How to Pay off $11,000 of Credit Card Debt [BA QA]

aka Mandy Money, your host hostess with the Mostess. I'm actually here for a classic, a classic Brown Ambition episode, the Baqa where y'all got questions. I'm going to take them and give y'all some answers. But just a reminder if you're new here, this is answers with a lowercase A, meaning I am not your personal financial advisor. Don't sue me, don't come for me, don't say well Mandy said I

should do. I am giving you like a besties perspective, like a really smart, financially savvy financial journalist for over a decade, podcast host for also a decade, knows a lot of stuff about money and career, like That's where I'm coming from here, But at the end of the day, I don't have all your info. I don't even I don't you know, I may not know you one hundred percent. So just take this with a huge grain of salt.

Get your salt shakers out. Okay, now that I've covered myself legally, let's get into the real real because y'all's questions are becoming increasingly stressed, increasingly intense. And I got a question this week from a listener called A n and she emailed me directly, which, by the way, if you want to get your questions financial investing, career, whatever it may be, you can email me Browdambition Podcast at gmail dot com or slide into my DMS. I'm at

Brown Ambition Podcast on ig. If you want to be anonymous, that's cool. If you want to use a pseudonym, also great. If you want me to say your full name so everybody knows who it is that's asking the question. You know, it's a to y'all. The point is I want to give y'all a chance who may not be able to get access to my coaching program to me one on one ask your questions. You don't have to go through hardshit alone, and that is what I'm here for. Okay, Okay,

BA fan, stay tuned. We'll be right back now. Other housekeeping stuff, what else is going on? We have a new intern, a new producer intern, BA fan. We want to say hello to our brand new producer intern, Miss Gabrielle. Welcome her. And Gabrielle is a upcoming college sophomore at Syracuse University, which is an incredible journalism program. And this is a really good example of how if you want to know, if you want to put yourself in the room where opportunities can happen to you. Gabrielle is an

incredible example of that because I ran into her. I met her because she asked a question at an event that I went to for an author and former guest of the show, Alencia Johnson, when her book came out Flip the Tables. Both me and Gabrielle happened to go downtown to the Barnes and Noble in the Upper West Side where Alencia was giving a talk, and Gabrielle raised her hand also she went with her mom, which is

just adorable. She raised her hand, she asked a great question, and I was at that point where I'm like, I would love to work with a college student to give them some real hands on experience in you know, podcasting, and to be able to help with this brand and also the youths. I need to connect with the youths. So I heard Gabrielle's question. I walked up to her. I was like, okay, tell me about yourself. You said you went to Syracuse. What's all going on? Do you

want an internship? This was maybe back in February March, I want to say. So she's like, well, I have school, but let's talk. And so we talked. You know, she sent me her resume, her clips. I got to know her a little bit better, and then I was like, you know, when do your finals over, can you start then? And that's exactly what's happened. So she's going to be with us for the summer and we'll see about the future. But very excited to give her this opportunity, and I

know she's gonna smash it. All right, So let's get into today's question, y'all. This is from a listener who wants me to call her a ny and she has a question about credit card debt. And I says, first and foremost, Mandy, I want to let you know I have been a huge fan of the brown Envision podcast, a dedicated listener for the past six years. Y'all have helped me so much with valuable information throughout the years. I could really use some solid financial advice right now.

I'm carrying a total of eleven thousand, five hundred and fifty seven dollars and twenty six cents of credit card debt. I have an American Express card with a twenty nine point nine to nine percent interest rate, a Capital One card at twenty eight point twenty four percent, another one at thirty one point two percent, and my PayPal credit is at thirty point thirty nine percent. With these high rates, it feels like I'm barely making a dent in these balances.

Would it be wise to take out a personal loan with a lo interest rate to consolidate and pay off these cards and then focus on paying down that loan instead. I also have student loans, but that's a whole separate conversation. Thank you, all right, And I that's really expensive debt. I'm glad that you only have eleven thousand. I know that that number seems really high, and it is. I mean, it's a lot of debt, right, but I'm glad it's not worse, because that can easily double. Like with these

interest rates. There are some interest calculators that you can use. I know bank rate has one investor dot gov. You can put this into a calculator and see what's going to happen to those credit card balances. If you continue to just pay you the monthly payment and you're not actually chipping away at that principal amount, it can really balloon. I actually do think, in my personal opinion, that it would be wise to take out a debt consolidation loan. Now.

It's not going to eliminate your debt, right and I don't want you to. This is the hard part when you pay down those credit cards. If you haven't solved the root issue, like if you haven't gotten to the bottom of why you were racking up credit or turning to credit cards in general, then it's very likely that you will consolidate it and shift it onto a personal loan that you can focus on, but that you may just recreate the same problem a year from now or

even less with how expensive things are. So that's something to consider for right now when you do feel like you are bleeding from these high interest rates. I would start shopping for a debt consolidation loan. I recommend starting with your local credit union. I recommend shopping around online, looking for some online lenders because they tend to have fewer fees and be more affordable. Obviously, read reviews, read

the fine print. There's a lot of great content out there where people you know will rigorously test and vet these different products for consumers. I used to work at a website called lending Tree, Magnify Money, you know Value Penguin, where it was our job to really like drill into the fine print of these types of products and help consumers make educated decisions when they're comparing. So do your

due diligence. The one great thing about credit unions is they have an eighteen percent cap on their credit cards, and I believe it applies to loans as well. Also, credit unions may be more willing to work with you if you don't have the most, you know, the greatest credit. And what I want to avoid is, you know, with these high interest rates, I'm going to guess your credit score is probably in like the fair category, maybe like six'

eighty mid six hundreds. And it doesn't mean it's impossible to get a debt consolidation loan, it just means that you may not save as much as you were hoping. Yeah, that can be kind of disappointing. And if you get a debt consolidation loan and the interest rate is maybe not even that much better than the interest rate you have in your credit card debt right now, then it becomes a decision about simplicity and also a fixed rate

versus a variable rate. One of the key differences with a person alone is that you have a fixed interest rate. Credit cards have a variable interest rate, and the more the Fed, you know, tweaks the interest rate and raises it lowers it, that can impact the interest rate on

our credit cards. It's very well likely possible that when you first took out these credit cards, your interest rate was better than it is now, but rates have been rising and here we are, so with a personal loan, like let's say it's high twenties in terms of like APR, which doesn't sound great, but you're not just but at least you know then the interest rate is going to be fixed and no matter what the Fed does, it'll stay.

You're also going to get a fixed repayment term, which means they're going to give you a loan for like thirty six months, forty eight months, whatever it may be. And then you know, by the time this time is over, I'm going to have one monthly payment. It's going to be a fixed rate, and I know when I'm going to have this debt paid off. And then you don't have four different credit cards to keep track of, right you have like four or five different credit cards to

keep track of. You have that one payment. But I really encourage you, like to get rigorous and get really diligent with your tracking of your expenses and your overall budget because getting to the root cause of what's caught, what's led to this, you know, five figure credit card debt, that is what's going to help you prevented from happening now.

And listen, I am not here to judge. It is so expensive in these streets, and as an entrepreneur, as a mom, you know, with a mortgage, and y'all know, I got these kids in daycare and after school activities and summer camps is coming up. My goodness, I one hundred percent can see how in just a few months you can have this much credit card debt and then it becomes really stressful and it weighs on you. Hey, ba fam, we got to take a quick break, pay

some bills, and we'll be right back. All right, ba fam, We're back. So I just want you to know it's not at all something that you know. And I just had Asia Evans, a financial therapist, on the show. If y'all haven't listened to that episode from Wednesday, please go check it out because we talk about mindset around debt and how it's important not to put so much focus or like really like get down on yourself on a personal level because you have this debt. Like I'm dumb,

I'm you know, I made some poor choices. What's wrong with me? I should know better. That's not helpful. It's not helpful. You're probably making the best decision with the options that you have. And there's this famous quote, at

least for me. In this series Little Fires Everywhere, where, Carrie Washington's character is talking to Reese Witherspoon's wasp neighbor character and she's like, Reese Witherspoon's character is judging Carrie's character for the choices she made about her daughter, and Carrie Washington is like, you didn't make good choices. You had good choices, And that says so much about privilege and about just the fact that we're all out here doing our best with the plate we have, like the

lot we have in life. And yeah, unfortunately that does look like putting things on credit that you may not be able to pay off right away. But let's just like set that aside. You know, acknowledge that you're doing the best you can. You're listening to Brown Ambition. You sent me your question. You know, I really hope that this is helpful for you and that you can start

chipping away at that debt. And another good thing about a debt consolidation loan is when you take out that loan and use that money to pay off these credit card balances immediately, your credit score should go way up because your credit score, yes, you still have the same amount of debt, you haven't eliminated that debt. That personal loan will appear on your credit report, but it's not a line of credit. It is a fixed term loan.

It's not a revolving credit line like your credit card debt was, and your credit score should benefit from that because revolving high interest debt can drag down your score, especially when you have a lot of it, you know, compared to your total available limit you know, utilization rate. That's how much of your credit card limit you're using

versus how much your limit is. And another sneaky thing that credit cards do that you may not even realize when you're someone who is continually racking up and adding more to your credit card is they will adjust your balance.

So you may think you have like a twenty thousand dollars limit, but if they see that you are getting close to hitting that limit and you're not paying it down in full each month, they can of their own will just go in there and reduce your your limit because they're afraid that it's looking like an I may not be able to pay this off, so let's actually decrease her limit so she doesn't take on even more debt that we're not going to get paid back for.

So that can hinder your credit score, because all of a sudden, you may have five K, you know, on a ten K card, which which gives you a fifty percent utilization rate, and that's not great, but it's not terrible. Then they maybe they chop that limit in half and now that five k is on a card that has a five five hundred dollars limit, and now your utilization

is almost at one hundred percent. And so that is how you know, even these like little things behind the scenes can be impacting your credit as you are relying more on credit cards and using those on a revolving basis and not paying them down in full. So and I hope this is helpful. I also like, if it comes down to being a budget issue and you have cut everything that you can possibly cut from your budget, then I would say it's time to start looking for

additional sources of income. And maybe once you have a one fixed rate debt consolidation loan payment to worry about each month, you can come up with a side hustle, you know, a way to bring an extra income and just use that money and say this is going to be to pay on this debt consolidation loan. And that's how I'm going to you know, be able to move forward and create that space in my budget for this new expense. Hey, bafam, we got to take a quick break,

pay some bills and we'll be right back. Welcome back, BA fam. Let's get back to the show, all right, and I think I've said everything I possibly could say on this. I want to wish you well. I want to wish you luck, and to our listeners who are also struggling with credit card debt, I want to hear

from y'all. Could you email me Brand Ambition Podcast at gmail dot com or dm me at Brand Ambition Podcast on Instagram and let me know how much debt you have, how you're managing it, and even if that's the first time in a long time you have gone and actually looked at all of your accounts. And just because Mandy asked you how much debt you have, you don't have to tell me, but I at least want us together to hold hands and like, go check our balances right now.

Check your balances, check your limit, see if it's been changing. You know, it's so easy to get a free credit report, a free credit score these days online. Probably all your banks offer some version of that. So let's actually look at it. I know better than anyone that it's really easy to just like stick your head in the sand. It's nice and dark in the sand. You don't have to look at stuff that stresses you out. But now I have one of my recent gas rokel Odin from

HSBC Bank. I have her voice in my head like, look at it. You have to look at it, even if it's scary. It's not going to go away just because you're avoiding it, and in fact, it make it even worse. So I encourage y'all go check out your balances. If you need a spreadsheet, you're going to use a tracking app like I do. I use Rocket Money. Do what you got to do to get all of your ducks in a row, your financial ducks in a row,

and then we can start strategically paying them down. And if you're wondering, like mey, hey, Mandy, why didn't you

recommend that? And I just did the debt snowball or the debt avalanche method, that's also something like if you really want to tackle this debt and you know you don't want to take out that personal loan or an eye, if you go and apply for a personal loan and you find out that they're not going to give you an APR that's any better than these credit cards, then maybe at that point it's like, well, what's the point I offered you all the pros of a personal loan?

So there still is a case to be made for taking one out. But if you were just going to tackle this one card at a time, the interest rates are all so similar, it might make more sense for you to take the debt snowball approach where you order them from the highest to lowest balance or the lowest to highest balances, and you pay down your smallest balance

first and then you just like let that. You know, even though it's not going to save you the most on interest technically over time, it does really help to get that momentum going and to help give you a bit of like positive reinforcement to see that progress being made. I'm interested to hear what you do. Please follow up with me and ba fan. Thank you so much for listening. I would love if y'all could take a second to

leave me review on Spotify or Apple Podcasts. It's so important, especially at its where everything in the economy is a little Craig crag that includes the podcasting space, So your support means so much to me. If you haven't left review, it takes less than twenty seconds to do. You can you scroll on your app right now find out where you can leave the review. Leave some kind words. I

do love them. And I'm actually gonna shout out a reviewer right now because I love reading y'all's reviews so much. All right, let me go find one. There you go, all right? From listener WGSSF, she says, yay Moms five stars, Mandy, I love, love, love your Mother's Day episode with Moms Reina and Jessica. I love how honest and thoughtful y'all were. Your conversation was about the difficult balance that motherhood can bring. Thank you for your candid takes on life and money.

And then listener are and Optional says so good, Thank you five stars. Eal been listening for years. Mandy is handling solo hosting with great Brown Tables and continues to bring amazing guests. I also love how vulnerable she is in her motherhood season. Keeping it real is how we support each other. Thank you. That is so so kind. Ba fam. I read all your reviews. I can't wait

to read some more. Thank you so much. And while you're at it, shared this episode with someone who you think might need to hear it and tell a friend, Tell a friend. Until next time, I am your host. Mandy Wichard Santos aka Mandy Money, and thanks so much for listening. Bye okay va fam, thank you so much for listening to this week's show. I want to shout out to our production team, Courtney, our editor, Carla, our

fearless leader for idea to launch productions. I want to shout out my assistant Lauda Escalante and Cameron McNair for helping me put the show together. It is not a one person project, as much as I have tried to make it so these past ten years. I need help, y'all, and thank goodness I've been able to put this team around me to support me on this journey. And to y'all be a I love you so so so so much.

Please rate, review, subscribe, make sure you sign up to the newsletter to get all the latest updates on upcoming episodes, our tenth year anniversary celebrations to come, and until next time, talk to you soon via bye