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Thinking about conquering your mountain of debt but too scared even to give your debt much thought? Read this real-world scenario of how one person erased $10,000 of credit card debt within a few years.

by Joel Walsh

Ever wonder how some people deep in credit card debt manage to come out on top financially? This is the hypothetical but realistic story of Emily, one person who dug herself out of $10,000 in credit card debt in just a few years.

Never a big spender, Emily was shocked when she noticed that her two credit cards had a combined balance of $10,000. What happened?

*Emily took a lower-paying job when the economy went bust at the turn of the millennium. *Hoping her lower income would be temporary, Emily didn’t sell her house to get one with a lower mortgage. She didn’t sell her expensive car to buy a cheaper one, since she would get much less than she had paid for it. In reality, the thought of driving a less-nice car was painful *Emily paid only the minimum monthly credit card payment most months. She was paying interest, and interest on interest, buying the privilege of having the credit card company hold onto her debt another month. *When one of Emily’s credit card balances got within a few hundred dollars of the credit limit, her interest rate on the card skyrocketed from 17 to 27% .

Loans: Emily’s Salvation? Emily considered taking out a loan to pay off her credit card debt. She owned a condominium whose property values had increased 40% since she bought it, so she could easily get a good low-interest second mortgage.

But a loan scared Emily: it would mean admitting her debt would not go away soon. Besides, Emily wanted to get rid of her debt, not trade (her unsecured debt for secured debt). Plus, she knew that if she ever couldn’t pay the second mortgage, she would lose her house, while failing to pay credit card bills would just mean a ruined credit rating.

For about a year, Emily argued with herself over whether to take out a loan to pay off her credit card. Then catastrophe hit: her beautiful car was totaled in an accident. While shopping for a new car with friends, Emily finally had to admit to herself that buying another car like the one she had had would be financial suicide.

Finding an Answer Emily cried and cried as soon as she got home from the car dealership that day. It wasn’t just that she would have to admit that she wasn’t someone who could afford the car she had been driving. When Emily’s parents were her age, they had already bought a five-bedroom house; Emily’s one-bedroom condominium was already a stretch. If she ever got married to a man with the same financial picture as she had, she wasn’t sure they’d be able to afford children. Growing up, her parents had always told her she’d do better than they had. What went wrong?

Emily did not have to think hard about what went wrong. Her father had been able to pay for college with what he earned at summer jobs, and then got a manager-level job straight out of school. Between college and graduate school, Emily had accumulated $70,000 in student debt that she was still slowly paying off. Houses in Emily’s town, even adjusting for inflation, cost several times what they did when Emily’s parents bought one. Cars had leaped in price about as much. The only thing that hadn’t gone up was income.

Unable to cope with having less than her parents had, Emily had used her credit cards.

Solving the Problem Emily knew that since her lack of financial skills had dug her into her rut, she would need outside help to dig herself back out.

She had heard about credit counseling services that took large chunks of the payments you made against your debt, so she was careful. She found a counseling agency that was a member of the Better Business Bureau, American Association of Debt Management Organizations and whose credit counselors are certified through the National Institute for Financial Counseling Education. Doing a quick search on the web, Emily verified that these were organizations with real standards and not just empty names.

Here’s what Emily got from the credit counseling service:

*Relief. Emily was relieved to learn that her $10,000 credit card debt is in fact about average for Americans. The credit counseling agency showed her that even if she didn’t have the advantages she had-a decent job and home equity-she would be able to rid herself of her debt if she just faced up to it. *Surprise. The agency urged her to put money away for a rainy day fund, even as her credit card interest mounted. But once she started saving, she felt amazing. She realized she had been under enormous stress from always being one paycheck away from poverty. *Understanding. The counselor understood Emily’s reluctance to take out a loan, and helped her create a budget that would let her pay off her consolidated debt within a few years. Besides the car, all Emily had to give up were smaller expenses. *Clarity. With her finances planned, Emily could think much more clearly about her financial situation. She figured out how much more money she would have to make to have her desired lifestyle, and aggressively pursued a new job. Starting fresh with her new coworkers, Emily focused on meeting people who were less materialistic-and even met her fiancé.

Though her fiancé has no better financial prospects, Emily’s confident they can afford to give their children all the essentials she had, even if in a smaller house.

After all, Emily knows that solid finances are just as good a shelter as a roof over your head.

About the Author

About the author: Joel Walsh has created a guide to choosing a credit counseling service: http://debtguru.com [Publish this article! Requirement: live link for URL w/anchor text: “credit counseling service” OR include this bracketed message. Permalink: http://www.debtguru.com/articles/the-10000-credit-card-challenge.html]

It’s exciting when people burdened with debt find a solution.

Bill and Shona (real names changed for privacy) were up to their ears in financial problems when they decided on an unusual strategy. They would give each other $100 to find a solution to their situation.

Bill immediately went online and set to work. He found a gambling casino and started to invest.

Shona retreated to the kitchen, took out the pad and pencil she used for making her shopping lists and started in on some serious thinking.

First she asked herself: “How much do I need to make?”

She calculated repayments on their mortgage, loans and credit cards and then added living expenses, a bit for treats and some for savings and wrote the figure down.

Then her questions went something like this:

“How am I going to get that money?”

She answered: “By selling something?”

“What?”

She thought for some time and couldn’t find a quick answser, so she wrote down a question mark and moved on.

“Who would buy anything from me?”

Again she had to think hard, but then she had a moment of inspiration: “How about, people like me? If I can find a solution to one of the problems we all share, they’ll buy it from me.”

Then she went back to her: “What am I going to sell?” question and wrote: “a way to get out of debt.”

Bill wouldn’t give up time on the computer until he’d lost all of his $100. Then he went out one night for a drink with the boys and Shone got her chance on the computer.

Using Google she found a lady who sold a book on ‘how to get out of debt’. She could earn twenty dollars commission for every book she sold.

She bought the book and read it from cover to cover. Then she set out to do everything that the book recommended. In no time at all she’d lost the feeling of helplessness which had been her constant companion and replaced it with the feeling that she was in charge of her situation. She began to feel really happy.

Now she had to start selling the book and earning her $20 commissions.

Once again she did a search on the Internet and found a free course which would teach her how to build a simple web site and attract visitors.

She enrolled for the course and immediately set to work. The way each step was explained was so clear that it made it easy to do the things she’d always feared would be difficult. In less than a week she’d built her first web site and got it ‘on air’.

Eleven days after that she received an e-mail saying: “SALE NOTIFICATION on (date) you made $19.90.” She stared at the screen in disbelief for several moments before letting out a whoop of excitement and joy.

The next day another “SALE NOTIFICATION” e-mail arrived. She shouted for Bill to come and see.

“Look, I’ve made another sale,” she exclaimed excitedly. “And, do you know what, I’ve only spent a third of my budget and I’ve got all that money back already.

That was Shona and Bill’s first step on the road to their Internet fortune.

David Ferrers runs The Online Money Academy which provides easy-to-follow, free guidelines in how to build simple one-page web sites that continuously make money online at http://www.TheOnlineMoneyAcademy.com

About the Author

The Online Money Academy specializes in helping people with little or no online money-making experience to quickly and easily build web sites that make money. Check out how you can enroll for their free courses at: The Online Money Academy