I Paid Off $30K in Credit Card Debt in 6 Months — Here’s How You Can Too

Written by Kiok Kang, Founder, Glowing PR

What is your relationship with money? Do you love to save and budget for the future, or are you all about enjoying that hard-earned money and prepared to go into debt for it? Either way, we need to get better at talking about it if we ever want to be better at managing it, and eventually having more of it. Especially when you consider that globally, women control upwards of $20 trillion in annual consumer spending. But sadly, when it comes to managing money and planning for their financial future, women aren’t as independent as you’d expect. A recent study found that more millennial women cede control to their husbands than women of older generations. Well, our new series, The Money Files is set to change all that by helping women become masters of their own finances so they can manage their money and their future.

Photo: Sarah Shen

Before launching my own company, Glowing PR, I was a corporate employee at a well-known beauty conglomerate. I often felt frustrated by the bureaucracy of a corporate environment, as well as the self-serving motives of other employees (instead of goals that would benefit the company as a whole). Eventually, I decided to take all of my experiences and launch Glowing PR Agency at the end of 2017, and I can honestly say, I haven’t looked back since. I identified a crucial need from brands—a concierge PR agency that genuinely understood their goals and created organic opportunities, secured tangible and relevant coverage, and aligned themselves with the best influencers for their target audiences.  

Our first client, KNC Beauty was just at the beginning of an amazing start. Since then, we’ve focused heavily on indie beauty brands, which heralds back to my own roots in the beauty industry 10 years ago. While the business was thriving, there were costs that were rapidly accruing. For example, I secured an office space in Koreatown that was beautifully designed by Maison Trouvaille but I didn’t forecast a budget properly—launching a business, paying for attorney’s fees, renovating and designing a new office space, and all of the miscellaneous daily business expenses that were keeping the lights on.   

I started my business without enough knowledge of credit card interest rates, cash-flow management, and being able to look at the company’s finances from a bird’s eye view. Before I knew it, I had over $30,000 in debt. This amount was only for the business and didn’t include my personal debt, like my student loans. I immediately felt the weight of this mental and financial burden, like I was drowning with no relief in sight. But I wasn’t alone. The average American now has about $51,900 in personal debt, including mortgage loans, home equity lines of credit, auto loans, credit card debt, student loan debt, and other debt, like personal loans. The US comes in at #6 of the top 10 countries with the most debt (Debt-to-GDP ratio: 127%). 

“Before I knew it, I had over $30,000 in debt... I immediately felt the weight of this mental and financial burden, like I was drowning with no relief in sight. But I wasn’t alone.”

Photo: Sarah Shen

Serendipitously, I spoke on a panel at a women's networking event and met Anna Choung, our wonderful financial advisor and now our accountant. She touched on the launch of her FSMamas (aka Financially Savvy Mamas), a community that empowers women to become more financially independent by educating them on financial management. Afterwards, I decided to dive into my finances and tackle them head-on. It was an extremely humbling experience, to say the least., However, Anna was able to provide comprehensive advice on both business and personal financial decisions that were also tax-efficient.  

The first step of my financial journey was to educate myself on basic concepts—reviewing my financial history to assess the situation, understanding the holistic picture of my debt, as well as strategizing on a clear payment plan to move forward.  Quite frankly (I kick myself because it seems so obvious), the simplest takeaway from all of this was to not accumulate debt, especially high-interest credit card debt, in the first place. I learned that there’s a wise way of allocating money in your bank account without earning extra interest.

With that in mind, I started to pay off my debt with the highest interest rate first. It’s as simple as coming to grips with the financial issues at hand and resolving it as quickly as possible. And don’t be afraid to ask for help—it was eye-opening to sit down with my financial advisor to discuss a debt payment strategy.  

I wish I knew then what I know now—hindsight really is 20/20. Hopefully my story can help someone else, too. So, here are my tips to pay debt off as quickly as possible and grow a healthy business:

1. Understand Financial Concepts 

Get to know some basic financial terms, such as the rate of return and Rule of 72 which uses a simple formula to calculate the number of years it will take for your money or debt to double, given a certain rate of return—it can actually work for or against you. In my case, it worked against me. For example, if my credit card debt was $10,000 with an interest rate of 30% and I made no payments towards the debt, it would then double to $20,0000 in 2.4 years (72/30 =2.4 years).

Not paying off the debt with the highest interest on the credit card was hurting me because it was generating additional interest (rapidly) on top of my original debt. Tallying up the total interest costs and doing the math frightened me into taking action. Ultimately, wouldn’t you rather save those additional charges to grow your business rather than to grow another financial institution’s wealth? 

2. Use Financial Apps and Tools

We’re living in the age of technology and there’s an abundance of incredible apps out there that can assist with debt repayments, budgeting, saving, and investing. Most of these tools are either free or only charge a minimal fee. Loan calculators, such as UnBury.Me or Debt Tracker Pro, can assist you in building and implementing the most suitable debt reduction strategy.  Budgeting tools, such as Mint, show all of your bank account activity in a concise way.

They’ll break everything down in easy-to-read pie charts and graphs to show you where your revenue is coming from and how you’re spending your money. You can then set budgets and financial goals to help you pay off your debt and never, never, never let yourself pay late fees on debt. I recommend setting up automatic minimum payments for your credit cards to avoid any pesky, unnecessary late fees. Don’t be afraid to do some research and find the most suitable fintech tools to use for your business and your personal finances.

“Take a hard look at your business financials and make sure that they’re accurate. Numbers are the basic language of business, and it’s telling you a story.”

Photo: Sarah Shen

3. Manage Your Cash Flow and Get a Great Accountant  

Take a hard look at your business financials and make sure that they’re accurate. Numbers are the basic language of business, and it’s telling you a story. What is your business’s story? Is your business carrying too much debt? Are your clients not paying you in a timely manner? Do you have too many expenses? Is your revenue falling flat? After analyzing your numbers, re-strategize your business plan and reallocate your resources. Tracking your numbers closely and accurately, as well as performing budgeting and forecasting for your business, will lead you to efficient business growth.

Not only will you be able to identify problems and eliminate them from the start, but you’ll be able to manage your business’s liquidity and maintain your bank balances more smoothly. After all, liquidity is what will keep your business afloat.  And if you’re not proficient with bookkeeping and generating accurate business financials, outsource it to a trusted accountant/CPA. I was fortunate enough to have a financial advisor that also has a background in accounting and taxes. Not only is she helping me with debt management, but she’s also my go-to person for my business finances, tax planning, and compliance needs.

4. Tax Planning and Compliance

Understanding your business’s tax needs and being compliant with various tax deadlines (including payroll taxes) will help you avoid unnecessary penalties and will get more money back into your own pocket. This can then enable you to pay off your debt quicker and invest more into your own business. Why pay more than your fair share of taxes?

“No matter what, pay yourself a salary—your time is worthwhile.”

Photo: Sarah Shen

5. Invest in Yourself

As a business owner, not only should you build the proper foundation for your business, but also for your own finances. No matter what, pay yourself a salary—your time is worthwhile. There are statistics that say that many people expect a business to fail, with 50% of businesses actually failing within 3-5 years. You won’t get that investment back if you don’t pay yourself from the start. Get into the habit of investing in your own future and retirement plans as your business grows.

It’s wise to consider and plan for this before having a family, as well. Increase your own wealth with some concrete business projections (i.e., how many clients are necessary? How much revenue is needed?) to reach your goals. Later on, your salary can also be set aside towards a retirement fund to concretely save and invest in your own future. There’s a common misconception that small businesses won’t offer solid retirement options in comparison to big corporations’ 401(k) plans, but there are actually several retirement fund options for small businesses and yourself. If you do more research, you’ll find that there are a lot of plans that are suitable for your business and any unique situations.

6. Education and Quarterly Maintenance

Get familiar with financial terms and set a clear budget for a road map of your business. Identify and invest in the areas that will allow your business to expand. 

Although the journey to becoming debt-free can be different from person-to-person, the most important thing is to take an honest assessment of your situation and face it head-on. Debt is a dirty word that has such an emotional pull. I’ve learned firsthand that debt seems to snowball and you feel completely out of control. The best way to avoid being in as much debt as possible is to understand basic financial concepts, manage cash flow, and avoid costs like buying lunch and shopping for the latest handbag.

Up Next: 10 Money Questions to Ask Yourself (So You Can Afford the Life You Want).

This post was originally published on August 26, 2019, and has since been updated.

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