A woman living in the US paid off about Dh75,000 in credit card debt at the age of 24. Here’s How!


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Hudak was charged with $229,000 (Dh840,000) in education loans, auto loans and credit debt
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With over $195,000 (Dh716,232) in education loan loans, Annika Hudak saw little harm in swiping her credit cards.


“I thought I would be in debt forever, so what are a few thousand here and there,” said Hudak, 25, a US-based product analyst.

Hudak ended up making about $20,242 (Dh74,348) on four credit cards by charging for food, textbooks, school supplies, and other expenses. Like them, many borrowers have other forms of debt in addition to education loans.

In college and in the early years of her career, she hadn’t found her financial footing. It wasn’t until she heard the stories of others’ debts on YouTube and other platforms that she gained hope, learned money management skills, and found a roadmap to paying off debt.

In January 2020, she began her debt-free journey and paid off all credit cards before the end of the year. Here’s how.

Know your goal and your obstacles

Hudak set a goal to be debt free by 30 years, with goals like building wealth or buying a house. She wrote down all her debts as she went along to get a complete picture of the amount owed.

She also looked at expenses. It’s important to review credit card and bank account statements to see where the money is going, says Jeffrey Arevalo, a financial wellness expert at GreenPath, a US-based credit consulting firm. Look for opportunities to cut back on unnecessary purchases, such as unused subscriptions.

Hudak builds her budget months in advance to schedule debt payments. “It’s definitely a trial and error process, and you have to find what works for you,” she said.

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In January 2020, she began her debt-free journey and paid off all credit cards before the end of the year. Here’s how.

Choose the right method to get out of debt

When researching ways to pay off credit card debt, checking your credit score in a credit card company’s mobile app is a good way to know where you stand with options.

For example, a balance transfer credit card typically requires a good credit score of 690 or higher. This option allows you to move debt from a high-interest credit card to a lower-interest credit card, usually for a fee of 3 percent to 5 percent of the amount transferred. The money saved in interest can be applied to your balance, reducing the time it takes to pay off the debt. The ideal balance transfer card has no annual fee, a 0 percent introductory APR, and a low balance transfer fee.

“Look at the cost of the fee versus the savings and interest,” Arevalo says. “That interest savings very often is going to be a big advantage.”

Hudak was approved for a balance transfer with a 0 percent introductory APR over seven months in January 2020.

The amount transferred can only be as high as your credit limit. For Hudak, that meant transferring just under half of her highest credit card balance to the new card. The rest of that balance was subject to a 26 percent interest rate, so two months later she applied for another balance transfer card through her bank, offering an APR of 8.99 percent.

Determine your payment strategy, set a deadline

Hudak stopped using her credit cards and wanted to pay off one of them in that first seven-month promotional period. She used a debt reduction calculator to track how long it would take to pay off all her cards.

Hudak first tackled smaller amounts of debt — known as “the snowball method” — to get instant gratification and stay motivated with every balance paid. Another approach, “the avalanche method,” would be to pay off high-yield debt first. Choose the method that works for you.

Her plan also included earning extra income to go into debt. She kept her full-time job amid the COVID-19 pandemic and held a number of permanent jobs. She taught children in a virtual programming camp, edited videos and was paid for other tasks they needed.

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Hudak stayed motivated with a budgeting app to count every expense.

Track your progress

Hudak stayed motivated with a budgeting app to count every expense. She also used a journal and spreadsheet to track combined debts and celebrate small wins.

She says she paid off the first card in June and had completely wiped out her credit card debt by November 2020, at age 24. After that milestone, she put her energy and money into her car loan and paid it off in February. Her efforts are now focused on scrapping that six-figure education loan.

“I think staying focused is my biggest goal and also the hardest, because now that I’ve paid off those smaller debts, I don’t have the next win anytime soon,” Hudak says.

Hudak wants to be debt free by 2026 and is now on the other side of the YouTube camera. She hopes her channel, Annika Hudak, will be a source of income as she documents her debt-free journey to show others that it’s possible.

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