1 The Answer to Getting Out of Credit Card Trouble: A Spreadsheet | The Billfold

The Answer to Getting Out of Credit Card Trouble: A Spreadsheet

When I clicked the “sure, I’ll pay back this $55K” button on the student loan site, I had $10K in credit card debt. I also had no idea that I had racked up $10K on my credit cards.

I remember waking up in the middle of the night and thinking, “What do I actually owe?” My debt was spread across three cards, and I made regular, minimum payments on them.

It turns out I had much more debt than I thought, and when I discovered the exact figure, I went through the Kübler-Ross stages of grief: screaming, emotional eating, retail therapy, crying on the phone to the relative least likely to tell my dad.

And then I made my first Excel spreadsheet. It looked a little like this:



I couldn’t handle $416.66 a month, so I decided to go with $300. As a 21-year-old just finishing college, this was an incredible amount of money. I had also just signed on to two years of graduate school for an even more incredible amount of money. I had a good outlook on the situation, though: $300 would be a good training-wheels amount to get used to—after all, I’d be giving up that kind of money each month for the next 27 years.

I worked two jobs and often took on freelance work to make these payments while soaking my brain in the graduate school Kool-Aid. I sacrificed two pretty nice tax refunds, two Christmas’s worth of cash gifts, and two summers to pay off that credit card debt. I did it, and it took three fewer months than I planned. I danced and wasn’t even drunk. I will never carry credit card debt again. I calculated the interest I paid while in guerrilla debt-crushing mode: $1,865. That is way too many martinis to experiment with debt again.

I am now in the second month of making student loan payments. I budget for them, and watch the balances like a hawk. I’m still accruing more interest than I pay (wow, great system we have going here), and I try to match that and pay at least $50 on the principal, but it’s difficult. I won’t be able to do it every month (read: Christmas). I moved to Manhattan immediately after ripping my master’s degree from the dean’s hand, and so I don’t have the luxury of extra cash (I just had that heart-warming conversation with my family about how stupid I am for throwing my money away on rent. The independence is still worth it to me).

I put absolutely every purchase I make on my Amex, and pay it off in full at the end of the month. I like watching my airline miles grow, and I now have a fantastic credit score.



Also, my Excel skills have improved (hooray for skills)!



Zach is a recovering classical musician and editor living in New York City. He is all over Twitter. Photo: Timothy Boyd


50 Comments / Post A Comment

AitchBee (#3,001)

“I’m still accruing more interest than I pay (wow, great system we have going here)”

What does that mean? Do you wish that you’d been better informed before deciding to go to graduate school? Do you think that all student loans should be interest-free? I worry that I’m turning into That Guy on the Billfold, but off-the-cuff “THE SYSTEM IS BROKEN” asides are really starting to bug me.

wrappedupinbooks (#1,426)

@AitchBee I mean, in what ways would you argue that it works?

eastcoaststudent (#5,030)

@AitchBee I agree and I would be interested in the answers to these questions. I don’t understand the system is broken trope either…if you do your research and only go to graduate school after performing a cost/benefit analysis based on a realistic appraisal of yourself and your abilities, then the system works pretty well.

Giving brand new adults the power the sign loans for undergraduate education is a different animal though, but I don’t know how it can be changed without making access to good schools impossible for lower income families.

AitchBee (#3,001)

@wrappedupinbooks Well…people keep taking out loans. They choose to go to graduate school, and they’re able to pay for it (without being independently wealthy) by borrowing money.

So I’m actually asking: Did Zachary not understand the specifics of his student loan? Did he misjudge his employment prospects post-grad school, or was he misled about them? Does he think that his field–or all higher education–is inherently valuable to society, and that is should be fully funded by the government?

I’m hoping for something more compelling than “I took out these loans and now I don’t want to pay them.”

astauff (#4,376)

@AitchBee I do think for that particular aside the argument that the system is broken is justified. My husband is from the UK and the interest on his student loans is the rate of inflation, which seems like a much fairer interest rate for the government to impose on loans used to educate its populace.

You should still do your research to understand your loans and decide what you can really afford, but that doesn’t mean the system is fair.

EDaily (#4,396)

@AitchBee It sounds to me like Zachary took out these loans and has made his peace with paying it, like he did with his credit cards? And has a plan to do so? Where are you reading that he doesn’t want to pay back his loans?

AitchBee (#3,001)

@EDaily Maybe that was ill-put. Substitute “feels that the student loan system is unjust (or at least in need of reform)”?

AitchBee (#3,001)

@astauff “Education is a social good and the government should support it, either through direct administration or by regulating student loans” is definitely a defensible position, but I don’t think that “The system is broken” is an argument at all.
I guess I just feel that, if you’re going to bring the topic up, you should address it with more than a sarcastic parenthetical.

EDaily (#4,396)

@AitchBee Ok, fair. The accruing interest thing reminds me of credit card reform. The Credit Card Act helped change the way minimum payments were presented to credit card users—so many were stuck in a cycle of debt because they were paying just interest, and not principal. Perhaps there can be similar things done here.

Ellie (#62)

@AitchBee I am also pretty bothered by sentiments that strike me as “I took out these loans and don’t want to pay them,” which I feel like we read a lot of lately, but this article actually struck me totally differently – it seemed like a positive message about taking a rigorous look at the problem and developing a concrete and reasonable plan to fix it. The comment about “great system we have here” struck me as being more about interest rates, which I think reasonable people do think could be reformed a bit.

kentuckienne (#4,294)

@AitchBee I’m someone who has a decent amount of graduate school debt. I can think of two problems right off the bat…

One problem is that graduate students are no longer eligible for subsidized loans. So, the entire time you’re in graduate school, your loans are accruing interest, sometimes hundreds of dollars a month. If a person is getting a degree because he/she wants to be in a better place job-wise or financially, they likely don’t make enough to pay much while still in grad school.

The other thing I don’t understand is why, until this summer, my interest rates on my federal loans were 6.8% when people could buy houses at 3% interest. I realize 6.8 isn’t high, but if these rates are set by Congress, why couldn’t they be lower? Isn’t the point to help those who aren’t already wealthy and need loans to better themselves? The rates did get adjusted a little this summer, and they’re at 5.4% which is an improvement, but I still feel they could be lower. The companies that get these student loans are getting rich off government contracts, and should be required to have the lowest rates.

Mae (#1,769)

@kentuckygal The disparity between mortgage interest rates and student loan interest rates is so galling. There’s no reason it needs to be that way, it’s just that the government has decided that subsidizing home ownership is more important than subsidizing education.

What is especially frustrating is that everyone is constantly told that education is the answer to our economic problems. We would all have better jobs if we were better educated, and if we had more STEM degrees, etc. If that’s true, then why do we make it so hard for everyone who isn’t already affluent?

wrappedupinbooks (#1,426)

@Mae @kentuckygal etc. I’m also very frustrated with the interest rates. Look, I know that graduate school is expensive, but I also know that to have any hope of advancing in my career, I need more than just a bachelor’s degree. At this point in the game, you practically need a bachelor’s degree to breathe. I have no problems with paying for that, or my next degree, but I sure do wish I could get the cash up front on more favorable terms than 5.4% (at the very minimum), with interest accruing while I’m still in school. Call me a socialist, but I do believe it’s the government’s place to subsidize educating its populace, especially since the government benefits from doing just that. Once upon a time, educating people through high school was enough to prepare them for productive adult lives. It’s simply not anymore. I would also like to see the cost of education reigned in, especially at public institutions, but I know that’s nothing more than an idle dream.

tl:dr my position is basically, DO MORE government. I know I am. Just try to meet me half-way? maybe?

Allison (#4,509)

@kentuckygal well, one reason mortgage rates are lower is because they’re for a secured loan – there’s something they can take away if you don’t pay. So it makes sense, but I’m not sure it makes a double the interest rate kind of sense. And the loans accruing interest while you’re in school sucks a lot.

@Mae The difference between mortgage rates and student loan (and credit card) interest rates exists primarily because one is secured debt and one’s unsecured.

Interest rates are the cost of money. Money that’s riskier for the lender costs more. With secured debt like a mortgage, the creditor is entitled to the property if the debtor defaults, so the risk is lower. Same with an auto loan. But you can’t repossess someone’s education if they default on the loan they took to get it.

I’m not saying 6.8% is the inherently correct number (particularly given that it’s set by statute and doesn’t track treasury rates significantly) but there’s an explanation other than subsidization of one social good over another.

garli (#4,150)

@Mae In all fairness I don’t know anyone with a graduate degree in STEM who didn’t have the bulk of their grad degree paid for by TAships or grants. I don’t have a cent of debt from getting a master’s degree. (I do have undergrad loans)

r&rkd (#1,657)

Seriously who came up with 6.8% fixed, it really makes no sense to just fix a rate like that.

Also where is stuffisthings to point out that, if education should be subsidized, the reasonable way to do that is to subsidize the education directly, i.e., more state schools and make them cheaper?

Maybe a re-title of this article is appropriate? A lot of people are in actual abusive relationships, and tossing it around lightly is a little off-putting.

Let me be more blunt: please change the title, there was nothing abusing him, and domestic abuse is a real problem that shouldn’t be tossed around in the same way we wouldn’t say “my debt was raping me” and think it was a-ok.

Caitlin with a C (#3,578)

@Jake Reinhardt Technically, I think lots of people would/do say that. …but yeah, they’re assholes.

honey cowl (#1,510)

@Jake Reinhardt Co-signed. Please change it.

Mike Dang (#2)

@Jake Reinhardt @Caitlin with a C @honey cowl Thanks everyone. Just seeing this now and made adjustments. It can get busy and I don’t always get to the comments, so feel free to email me directly in the future to grab my attention.

Ellie (#62)

This looks good! It also strikes me as much more appropriate as a title. “I was in an abusive relationship with debt” doesn’t even make sense for this article.

LB (#3,427)

@Mike Dang Thanks for changing the title, Mike.

@Mike Dang Thanks for that!

honey cowl (#1,510)

@Mike Dang Thank you for your quick response! Agreed, I should have emailed you. And also agreed with @Ellie — it seemed like a very strange title for this rather calm, non-alarmist piece!

shannowhamo (#845)

@Jake Reinhardt I’ve been in an abusive relationship and it was horrible but I don’t think that takes away a writer’s right to use creative language. I don’t like being an “everyone’s so PC now” person but this criticism seems a bit much. Now, did the title apply to this article at all? Not really. But if you really can’t escape the cycle of poverty/debt, that CAN feel abusive- abused by banks and credit companies, certainly, but also that similar kind of hopelessness you can feel in an abusive relationship you can’t get out of. I’d say a few of Logan’s debt tales could be un-offensively titled “abusive relationships with debt.”

milena (#3,288)

I have to say, it’s kinda crazy that you spend 1.5x more on food/entertainment than you do on rent. Even viewing it through the “everything is crazy pricey in NYC” lens. I don’t know what kind of hours you work or what your living situation is, but do you have room to cut that budget? I lived in NYC for a year-ish. I spent maybe $200/month on groceries to cook at home, but we ate out on weekends pretty much every meal and my average was around $400-500 per month. (Granted, I don’t have expensive taste for food; my average fancy meal was no more than $40 w/ tip but most often I’d just be getting ramen or burgers or something inexpensive.)

I know the student loan system is pretty fucked, but you’d be doing yourself more favors cutting down on eating out and putting that towards your principal.

amglory89 (#3,588)

@milena I signed in to ask about this too. What kind of food/entertainment budget is that?!? Can I have it?!?!?

aproprose (#1,832)

@amglory89 RIGHT! I’m a girl who can go out for a spendy $100+ dinner once in a blue moon but where on earth is that $1200 going? I’m honestly baffled.

sunflowernut (#1,638)

@milena And compared with how little he’s putting in his IRA and 401K!

therealjaygatsby (#4,053)

@milena $40/day on food and entertainment does seem like a lot to me too. We only have a small snapshot of the author’s budget, but this seems like the area where he could save the most money. Even if he cuts back $10/day on food and entertainment–and $30/day still seems like a lot to me–he could save an extra $300/month or $3600/year. If he applies this hypothetical $3,600 toward his student loans, he could save a whole lot on interest payments in the long-run. I’ve done a lot of hypothetical “what ifs” in my own debt repayment spreadsheets (gotta have ‘em), and have often been amazed at what throwing an extra $10/month at large amounts of student loan debt can save you in the end. $300 could really change the game here!

SterlingCooper05 (#2,529)

@milena I stopped reading when I saw $1200 for food/entertainment. That’s insane for one person. There’s no interest rate low enough that would help him as much as cutting that line item in half every month.

@SterlingCooper05 Well, to be fair, based on the rest of the categories it looks like more of a catch-all for “literally everything else that I’m not actively being billed for” which would include boring shit like toilet paper/socks/medications, not just crazy sandwiches.

EA_Mann (#5,000)

@milena the only way I can think to spend that much $$ on ‘entertainment’ would lead to me smelling like perfume and my wife being very angry

milena (#3,288)

@MollyculeTheory If that’s the case, it’s more reasonable than my initial assumption, but you could argue that it could bear some trimming if he’s trying to aggressively pay down student loans. Still, the fact that there is some semblance of a budget is a good first step. I’d really recommend using Mint, if not to actually budget and stick to it, to at least see where his money is going.

wrappedupinbooks (#1,426)

I am confused by the tax column in the budget. I know that it’s not really material to the discussion, but it is bothering me. Like, I live in NYC and spend a comparable amount each month on a gym membership, but I pay less than $5 in taxes on it, where did the $29.70 come from? Also tax on rent???

beet hummus (#946)

I just logged in to ask the same question!

Ellie (#62)

I was about to post echoing this question, and then I came up with an explanation that I think is almost certainly correct: this reflects the amount of tax that, when added to the amount paid out (e.g. the $800 for rent), equals the gross earned income that ends up being that amount of money after taxes are taken out. This is probably done so that gross income and outgoing money match up each month. Honestly, though, it doesn’t make a lot of sense to me to do it this way; I record my income as what I actually get net paid – this seems like a needless extra step to me.

wrappedupinbooks (#1,426)

@Ellie oh that does make sense. It would never even occur to me to break it out like that, but your explanation does seem to work.

athens_baby (#2,527)

@Ellie Thanks for the explanation, I came down here to see if anyone else had figured it out. It seems so unnecessary, I don’t get the logic at all.

Cup of T (#2,533)

The idea of making debt repayments for decades is so terrifying to me. So many of my grad school colleagues have tens of thousands in student loan debt and the idea of shouldering that while also trying to set up a post-grad life just seems so overwhelming. Good on you for tackling it

EA_Mann (#5,000)

The answer to almost every problem is a spreadsheet.

tuntastic (#2,769)

I just saw from Zach’s twitter that he is discouraged by the comments he is getting here so I came back to say, I made a spreadsheet this morning which maps out me paying back my $5,000 CC debt in four months! Thanks for the inspiration!

aetataureate (#1,310)

@tuntastic Hahaha oh man, he seems whiny! It figures.

tuntastic (#2,769)

@aetataureate It is true that Billfolders tend to pile on, and this particular set of comments contains even less positivity than normal (which is normally very low).

aetataureate (#1,310)

@tuntastic Yeah . . . His tweets are what I was saying are whiny, to clarify. I didn’t have a Feeling about this post but reading the tweets tipped me. That said, of course, I am very glad you were inspired to take some positive action for yourself!! $5,000 in four months is intimidating!

tuntastic (#2,769)

@aetataureate it certainly is but I CAN DO ITTTTT (according to the spreadsheet!)

Gary M. Freedman (#5,601)

Just follow up at daveramsey.com, and follow Dave’s advice…. I did it… It works.. No, I get no kick back on anything someone buys—And I have no credit cards and survive just fine

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