Reducing $20,000 in credit card debt

Debt can be the result of a number of factors. Here’s how I got out from underneath $20,000.
Photo by Joshua Chua @justgetcreative

At the beginning of 2020, Americans owned close to $900 billion in credit card debt. While credit card debt is certainly a national issue, being buried in credit card bills with your name on them can feel incredibly personal.

If you’re wondering why this post is labeled as such, $20,000 is not a magic number— it is the amount of credit card debt I was faced with and eliminated.

It will of course take more than 5 minutes for you to polish off your credit card bills, but no more than 5 minutes to hear some ways in which you can reduce it.

This is how I took my credit card balances from $20,000 to $0…in 5 minutes.

How to start erasing credit card debt

Yes, losing a job or a stagnant wage are surefire ways to get you mired in credit card debt, and many times aren’t of your own doing. But these events shouldn’t leave you helpless. Credit card debt is not just a matter of dollars and cents. Becoming debt free is as much about having the right mindset as it is the ability to do math or to always end up in the best situation.

Think about your relationship with money

Some people don’t even realize that they may have a negative relationship with money. Be it a lack of self-worth or a need to have some excitement in their life that only the temporal satisfaction of buying something can bring, think about how much time money spends in your pocket and where it goes, and analyze why that might be.

Identify the expenses that got you into debt in the first place

Look at what expenses you made over the pat 2-3 years and if there are any you know you’d take back if you could, think why. Being able to determine the past spending mistakes will help prevent you from making them again.

Is there a higher paying job out there for you?

We often feel helpless and believe the job we have is the job we’re worth. Perhaps you’re chasing a dream that barely pays the bills and might not be paying off? Or conversely, you’re working for a company that has made you believe you’re not worth more? Knowing your self worth and doing a market analysis of people in a similar job position as you are imperative, so you know if you need to develop more skills and pursue a better paying position or if you’re simply being underpaid.

Is your credit card debt above or below average?

More than 190 million Americans have a credit card. This same report claims the average debt is $8,300.

Think about what expenditures you could have avoided that you now regret the most

But the answer to this question should be who cares. Everyone gets into debt for their own reasons and you only get out of credit card debt by making the best decisions for yourself and not following along with what other people are doing because chances are, they’re not making the smartest financial decisions.

Keep your housing costs under 30% of your salary

Your housing expenses are for most of us our greatest monthly expense. Finding a way to keep this expense under 30% of your monthly income is imperative.

For those who are rent burdened (the official name for those who pay more than 30% of their income on rent) analyze why your costs are so high and decide if there isn’t a move you can make or a roommate you can find. It might sound obvious, but many of us still won’t do it. It was a tough pill for me to swallow and can be the quickest (or only) way to get back on your feet.

Understand what APR means

Annual Percentage Rate (APR) is what you’re paying every month to not pay off your credit card. The average national APR (the average you should be interested in knowing) is 19%. Take the balance you owe, multiply it by .19 (19%) and divide by 12. That’s how much you’re paying interest.

Credit card points are not your friend

Most cashback deals on credit cards are around 1%. If you’re paying 20% in interest, then you shouldn’t feel incentivized to spend money on your credit card as you’re taking a 19% hit for not paying off your credit card bill in full and on time.

Learn the best ways to consolidate credit card debt

Holding $20,000 in credit card debt costs $333 a month on interest alone (with 20% APR). That’s a car payment, two weeks of groceries for a family, or could return $200 dollars a year if invested in the stock market (at a 5% return).

Locate a local credit union

My credit union offered me a much lower, unsecured loan (I didn’t need any collateral) that saved me about $40 a month. Your rate will vary here but it is worth exploring.

Credit card balance transfers

Credit card balance transfers allow you to transfer your credit card debt to a new credit card for an initial cost of usually 3%. After that, you’re in the clear for usually 12-18 months. But after that, you’ll be back where you started from before, likely with a higher interest rate, as credit cards that allow you to do a balance transfer are in the business of penalizing you (charging you) for your inability to pay off a transferred balance on time.

Change or update your car insurance

Many people are paying for car insurance that include too many miles or have coverages you likely don’t need. Given the times, car insurance is an even more competitive industry with people driving considerably less. I can’t recommend enough calling your car insurance carrier and telling them you’re thinking about switching and you’re driving less miles than ever. It’s highly likely they’ll cut you a deal to keep you around. I saved $360 for the year just for making a ten minute phone call. Insurify is a good tool to use for this.

“Getting rid of credit card debt fast” …

I’ve done all of the research and received almost all of these notices. I can promise you there is no savior from credit card debt other than yourself. These “deals” mainly offer you loans with the following strings attached:

  • Higher interest rate after 12 months
    Most credit cards that are zero down will jump up to 25% to 30% in the second year. 
  • Origination fees
    Origination fees are just a murky way of saying “sign-up fee” and can be anywhere from $300-$1000 depending on the loan amount. ALWAYS look for these before doing a loan, as a costly origination fee might outweigh the benefit of having a lower overall interest rate.

Final Minute

Being in credit card debt can feel a bit surreal. The money you spend can feel a bit empty, as you know it’s not yours. At the same time, you don’t mind spending it because there’s this part of you that assumes you’ll always be in debt.

Don’t succumb to this feeling.

You can’t get out of debt if you aren’t committed to changing your spending habits. Think about what expenditures you could have avoided that you now regret the most.

For those who built up debt because of emotional purchases or because you were quick to spend and not to invest, think about how you would do things differently this time around. Focusing on these purchases or the choices you made that put your back against the wall and caused you to rely on credit cards, will help shape your choices moving forward.

This article was written by:

Paul is the Founder & Editor of He is a Certified Salesforce Marketer, FAA Drone Pilot, HSK Chinese Speaker, Ham Radio Operator, NASM Personal Trainer, and Certified Canon operator amongst other things. He hosted and produced the first original programs for Hulu and Twitch and helped launch a pilot program for teaching soft skills to incarcerated students. He currently runs content marketing for an aerospace company in Los Angeles. If you'd like to request a consultation, contact Paul here.

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