When Oscar started using YNAB, you might remember he had some credit card debt—$9,200 to be exact. There was that surprise emergency room visit, a blown tire, and of course probably a few out-to-eat meals here and there—it was hard to remember them all. But there was that one meal…the lobster dinner…overlooking the city…the butter sauce. It had been perfection. But now, all that was left was a memory and a $150 charge yet to be paid, and accumulating interest at 19.87% APR. Oscar tried to focus how good that lobster tasted. It was good. It WAS DELICIOUS. Wasn’t it?
The $9,200 balance was spread out over four cards:
- Artistry Advantage: $375. A 0% APR that was opened with the purchase of a new table.
- Bedazzled Rewards Card: $6,294. Used for groceries, gas, eating out, and everything else.
- Griti Bank Unlimited: $1,797. Leftover balance from Oscar’s single days and some epic weekend trips with the bros.
- Express Store Card: $734. Oscar bought a whole new work wardrobe last year, and if you signed up for the card you got a discount. The saleslady was very convincing.
When he first set up his budget, the whole credit card thing felt a little overwhelming, but now that the rest of their money was feeling more organized, he was ready to take another peek at his credit card debts and tidy those up too.
He watched a short video on how to set up his credit cards, and finally it all clicked into place: the credit card was just like a holding envelope in his budget. If he bought groceries with his card, money would just move from the grocery category to the credit card payment category, and then the money would be there to pay the bill when it arrived (at which point the credit card account balance would go down). Ok, it wasn’t so bad after all!
Here’s each card listed out in their budget:
And here’s a list of their credit card accounts (showing their remaining balances to be paid off).
They decided to snowball their debt payoff (which means focusing on the smallest balance first to build momentum). That meant all their fire power went to paying off the Artistry Advantage card (whose 0% APR was expiring next month).
You can see how their plan is laid out in their budget: they’re focusing on building up the payment for the Artistry Advantage card while paying the minimums on the other cards.
They had already been able to budget for almost half the remaining amount on the card, and when they got paid again this month they’d be able to wipe it out completely.
Hurrah! That meant they would have the Artistry Advantage credit card paid off by the time the 0% APR ran out in a month—and they’d have one less debt to deal with and an extra $150 with which to tackle the next card! With his newfound credit card plan laid out, Oscar held his head a little higher. He had a plan. And a plan felt good.
Learn more about how credit cards work in YNAB with our oh-so-helpful workshop.