Worked to build my credit
Worked to build my credit
**Natalie is a 39 years old, spouse is Active Duty Warrant Officer in the Army**
We all know that one person who has enormous credit card debt. Well, I was that person! When I married my husband, I had over $22,000 in credit card debt. We attended a financial workshop at Fort Carson Army Post and the first activity we were assigned was to cut our credit cards into three pieces. Two pieces went into the trash, but the third you kept until you finished paying off your debt.
Two years later, I’m down to under $13,000 in debt, and my credit score has steadily improved almost 50 points to a 725. My new goal: pay it off before he retires in 2026!
MilSpouse Money
Mission Response:
Great job on working hard to pay off your credit card debt, Natalie! Managing debt is not an easy process, but it is worth it. Thank you for sharing your experience, Natalie and we hope you celebrate when you throw away the third piece of your card!
As Natalie’s experience shows, there is no quick-fix solution to managing debt. It takes time and a plan to achieve any financial goal, including paying off credit card debt. One of the most important aspects of managing debt is knowing where your money is currently going, where it should go, and following a spending plan — also called a budget — that fits your needs. Take the time to create a budget and then direct your resources toward paying off your debt using the snowball or avalanche method.
- Snowball method: Pay off debt with the smallest balance first
- Avalanche method: Pay off debe with the highest interest rate first
The calculators, linked here and here, can help you get started and show how much in interest you can save by paying these high interest rate debts sooner. While the power of compounding can work for you with investments, this article illustrates how the power of compounding can work against you with debts. Watch our video series for six steps to destroy your debt.
Natalie’s tip highlights another important component of managing debt – your credit score. The FICO credit score is most-commonly used and ranges from 300 to 850. It is like a grade based on your past credit behaviors. The higher your credit score, the more favorable borrowing rates you’ll receive from creditors. It is not just financial institutions that are interested in your credit history though. Potential employers and landlords use this information to make decisions. Review your credit report each year at AnnualCreditReport.com for accuracy and to prevent ID theft and fraud.
