Navigating a Mountain of Credit Card Debt: Tips for Debt Management and Recovery | Ep. 298

You know what it is. That's right. It's time to talk money with your

money nerd and financial coach. Now tighten those purse

strings and open those ears. It's the money talk with TIFF

podcast. Hey, hey, and welcome to

Tiffany's take, where I answer your questions right here on the podcast.

If you would like your questions answered, just go to ww

moneytalkwitht.com forward Slash x, Tiffany,

and I'll be more than happy to answer. Think of it like a one on

one session before everybody to listen to, but nobody knows

who you are. But anyway,

today I wanted to talk about a question that I received, and

someone asked Tiffany, I have over $50,000 in

credit card debt. What do I need to do to get out of this?

Okay, so I wanted to focus on this question

because, actually, I've had quite a few conversations lately with

people in quite a bit of credit card debt, which is not

surprising, honestly. You have to realize that

it has been the perfect storm for credit card debt to

continue to rise. And if I'm not mistaken, I would have

to check my stats on this. But I think we're at or

almost at a record breaking amount of debt,

not just as a country, but also as consumers. Right?

So if this is something that you're going through, I know it's a

tough situation, and it weighs heavily on many of our listeners

hearts, but just know that you are not alone,

okay? And so that's why I wanted to do this episode. So maybe I can

help a few other people that may be going through this situation,

because I know that it's out there. So, first,

you want to acknowledge the emotional mental burden that comes with this level

of debt. So it's important to understand that the stress you're feeling is completely

normal. Behavioral finance tells us that our relationship with

money is complex, and it's tied to our emotions, our upbringing, and our

experiences. You hear me talk about that all the time. So you're

not just dealing with numbers here. You're also dealing

with feelings, too. So you need to acknowledge those feelings.

And it's even good to maybe even write down how

you're feeling about this debt. And one thing that I worked with my

therapist on was using a feelings wheel, and you can

just google one because that's what I did, and I printed it

out. And I use that occasionally to say,

how am I really feeling? Because we usually default

to, like, okay, stressed or mad

or sad. But feelings are a little more

complex than that. There are different levels to med. There are different

levels to said there are different levels to stressed. And

so when you have a feelings chart, you can kind of see,

okay, I'm mad, but what is beyond that

mad? Are you feeling disappointed? Are you

feeling betrayed? What is

behind that mad? So I highly recommend getting a feelings wheel

because that might help get to the root of how you're feeling about

this. Then next, you want to start digging deep and

understand how you got into this debt in the first place. So was it due

to an unexpected medical bill? Was it job loss?

Unchecked spending habits? Did you have a

pet that needed care? What was the reason

that you got into this debt? So, identifying what the root cause

was can help us create a little more effective plan to tackle

it. Because remember, this is not about blame. It's about

understanding and learning if it was something medical

related. Okay, cool. That just comes up every now and

again. And so when we develop our plan, that's not something we have to take

into consideration too much. But if it was job

loss or if it was like, unchecked spending habits, that's something that

we need to consider as well because that'll affect how we

develop our plan later on. So I hope that makes sense.

So now that we got those two things out the way, because those are super

important to start with, let's dive into some actionable steps

you can take. So let's say you checked your emotions, you

checked your mental around this, you understand how you got into this

debt. What's the first thing you need to do? So first,

list all of your debts in their interest rates.

Prioritize paying off the ones with the highest interest rates first. This

is known as the avalanche method. Now, this method will save you

more money. So that's why that one is preferred.

But if this is something where you find yourself

continuously in debt and it's something that you need more of, like a

psychological boost, then you can always do the snowball method, which

is listing the debts in order from least amount to

greatest amount. And then starting with the smallest one and

working your way up. That'll give you a psychological boost and

help you keep on the journey. Sometimes if you do

the avalanche method, which is the highest interest rates, first, it

can feel overwhelming. Because what if your highest interest rate

debt is also the highest amount? You'll feel like you're working on that

forever. So I'll make sure I put in the show notes, a

link to my methods to pay off debt article because that'll

be helpful to go into more detail about what I'm talking about. With these two

methods, and then I also do another method with my

client, which is kind of like a combination of both. So I'll make sure I

have that in the show notes. Make sure you check out that if you're interested

in learning the different methods to pay off debt, the second

thing you need to do after you got everything laid out is to create

a budget. And I know y'all are probably like, Tiffany, I'm tired of you talking

about budgets, but if you hear me talking about it, you

see how crucial it is to your financial

wellness. And so knowing where your money is going

each month can help you identify where you can cut back and

put more towards your debt. This is actually what me and

my clients go through, so we kind of go through all of these things

in order. So you're getting like, a free session right now,

but when you are able to see where your money

is going, we can go line by line and see. Okay,

does this need to stay the same? Can we cut out a little bit of

this? Can we add more here? You can kind

of start playing with the money and moving it around to reach your

goals. Number three, you may need to

consider debt consolidation options. So if you have

multiple sources of high interest debt, maybe

consolidating them into one lower interest loan can save you money

and simplify your repayment. And this is also why

I went over number one first and listing out all the debt, because

then you'll get a better understanding of if debt consolidation

will help you or not. Sometimes it doesn't help everyone.

Okay? And it makes no sense if you are

to consolidate into a loan where you'll be paying more

interest or it's a monthly payment that you can't afford.

So it's good to know all your debt and really

take an analytical look at it. And if you're interested in debt

consolidation, I'll also put that link in the show notes as

well. I actually have an article for all of these

things that I'm going over, so I'll make sure I'll put all of

that in the show notes so you can read a little more in depth because

that kind of expands beyond the purpose of this episode.

So if you're interested in debt consolidation, check that out next,

you want to set small, achievable goals. So people come

to me and they're like, tiffany, I want to get out of credit card debt.

I owe like 70, 80, sometimes even 100 plus

thousand in credit card debt. I get it and I understand,

and we will get there. But it's important that

you set small, achievable goals. So don't just aim for that final

zero balance. Celebrate smaller milestones along the way.

So maybe every $5,000 you pay off, make

sure you celebrate. This way you can keep your motivation

high. That's one thing that I did that was really helpful

for me when I was on my debt repayment journey. I mean, I still am.

Don't get me wrong, I still have debt as well, but

it really helps to keep my motivation. So when I used to

get those little paid in full letters, every time I would pay off a student

loan or pay off a car, whatever, you get these

little letters in the mail and I'm like, oh, yay. And then

even when I go and I update, because sometimes I update my net

worth numbers, too, it made me realize that, oh, I'm

making a lot of progress. I actually just posted about this over the weekend because

I updated my numbers on Twitter and I'll have a link to

that post as well if you want to check it out. But I was five

And I started this journey. And when I looked over the weekend,

guess where I met you all. Almost to multiple six

figures in net worth. And so not only did I turn my

ship around to get out of the negative, but I'm also

six figures plus. And so that's why it's

important to check on your progress and celebrate those small, achievable

goals. Am I at no debt?

Absolutely not. That is a goal that I would like to have. But in the

meantime, in between time, I celebrated getting to zero

net worth. I celebrated when I got to five

figures net worth. And now I'm celebrating at over six

figures net worth. So set those small achievable goals so that

way you can get those extra boosts of motivation.

Number five, make sure you reach out and build a support network.

So talk to people that have been in your shoes or consider seeking

professional advice. There's no shame in asking for help. And if you

listened to the episode last Tuesday, I talked about financial shame

and guilt. If you haven't listened to it yet, highly recommend listening to that

one as well. But it's important to talk with people that

are in the same shoes or talk to people that have seen

it before, like myself, and have the

tools that are able to help you, whether it's

psychological, mental, or just tactical. Some people,

they already have tapped into the psychological side. Maybe they already have a

therapist or what have you and so now they just need the tactical steps to

take. Right. So talk to someone that's a professional

or see if there's someone in your community or in your network

that are going through the same thing. I can almost guarantee

that if you have a lot of credit card debt,

there's probably someone in your circle that does as

well. It's just that nobody talks about it, right? So

it's hard to know. But once we start having these conversations

openly and more frequently with our loved ones, friends, family,

whoever, then we'll understand that we're more alike

than we are different. Number six,

when you do celebrate those milestones, like I said in number four,

make sure you do it frugally, because I want you to

celebrate. But remember, do it in a way that doesn't involve excessive

spending, because that's how we got here in the first place. So a small treat,

a dance in your living room, or even just taking a moment to acknowledge your

progress can be enough. And that's one thing that I do with my clients

in our meetings. Whenever we have a meeting and they've

implemented our plan and they've took the next steps, I'm like,

let's take a moment and let's just acknowledge that

it's easy to glaze over it. Like, okay, I did this. I did this, I

did this. What's next? But I'm like, no, let's pause on that

real quick. Let's celebrate that. Let's talk about how we feel about

that, and then we can talk about what's next. Because if you

tap into that instead of being on autopilot, and the same goes

for when, let's say you're dieting,

right? There's a lot of information out there

about being mindful about when you eat and how that plays a

role in lowering your calorie

intake. Well, it's the same here. If you're mindful about the progress that

you make, then you can use that

motivation to get you to the next step. So

definitely celebrate those milestones, but do it in a way where it's

frugal, because think about it this way, too,

y'all. The least money you spend on celebrating, the more you can

put towards that debt. Okay? All right.

And then number seven, my last thing, well, second to

last, is to stay consistent. So paying down debt is a marathon,

not a sprint. So stay consistent with your payments, no matter how small

they might seem. There have been times where I was paying only the minimum payment

on all of my debts because that's all I had at the moment. But I

stayed consistent with that. And even if you do that, you don't

make too much headway too fast, but you are making some headway,

believe it or not. So you can pay a significant

amount just by doing the minimum payment over

time. But if you wanted to put pedal to the metal, of course you would

have to pay more than that. But as long as you're doing what you

can, you're keeping up with your payments. Sometimes you hit rough spots, and

it's okay to pay the minimum balance. I mean, pay the minimum payment,

it's okay. But when things get back good, just bump those

payments up and get back on track. So remember that

the most important thing, and this is the last thing, is to take

action. So start today, even if it's just one tiny step,

like creating a budget or calling your credit card company to negotiate your

interest rates or figuring out what your goals

are for your financials. Take one step

today, because every step you take is a

step closer to being debt free. And once you're there, let's work together

to make sure you stay there. So learn from your past

experiences, build good financial habits, and

maintain a healthy relationship with money to avoid

falling back into the same debt cycle. So I am here with

you every step of the way. I will make sure that I have all the

links in the show notes to all the articles about all of these points

because I have one for pretty much all of them. So that way, wherever

you are in those steps, there's some

resources for you. Okay? So thank you so much for

listening to today's episode. And if you are in massive amount of debt, don't

worry, you are not alone. I am right there with you

actually, and we are going to work through this together. Now,

if you enjoyed this episode, be sure to share it with your family,

friends, whoever you think might need it. But also rate, review

and subscribe to the podcast so you don't miss another one. Until next

time. Bye. Thank you for

listening, joining and being a part of the money talk with TIFF podcast this

week. You can check Tiff out every Thursday for a new money talk

podcast. But if you just can't wait until next week, you can listen to

previous podcast

episodes@moneytalkwitht.com

or follow TIFF on all social media platforms at

moneytalkwitht. Until next time, spend wise

by spending less than you make a word to the moneywise is

always sufficient.