Paying Down My Credit Card Balance

by JT on April 27, 2010

How I’m controlling my household debt while saving money at the same time!

$2,000 is a lot of dough — and that’s how much I had on my credit card at the end of the average month last year. Now I should say here that I did clear that balance every month (most months anyway), because it’s important for me to keep my finances in the black.

But I knew at the start of this year that this was the time to focus on reducing my credit card bill down significantly every single month. By doing so, I knew I could in effect make more money –- and that’s what I’ve been able to do.

credit card balance

How I Earned More By Saving

This past month, the balance on my credit card bill has gone down from $2,000 to $700. That is a big difference — my balance has been reduced by about 65% — but I’m still focused on getting it down further. But I realized one main thing when I stopped jumping up and down and celebrating the huge reduction in that monthly bill. And here it is:

By reducing it by a whopping 65%, I’ve actually managed to EARN $1,300 more in a single month.

Obviously I’ve still got the same amount of cash coming in more or less than I would have had otherwise. But because I have saved $1,300, I have effectively ended up with the same end result as if I had brought in an extra $1,300 through my job.

Who gets to have a $1,300 pay raise in the course of a single month? Not many people, I’m betting.

Paying Down My Credit Card Balance: Saving $1,300 Per Month!

I found it easier to pay off the balance I owed in full, and I had a full $1,300 extra in my pocket that would otherwise have gone to pay that same bill. So I stuck it in my high yield savings account. I’ve made a pact to keep on doing the same as the year goes on.

The real benefit of all this is that I am more in control of my earnings than I have ever been before. Instead of using my credit card constantly and then paying it all off at the end of the month, I make a note of what the running total is on the card. I now pay more attention to what I’m spending and putting on my card. I never buy anything without seriously considering whether or not I need it first. Can I get it cheaper? Do I need it now? Do I need it at all? All these questions now run through my head on a regular basis, and it has made a big difference to my life. It has made a monthly $1,300 worth of difference, to be exact. And since I had a couple of car related bills that were covered (and wiped out) by my most recent $700 payment, hopefully this month’s balance will be even lower.

Some people really struggle with their credit cards and I can see why. But I’ve proven to myself that I am in control of what goes on my cards, and I intend to keep up with my debt reduction strategy over time. Who knows how much less cash I will have spent by the end of the year! But after the first two months of this year, I have already saved myself $2,600 –- and that is no mean feat. This is a good amount of additional savings I can squirrel away into my new online stock broker account.

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