
[1029]
"Okay, every $15,000 I pay
off, you know, I do something
[1033]
kind of fun in the middle of it."
[1034]
So sometimes you have to
have those small rewards
[1037]
throughout this process.
[1038]
Number five: Remember how far you've come.
[1041]
The trackers are going to help with this.
[1043]
But look back and just remember:
Okay, if we've done it,
[1045]
if we've made it this
far, we can keep going.
[1047]
We can keep doing this.
[1049]
Number six: Make sure you
have someone in your life
[1051]
who loves you enough to hurt your feelings
[1053]
and keep you on track.
[1054]
If you have all "yes" people
around you and you're like,
[1056]
"Oh, I really want to buy this new sweater."
[1057]
And they're like, "Yeah, do it."
[1059]
No, no, no. Get that
girlfriend out of here.
[1060]
You need the girlfriend
you call and you're like,
[1062]
(inhaling)
[1063]
"I really want to buy that J.Crew sweater."
[1064]
And she's like, "Listen,
you can buy it next year.
[1066]
Just hold off."
[1067]
That's who you need.
[1068]
Number seven: Check your budgets.
[1071]
I love this. I've gotten
in the habit of doing this.
[1073]
I check EveryDollar almost every day.
[1075]
Just look at the progress,
and just to see how we're
[1077]
doing monthly with our
money. And the same is true
[1081]
when you're getting out of debt.
[1082]
Number eight: Plan for one
fun, cheap or free thing
[1086]
that you can do once a week.
[1088]
This is big, because in this
process of getting out of debt
[1090]
there's a lot of things you can't do.
[1092]
So find something that you can do.
[1095]
Number nine: Quit the comparisons
[1097]
and do a social media purge.
[1100]
Yes, we love our fashion bloggers
and our lifestyle bloggers,
[1103]
but sometimes you may
need to unfollow them.
[1105]
Because they may have
stuff that you just simply
[1107]
are not going to buy.
[1108]
So, why tempt yourself?
[1109]
Do a little purge if you need to.
[1111]
And number 10: Surround
yourself with people who are
[1114]
encouraging or who are also
on the same journey as you.
[1117]
And a great way to do this is to join
[1119]
a Financial Peace University class.
[1121]
This is our nine-week
class. It walks you through
[1123]
the whole Baby Steps
in getting out of debt,
[1125]
budgeting, insurance—like
everything you need to know
[1128]
is there, and you're actually
with a group of people.
[1130]
So, click the link in the show notes
[1132]
to sign up for a class.
[1134]
All right you guys, this was so fun.
[1135]
I loved this episode, talking
about getting out of debt,
[1138]
and especially credit card debt.
[1140]
Living without credit
cards—we can do this.
[1142]
So I hope you feel super
inspired to be gazelle intense
[1145]
at paying off that debt.
[1147]
Now, if you've not yet
subscribed to my podcast,
[1149]
make sure you do that because
we have some really fun
[1151]
bonus material that comes out there.
[1153]
And as always, for you, make
sure that you take control
[1156]
of your money and create a life you love.
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