A Gilbert woman paid off over $50K in credit card debt. You can, too.
GILBERT, AZ (AZFamily) — Joni Kattau is getting ready to move to a new home, walking into her new life without the credit card debt she carried for years. “Stuff hit the fan and I was on this hamster wheel with credit card debt,” she told On Your Side. “My interest rates were through the roof, and I just couldn’t keep going.”
The credit card debt had piled up to about $53,000. Kattau also owed taxes. There was student loan debt and a car payment. It all added up to more than $60,000. “It was almost as much as my salary was at the time,” she said. “I was really good at burying my head in the sand when it came to my finances.”
Kattau was desperate and on the brink of declaring bankruptcy. One of her credit card companies recommended she contact Money Management International, a nonprofit credit counseling organization.
“They renegotiated my interest rates on all of my credit card debt,” she said. “One of my cards went from 29% interest to 0% [interest].
A 29% interest rate may sound high, but it is becoming more common. According to a recent LendingTree analysis, the average interest rate on a new credit card is 24.66%. “We’re seeing a lot of consumers that have a lot of debt issues right now. The interest rates specifically are really causing consumers harm,” said Jim Triggs, the president and CEO of MMI.
It’s unlikely consumers will see interest rate cuts for the next several months after the government’s latest inflation report showed inflation is still hotter than the Federal Reserve’s 2% target.
High-interest rates can trap people in debt for years. “Understand what you owe. Understand what your interest rates are. If you can make more payments to your credit cards, then do so. High-interest debt you want to pay off as fast as possible, so have a plan to pay it all off,” Triggs said.
Kattau’s path to payoff involved sacrifice. She got a side gig delivering food and created a budget for the first time. “The budgeting was definitely an adjustment,” she said. “I had given myself a $20 a week allowance for frivolous stuff, for fun stuff.”
Kattau paid off her debt in four years, a year ahead of schedule on her MMI plan. “I was able to avoid bankruptcy. Phew. Thank goodness,” she said. “It was huge. I was really, really excited.”
To tackle your debt, first create a budget and then find ways to cut expenses. MMI suggests focusing on ‘easy wins’ first. Those are the little things, like canceling subscriptions you don’t need anymore. After that, move on to the ‘big wins.’ The most costly monthly expenses are typically food, housing, and transportation, so find ways to reduce those costs, too. It’s also important to review your plan regularly.
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