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Am I Following a Healthy Path to Freedom from Debt? – Trish

“Dear Steve,

‘m a 52 year old divorced woman who is 22K in credit card debt and want to eliminate this in the next 4 years. My interest rates are astronomical (23%) and it is causing me to lose sleep at night and worry, worry, worry constantly on how I’m going to get myself out of this hole.

Bankruptcy is NOT an option for me and I don’t want to go this route since I was already involved in a foreclosure back in 1998 thanks to my ex-husband (now deceased). I’ve been able to to put aside 6% of my salary for the last 10 years for retirement so I have about 55K set aside so far and will continue to invest in this (it is matched by my employer up to 3%) My credit rating is good….about 720 because I make my minimum payments on time each month.

But making the minimum payment will NOT get me debt free for decades. And my debt ratio stinks because I make 52K a year and my debt is 22K. I won’t even THINK about touching my 401K or borrowing against it. I currently pay my minimum payment each month for three credit cards…..11K on my Wells Fargo Visa, 9K on my Chase MC and 2K on an old At&t MC. I’m getting back a nice sum from my taxes this year and plan to pay off the AT&T in full. I have a one store CC (Kohls) of $300 that I can also pay off once I get my income tax refund.

My plan is to get out of debt in the next 3-4 years less if I can do it……I got myself into this so I have to get myself out of this, somehow. I want to continue contributing to my 401K because seriously, is SS going to be around when I retire? I doubt that very much. I’ve cut up one of my credit cards and will keep one major CC for emergency only (and emergency does not mean a shopping spree online or at the mall).

Am I following a good and healthy road to freedom from debt????


Dear Trish,

Looks like you are headed off on a good path. A few pointers may help you on this journey.

  1. If you are getting a big tax refund it means you are having too much withheld from your check each payday. Adjust your withholdings so you break even at the end of the year and put more money back into your pocket on a monthly basis. Put the extra cash into a boring old savings account. That way in case of a financial emergency you have cash on hand rather than putting stuff back on plastic.
  2. Don’t close your cards. I’m often asked if closing the paid off cards is a good thing. Interestingly, maybe not.

    Your credit score is important in many ways. Closing all of your cards or just your oldest cards can have a significant negative impact on your credit score.

    Your credit score is not a measurement of how well you manage your personal finances. It is a measurement of profit potential for creditors. The higher the score, the lower the creditor calculates your risk of default. Lower risk of default translates into more favorable credit terms.

    When you close a credit card you terminate the continuity and current relevance of the history of that card. Let’s say you’ve had one credit card for five years and have always paid on time. Right now that card carries more weight in the calculation of your credit score. If you close the card and we flash forward one year, the card is much less meaningful as a current predictor of your risk then.

    Before you close your cards, focus on keeping at least your two oldest cards open and use them from time to time. If you do that you’ll be able to accomplish your goal to eliminate your debt and keep your credit score looking good for when you might need it in the future.

  3. The two ways to get out of this debt faster would be to either consolidate the debt or drop it in a credit counseling program. If you include it in a credit counseling program the interest rates may be lowered but the cards will be closed. You can click here for credit counseling information.

    A debt consolidation program I love is It is a peer-to-peer lending network where people like you and I help to find the loan requests of others. With you debt can be consolidated to a lower interest rate, the cards will not be closed and the LendingClub loan will report to your credit report, helping you to improve your credit.

    From what you’ve shared I think the approach is the best first step to examine. If you go that route come on back and post your loan request number in the comments and I’ll help to fund it.

Please post your responses and follow-up messages to me on this in the comments section below.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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