Managing Debt

How One Woman Paid Off Serious Credit Card Debt in 18 Months

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What’s the price of freedom? For Minnesota businesswoman and talk show host Lauri Flaquer, it was nearly $30,000. That was how much she owed in credit card debt, though she had no idea of the total. Until, inspired by Tim Ferriss’s The 4-Hour Workweek, she went from the patio where she was reading and into the house, where she sorted her unopened bills. Her motive? She wanted the time and mobility discussed in the book, and she was convinced debt was an anchor, holding her down, keeping her from reaching her dreams.

She discovered that not only did she owe nearly $30,000 in credit card debt, she was paying nearly 30% in interest. This despite being able to run a successful business helping clients succeed in their own entrepreneurial ventures. Flaquer considered herself a dynamic, big-picture person. But she didn’t consider herself a detail person — and credit card bills were details. She was haphazard in making payments, often paying online and late, sometimes forgetting to pay at all. The result? Sky-high penalty interest rates and a shockingly large debt.

Adding up the balances, she began to size up her situation. Debt became her No. 1 enemy, and she read all she could about strategies to defeat it. First, she called her credit card issuers to ask them to lower her interest rates. No one actually laughed, she said, but nobody gave her a lower rate, either. The best she got was “call us back after six months of on-time payments.”

A Battle Strategy

Using what’s often called the “snowball method,” she began paying off her debts, from smallest to largest, often paying several times the minimum payment — and continuing to put what she had been putting toward the smaller balances toward the remaining bills. “It was my own personal war,” she said. “I didn’t buy any new clothes, any new boots, nothing.” She also looked for ways to cut costs at home. Flaquer already was frugal — she drives a 1998-model car with 85,000 miles on it, for example — but she wanted to do more. She no longer does small loads of laundry, and she unplugs appliances when not in use. “Even my TV is on a power strip,” she said.

When credit card issuers declined to lower her interest rates after months of on-time payments, she used it as motivation, telling herself, “I don’t care what you’ve decided. I have decided to get out from under that. I am not going to play by your rules. …And when I made a payment, it was like, ‘yeah, take that!'” The more her balances dropped, the more powerful she felt.

Eighteen months after she started attacking her debt, she called her last credit card issuer and asked for the exact balance on her card — and paid it over the phone. She remembers exclaiming, “I’m free, I’m free! I’ve done it!”

That was almost two years ago. These days, she uses credit cards when she makes travel reservations or when she can get a discount for doing so — but she pays off the balances and avoids interest charges. She also has a savings account, along with plans to buy a used car, with cash, after her emergency fund is complete. She says she’s also healthier now and that she takes better care of herself — and she thinks it’s related to the empowerment she felt when she was able to eliminate her credit card debt.

One thing she acknowledges she has not yet done is check her credit reports and scores. She’s still working up the courage to look.

A Little Splurge? Not Exactly

Asked if she allows herself little splurges now and then, she responded that no, she prefers big splurges — international vacations, for example. But she travels frugally, often with time-share exchanges or splitting expenses with friends. “I can usually get a nice villa for $300 to $400 for the week,” she said. “I search airfares for a while and at odd hours to snag the best deals, I’ll cook most the meals in the villa, slashing restaurant tabs, and rent a car to get off the beaten path. …I travel cheap. However, my splurges are more than a new pair of shoes.

“My take is this: I don’t go to the movies, I buy DVDs at the pawnshop. I don’t eat out much. … I don’t need a closetful of wonderful clothes, I work from home. I do dress for my TV show, but that is a business expense. I live frugally so I can have time and mobility.”

One of her secrets to staying motivated during the 18 months she wrestled with debt: surrounding herself with positive people. Through her TV show, “Focus Forward,” she was able to get to know authors and motivational speakers, and their enthusiasm and “can-do” attitude were contagious. She spent money on boot camps, conferences and retreats to “to understand how I can be the best I can be and to be with other people who are investing in themselves.” And her contacts led to new clients for her branding, marketing and media exposure consultancy.

While making friends and spending time with motivational authors and speakers may not be realistic for most of us, it is realistic to find support in the community. Many religious organizations have support groups or programs for people who are paying off debt; you can also look online for support and motivation. And all of us know how to tell the Eeyores in our lives from the Tiggers. Even if you are an Eeyore, there is hope. “When somebody tells me they can’t do something or they’re not good at something, I totally understand,” Flaquer said. “But then the question becomes, ‘What are we going to do to make you good at this?'”

She acknowledges that her method of debt repayment isn’t for everyone, but there are plenty of others to choose from. And, “if something works for you, work it. …You owe it to yourself to be able to sleep at night without worrying about how you’re going to pay off a debt.”

Editor’s note: If you’re concerned about how your credit card debt could be impacting your credit and the interest rates you are paying, you can check your credit reports for free once a year at AnnualCreditReport.com and get two free credit scores per month at Credit.com’s Credit Report Card.

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Image: Feverpitched

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  • Mindset to Freedom

    Great job, Lauri! I am a sales and success expert and I teach my clients how to rid themselves of the burden that debt carries. Most financial experts agree that the average household wastes 10-15% of their monthly income, I find it around 20% with my clients. We’re talking eating out, excessive overages, cable TV, gasoline for commutes, etc. Regardless of how much money you earn there is always room to improve. Interestingly enough, the average millionaire saves between 10-15% of their income. A healthy mindset and action plan will give you the freedom to conquer debt and stick to a budget that works.

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