I’m in $20K of Credit Card Debt: Here’s How I’m Paying It Off This Year

Astarot / Getty Images/iStockphoto
Astarot / Getty Images/iStockphoto

If you’ve ever been in credit card debt, you know just how difficult it can be to pay it off. In February 2024, ABC News reported that data from the Federal Reserve Bank of New York found credit card debt had increased by $50 billion in Q4 of 2023. Credit card balances for Americans are now at a record high of $1.13 trillion.

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Those with skyrocketing credit card debt often find themselves in a position where they make just the minimum monthly payment because it’s all the money that they can afford. But one working professional shared with GOBankingRates her story about her plan to eliminate her entire credit card balance of $20,000 by the end of 2024. Here’s how she’s getting out of credit card debt.

Tackling $20K in Credit Card Debt While Running a Small Business

Jodi Blodgett is a photographer who specializes in capturing cherished moments. By the end of 2024, Blodgett said she plans to pay off approximately $20,000 in credit card debt.

Blodgett told GOBankingRates that it’s challenging to manage finances while running a creative business. When asked why she had not eliminated this debt sooner, Blodgett answered honestly from the perspective of a mother and entrepreneur.

“My income could barely cover operational expenses, living costs and the costs associated with raising two kids,” she said.

For many Americans, too little income is the biggest reason they’re unable to repay their debt.

A May 2024 GOBankingRates survey polling 999 Americans revealed that 41% of overall respondents said they didn’t earn enough money to get out of debt. Women also struggle slightly more than men, with 42% of women polled agreeing that they couldn’t get out of debt because they didn’t earn enough money.

Another issue Blodgett said made it difficult to pay off her debt earlier was related to her income, much of which is freelance. The unpredictable nature of freelance earnings, she said, made it difficult to allocate sufficient funds toward consistently repaying debt balances.

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How I’m Repaying My Credit Card Debt

To pay off her credit card debt, Blodgett said she’s planning to use the debt avalanche method.

The debt avalanche method, for those unfamiliar with the term, means starting off repaying debt with the highest interest rate. As you put the most money toward this debt, you make minimum payments on any other pieces of debt.

Once the debt with the highest interest rate has been eliminated, you then move on to pay off debt with the second-highest interest rate. If you are paying off three credit cards with interest rates of 22%, 8% and 12%, for example, the debt avalanche method would prioritize starting with the card that has a 22% interest rate. Then, you’d move on to pay off the cards with 12% and 8% interest.

Beyond utilizing the debt avalanche method, Blodgett said she plans to diversify her income streams. Some of her offerings to boost cash flow will include short-term photography workshops and seasonal mini sessions.

She’s also tapping into her local network for an added boost.

“I’m participating in community events that can potentially generate leads and immediate revenue,” she said, adding that this mirrors a tactic she has previously used, which helped significantly boost Blodgett’s website traffic and engagement.

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This article originally appeared on GOBankingRates.com: I’m in $20K of Credit Card Debt: Here’s How I’m Paying It Off This Year