Have Lots of Debt? You Might be Able to Repay It Faster Than You Think

By Jackie Beck   Updated 07/06/2020 at 1:12 pm

How long will it really take to dig your way out of debt? You might be surprised when you look at the facts.
It’s easy to look at the amount of debt you’ve got and feel completely overwhelmed — so much so that you might end up giving up before you start. In fact, that seems to be how a poster on a public forum that I read felt.

Paraphrasing her a little, she said:

Did you have as much debt as we do? If we could pay it off in two years I’d be glad to give up family trips, but it feels like it’ll be closer to a decade before we could do that. The thought of being so strict with our money for so long makes me not even want to try…

The thing is, that particular person had $18,500 in credit card debt, and her take home pay was $2726 per month. While I don’t know how much her regular household expenses were, I find it hard to believe that it would really require ten years of strict scrimping to pay off $18,500 in debt.

So much so that I decided to do a little estimating.

Breaking it down

Suppose her credit cards were at 18% interest, and she stopped using them today. (Which is key. If you want to pay off debt, you have to stop adding to it.)

Now let’s use a minimum payment amount of $370 a month (2% of the total, since that’s common.) According to my debt snowball app, she would actually have them paid off in 7 years and 10 months just by paying what’s presumably already the minimum payment.

No being “strict” there. And yes, that IS a long time. But it’s not 10 years, either.

Let’s look deeper

Now let’s think about this a little more. What are the chances that she would never be able to pay more than $370 a month over that entire time period?

While it’s GOOD to assume that you’ll never get a raise or that your financial situation will never improve when you’re, say, getting ready to take out a mortgage — it’s not necessarily realistic. Many people’s financial situations do change over the years, and it’s possible that hers could improve.

Especially if she’s proactive about it, and works to cut expenses and increase income.

Every little bit helps

In fact, if she could come up with just an extra $20 per month to send in starting right now, she could cut 10 months off the repayment time right there.

Many people can come up with an extra $20 a month without a whole lot of scrimping or struggle.

If she could come up with an extra $100 per month starting now, she could reduce the repayment time to 5 years. Although it’s still a pretty long time, 5 years sounds a whole lot better than the decade she originally believed it would take. Half as long, in fact.

Don’t give up

So if you’re feeling overwhelmed or tempted to give up, remember to temper that feeling with information. Explore other options, and be willing to get creative.

Break your goals down into baby steps, too. Heck, if I’d known how long it was going to take my family to get completely out of debt, we might never have started. Luckily, we just focused on one goal at a time. (Credit cards, then student loan debt, then the car payment, and finally our mortgage.)

Instead of feeling like one long haul, it felt like multiple successes.

So keep going. You can get there. And it will be so worth it.



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