How This Entrepreneur Paid Off $9,500 in Credit Card Debt in 10 Months

Nicole Bandklayder is a serial entrepreneur that is on the verge of becoming debt free. Like many people, she knows all too well that credit card debt can be overwhelming.

For the last decade, Nicole struggled with about $10,000 in consumer debt between her seven or eight credit cards. A major move helped her free up finances, but she also found that she needed to change her mindset if she wanted to be debt free.

Where she started.

Nicole paid about $400 minimum payments each month. Add car insurance, car payments, rent, and other living expenses and the monthly bills add up. But, Nicole didn’t focus on paying off her credit cards until this year.

“A lot of the problem is that when you have so much debt and you know you can’t pay for it, you often close your eyes and pretend it’s not there,” Nicole said. In retrospect, she thinks facing the debt head-on is one of the best approaches. Once she did, she was able to pay off $9,500 in less than ten months.

A good income isn’t enough.

From 2009 to 2013, Nicole worked as an executive assistant to three partners at a big financial firm in New York City. “I was making good money,” Nicole said, “but I still couldn’t afford to pay off the debt while living in New York.” Not that Nicole couldn’t save at all, but she was also starting a PR and marketing company. She wanted to leave her day job and work on the new business full time, but that required enough savings to cushion the transition. It can take a few years for a company to turn a profit.

Big lifestyle changes lead to big savings.

In February 2013, Nicole quit her job and the next month she moved to Minneapolis. It wasn’t a total leap of faith, her boyfriend grew up in the area and still has family there.

Instead of paying $2,000 a month in rent she now pays $600. Her general day-to-day expenses also dropped. “I don’t know if I’d be in the same situation if I was still in NYC,” Nicole said.

Minneapolis also turned out to be a great place to grow her business, and she feels supported by the community around her.

A year after the move she started a second business, an online jewelry shop, with her partner. This year she also launched The Cookie Cups, a cookie meets mini-cupcake treat.

Face the debt head-on.

In early 2015 Nicole decided she want to live a freer life. She realized that she needed to start living within her means, and she decided to tackle her debt. Nicole continued to trim expenses, focus on her needs rather than wants, and starting making more than the minimum payments on her credit cards.

“If you have debt, everything gets more complicated. I didn’t even realize all the restrictions until the blocks weren’t there.” Making a purchase online was hard with maxed out credit cards.

That’s no longer an issue.

The new lifestyle, and lack of monthly interest payments, lets her save for future goals and reinvest in her businesses.

Being debt-free can pay off in many ways.

Several times during our conversation Nicole mentioned how free she feels without credit card debt. She’s saving money each month and can see her plan to one day buy a house slowly coming to fruition. And, she’s surprised by the other benefits.

Her credit was in the mid-500s but has since risen to over 700. In early October 2015, Nicole refinanced her car loan, and the interest rate dropped from ten percent to three-and-a-half percent – her monthly payments dropped by $60. “At every turn there’s a benefit. When you clear your debt the doors open, it’s a whole new world.”

Today, the PR company is in its third year and doing well. The other ventures are starting to stand on their own, and Nicole is reinvesting her savings into growing all three businesses.

Nicole’s advice to those in debt.

I asked Nicole to reflect on her situation and share recommendation for others that are dealing with credit card debt.

• Go in and look at the accounts every day rather than hiding from the debt. See what you can pay every month and do it.
• Choose a debt repayment method and stick with it. Nicole used the traditional snowball method, which involves ordering one’s debts by total balance and paying the one with the lowest balance first. She found it to be a satisfying approach and the best for her, even though paying off the highest interest debt first would save a little money.
• Nicole still thinks it’s okay to have credit cards and enjoys earning rewards, but she says it’s important not to spend what you don’t have. A vacation is okay, but know you’re going to be able to pay the balance off when you’re back.

The takeaway.

Nicole’s move to Minneapolis let her dramatically cut expenses, but it wasn’t until she made a conscious effort to face her debt that she was able to pay it off. Even if a move isn’t in your future, learn from her and take her advice to heart. Face your debts, make a plan, and start paying more than the minimum.

Louis DeNicola is a personal finance writer. Nicole’s story is one in a series he’s working on about real people dealing with real financial struggles.