I Paid Off $20,000 in Credit Card Debt in One Year — But Had to Follow a “Zero-Based” Budgeting Trick

A financial influencer has revealed a crucial method for paying off tens of thousands of credit card debts.

They relieved a balance of around $20,000 on their cards using the technique in 12 months.

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“To give you an idea, I was making about $45,000 at the time,” explained budget expert Lexa (@theavocadotoastbudget) in a recent YouTube clip.

Lexa continued that along with her annual salary, she lived with a partner at the time, shared expenses and had no children.

She provided extensive background to paint a broader picture of how she got to her position with credit card debt and acknowledged that “privileges, resources, cost of living, and time make a huge difference” in repayment.

The method remained the same anyway.

Lexa said the first step in the right direction that allowed her to get rid of the $20,000 on her credit cards was to stop spending money on the card.

Anyone wanting to do the same will need to make that decision immediately.

“It was very difficult for me to keep paying while actively spending on it,” said the financial influencer.

Not to mention, Lexa noted that she had “no budget or plan” at the time to give her an idea of ​​how much she could spend on the card without going overboard and getting her into trouble.

“By taking a step back, it made a huge difference,” she added.

It was then that the method of saving money emerged, through what Lexa called “zero-based” budgeting.

She explained that the budget requires those who use it to attribute every dollar spent to a specific job.

Every month, Lexa tracked the money earned and where she wanted it to be spent.

She then wrote everything down to ensure every dollar went where it was intended.

The budget expert could always know exactly how much was allowed on your credit card so as not to spend more than you could pay off by the end of the month.

Lexa emphasized that zero-based budgeting worked for her, but she would recommend any budget that someone with credit card debt knows they can stick to.

She also took another crucial step toward paying off her credit card debt.

CONSOLIDATED CASH

Lexa consolidated the $20,000 into a personal loan and refinanced it at a lower interest rate.

The 28 or 29% rate was hard to keep up with, and refinancing her caused the rate to drop sharply to 11 to 13%.

Lexa recommended Lending Club or Upstart as two companies to use to consolidate credit card debt if necessary.

“This helped me reduce my interest rate and pay off my debt faster,” she emphasized.

So, the two rules for paying off credit card debt quickly, according to Lexa, are creating a budget and getting the lowest interest rate possible by refinancing the money.

It may not happen immediately, but the debt will be paid off faster if credit card users stick to the plan.

For more related content, check out The US Sun’s coverage of a Bluetooth test that can show whether your credit card information is safe and secure.

The US Sun also has an exclusive story on a money expert’s top tips that helped her pay off $175,000 in student loan debt.