{"id":186,"date":"2020-09-16T12:55:00","date_gmt":"2020-09-16T12:55:00","guid":{"rendered":"https:\/\/moneywithkatie.com\/how-to-cut-your-high-interest-debts-payoff-time-and-interest-paid-in-half\/"},"modified":"2025-08-29T16:28:59","modified_gmt":"2025-08-29T16:28:59","slug":"how-to-cut-your-high-interest-debts-payoff-time-and-interest-paid-in-half","status":"publish","type":"post","link":"https:\/\/moneywithkatie.com\/how-to-cut-your-high-interest-debts-payoff-time-and-interest-paid-in-half\/","title":{"rendered":"How to Cut Your High-Interest Debt\u2019s Payoff Time and Interest Paid in Half"},"content":{"rendered":"

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Pssst<\/em>: After you read this, don\u2019t miss this episode of Rich Girl Roundup<\/a>, in which we do a debt deep dive, including discussing the balance transfer card<\/strong> option. <\/p>\n<\/div>\n

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Before I began helping people with their finances in 2020, I didn\u2019t have much experience dealing with debt. While it felt like a given at the time, as natural as being fed dinner at 6 p.m. every night and being driven to school every morning, I was wildly fortunate to have two parents who covered the housing, food, and sorority costs my tuition scholarship did not.<\/p>\n

Graduating with no student loans and a strong aversion to credit card debt (again, thanks to my parents who reinforced at every swipe that the credit card was to be paid in full every month), I had never worked to pay down debt personally \u2013 so when client after client brought debt with varying degrees of intensity, learning quickly was a necessity.<\/p>\n

In the last 10 years, the cost of college has risen by more than 25%<\/a>. The fact that it\u2019s mathematically impossible for a student to put themselves through school<\/a> by working hourly jobs almost guarantees that students whose parents won\u2019t or can\u2019t foot the bill (understandably so, as the average tuition for a four-year public university is $9,410 for in-state students and a staggering $23,890 for out-of-state students<\/a>) will end up with some<\/em> amount of student loan debt.<\/p>\n

This post is a guide to paying down high-interest<\/em> debt. Fortunately, student loan debt (with the exception of graduate school loans) rarely falls into that category, so the bulk of what we\u2019ll talk through today is probably more relevant for credit card debt<\/strong>.<\/p>\n

How people find themselves in credit card debt: Crises compound<\/h2>\n

I\u2019m always tempted to make jokes about swipe-happy Sapphire spenders when we start talking about credit card debt, and undoubtedly, that plays a role: a lot of credit card debt is the result of poor planning and impulse control, and there\u2019s no way around that. <\/p>\n

However<\/em>, the student loan debt crisis outlined above doesn\u2019t exist in a vacuum: Sometimes one debt fuels another. <\/p>\n

Going to school, taking out loans, and graduating with a low-paying full-time job in a high cost-of-living area is a recipe for disaster. By the time rent and the student loans are paid every month, it leaves very little for actual living. (Another note, for context: According to the Center on Budget and Policy Priorities, the national median household income has risen by 0.5% since 2001. Median rent has risen by 13%.<\/a>)<\/p>\n

This is, of course, not a new issue for young professionals, but it\u2019s certainly exacerbated by the conditions above. And while you\u2019re almost definitely not<\/em> entirely at fault for a debt situation you find yourself in now, there are strategies to claw your way back. Work smarter, not harder (a lazy intellectual\u2019s dream). <\/p>\n

Credit card debt is a slippery slope, and most of the women I work with didn\u2019t voluntarily dive, Dry Bar blowout-first, into the black hole of Neiman\u2019s-induced 27.99% APR (though some did). Most of them overextended themselves little by little, month by month, and looked up one day to find themselves $10,000 in the hole (thanks to that aforementioned 27.99% APR).<\/p>\n

The good news is, it\u2019s not always a financial death sentence. <\/p>\n

It\u2019s a little like having a broken arm: If you recognize the problem, go to the doctor, undergo the pain of resetting, and agree to wear a cast for a little while, eventually, your arm will function normally again \u2013 but if you ignore your broken arm and continue to use it as if nothing\u2019s wrong, you\u2019ll wind up with irreversible damage.<\/p>\n

Now that this has taken a sufficiently macabre turn, let\u2019s talk tactics.<\/p>\n

A quick note on earning more money to pay off debt quickly<\/h3>\n

I worked with a gal recently who secured an astonishingly high-paying job after working for years in a more average salary band. Her new monthly take-home pay? About $10,000 per month. Wisely, she paid off $15,000 in credit card debt almost immediately \u2013 and just like that, overnight, she was debt-free.<\/p>\n

This solution is simultaneously easier-said-than-done-obvious and, candidly, a quite tenable option. <\/p>\n

Of course, the assumption is if it were possible to go out and get a higher paying job, we\u2019d all do that \u2013 as if the winds of upward mobility will shuffle us swiftly forward the moment we outgrow our current situation. But I have to wonder: How many of us are actually<\/em> actively seeking a higher-paying opportunity and pulling all the levers available to us?<\/p>\n

In this particular individual\u2019s case, she had a long-standing relationship with a client in her former role and had established a lot of trust and candor with him. Unsatisfied with her salary, she finally asked him if there were any jobs available at his firm. A position was essentially created for her, and six weeks later, her credit card debt was gone.<\/p>\n

While Cinderella stories of this nature can be equally as demoralizing as they are inspiring (\u201cThat would never happen to me!\u201d), I encourage you to expand your consideration of what\u2019s possible for you. If you\u2019re underpaid and drowning in debt, rather than finessing ways to stretch your current dollar further, devote some of that energy to acquiring more dollars<\/em>.<\/p>\n

You never know.<\/p>\n

It\u2019s worth noting that she isn\u2019t the only client I\u2019ve seen unknowingly employ this approach, though I realize suggesting you simply \u201cgo out and get a higher-paying job\u201d is, in itself, unhelpful \u2013 but it warrants explicitly suggesting because most of us don\u2019t even think to put much energy into turning over that stone, despite the fact that it\u2019s the Easy Button approach to debt. <\/p>\n

The slow and steady approach to paying off your debt strategically<\/h2>\n

So let\u2019s say six-figure incomes aren\u2019t falling from the sky (although, I repeat, remember to look for one<\/em>). <\/p>\n

It\u2019s easiest to illustrate these tactics using an example scenario, so allow me to fabricate an indebted 20-something and you can project yourself onto this imaginary person\u2019s experience. <\/p>\n

Showtime!<\/p>\n

The situation<\/p>\n

Let\u2019s say you\u2019re in the following situation:<\/p>\n

$38,000<\/strong> in student loan debt with a 4.45%<\/strong> interest rate on a 10-year term <\/strong>and a $393 <\/strong>monthly payment <\/strong>(if these numbers feel surprisingly close to your situation, that\u2019s because I used national averages)<\/em><\/p>\n

$5,700<\/strong> in credit card debt with an 18%<\/strong> interest rate with a minimum monthly payment of $142.50<\/strong> (again, averages gleaned from a sloppy Google search)<\/em><\/p>\n

The basics<\/h3>\n

Thankfully, the internet abounds with fantastic loan calculators. Here\u2019s the Reality Steve breakdown of what your debt actually looks like:<\/p>\n